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Abstract

Three attorneys entered into a partnership agreement for the practice of law. Their agreement included a provision that assigned the partnership's insurance carrier clients to individual partners upon the termination of the partnership and restricted the partners from doing business with a client designated as that of another partner for a period of five years. Of these insurance carrier clients, 154 were assigned to the defendant while five were allotted to the plaintiffs. After the partnership was dissolved, the plaintiffs sought a judicial accounting. The defendant counterclaimed, contending that the plaintiffs violated the restrictive covenant of the original partnership agreement by attempting to do business with clients designated as his. Plaintiffs denied the charge and argued that the covenant apportioning clients to individual partners had the effect of prohibiting the other partners from dealing with those clients and was therefore void as against public policy. The plaintiffs also contended that they had entered into the agreement at the insistence of the defendant, even though all parties regarded the provision as unenforceable. The Superior Court of New Jersey, Chancery Division, held that the covenant in the partnership agreement restricted the partnership's clients in their choice of counsel and was thus void for public policy reasons. The court refused to apply the standards usually used in evaluating restrictive covenants.

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