Thomas F. Maffei quoted in Massachusetts Lawyers Weekly article on noncompete covenants and the Rules of Professional Conduct
Thomas F. Maffei, of counsel in the firm’s Litigation Department, was quoted in a Massachusetts Lawyers Weekly article on May 30, 2019. The article, “Ethical rule fails to free attorney from noncompete,” addressed The Advocator Group, LLC, et al. v. Arruda, in which a Superior Court judge ruled that Rules of Professional Conduct do not excuse an attorney from complying with the restrictive covenants they’d agreed to when selling their business, as the business was not engaged in the practice of law.
From the article:
Boston attorney Thomas F. Maffei said the defendant attorney in Arruda was “ahead of his time” in a sense. Maffei pointed to the proliferation of vendors offering law firms the opportunity to outsource non-lawyerly aspects of their practices, such as client intake.
Non-lawyer ownership of law firms is outlawed in all jurisdictions except the District of Columbia, Maffei noted. Otherwise, investors might find the large profit margins of some of the top-grossing national firms irresistible.
As a result, there will continue to be an incentive for firms to think about whether they might do as the defendant in Arruda did and separate out services not provided by attorneys and perhaps monetize them, he said.
Though the defendant had wisely clarified in the sale of his business that he would still be able to practice law once the sale was complete, he tried to take things one step too far, Maffei said.
While he could take an unsolicited call from a long-term disability carrier interested in his services or send out advertising fliers, what he could not do was replicate the high-volume system of referrals that the buyer had purchased, Maffei said.
As a practical matter, Maffei said the lesson is: “Don’t bite the hand that feeds you.” It was not entirely clear how much of the $32 million the defendant pocketed, but Maffei suggested he should have expected that part of the consideration in the deal would be restrictions on his professional activities.