# Donnelly v. Brown, Winick, Graves, Gross, Baskerville, Schoenebaum, & Walker, P.L.C.

> Supreme Court of Iowa · September 9, 1999 · 599 N.W.2d 677

URL: https://www.frixlaw.com/law-library/cases/9719470

## Case

- **Full name:** John v. DONNELLY, Appellant, v. BROWN, WINICK, GRAVES, GROSS, BASKERVILLE, SCHOENEBAUM, and WALKER, P.L.C., Appellee
- **Court:** Supreme Court of Iowa
- **Decided:** September 9, 1999
- **Citations:** 599 N.W.2d 677; 1999 Iowa Sup. LEXIS 207; 1999 WL 700236
- **Precedential status:** Published
- **Opinion:** Concurrence by Ternus
- **Judges:** Larson, Carter, Snell, Ternus, Harris
- **Cited by:** 6 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/9719470

## Opinion text

TERNUS, Justice
(concurring specially).
Although I join in the court’s opinion, I write separately to explain why I believe the continuation payments qualify as retirement benefits under DR 2-108(A). Preliminarily, I agree with the court’s distinction between retirement benefits and *683 other payments made to departing lawyers that represent their interest in the firm’s capital account or in uncollected or undistributed earned income. The latter payments can never qualify as retirement benefits within the meaning of the disciplinary rule. See Anderson v. Aspelmeier, Fisch, Power, Warner & Engberg, 461 N.W.2d 598, 601-02 (Iowa 1990). In the present case, there is nothing to suggest that the continuation payments are tied to uncollected fees, undistributed income, or capital investment. Rather, the continuation payments are gratuitous, based only on length of service and age, factors traditionally linked to retirement.
The crux of the plaintiffs argument is that benefits cannot truly be retirement benefits if one does not have to fully refrain from gainful employment as a lawyer. In other words, how can benefits be retirement benefits when one does not have to quit working to qualify for them? I agree with the District of Columbia Court of Appeals that “the word ‘retire’ is susceptible to varying meanings depending on the reference to which it is made”:
In one sense, it connotes a permanent withdrawal from gainful employment altogether, namely, “[t]o give up business or public life and live on one’s income, savings, or pension.” However, “retire” may also refer simply to withdrawal from a particular occupation or even from a particular position within an occupation.
This distinction may be no small matter. If “retirement” denotes simply withdrawal from the firm, then any benefit offered to withdrawing partners may ethically be held contingent upon the partner’s refraining from the practice of law. On the other hand, if the word is understood more narrowly to mean, for example, “withdrawal from the practice of law,” then only the benefits intended for those who so withdraw may be withheld from a departing partner who continues practicing. Clearly, the broader the scope of the term, the weaker the prohibition on attorney-practice restraints becomes, and the more likely a particular benefit in question does not contravene, the rule.
Neuman v. Akman, 715 A.2d 127, 131-32 (D.C.1998) (citations omitted). As the quoted discussion implies, it is not practical to define “retirement benefits” as used in DR 2-108(A) simply in terms of the extent of the lawyer’s withdrawal from gainful employment because retirement encompasses a broad range of changes in employment. I agree with the majority that, as used in DR 2-108(A), retirement certainly means something less than ceasing to work as a lawyer; otherwise, the exception to the rule prohibiting noncom-petition clauses would be unnecessary.
How then does one determine whether a benefit is truly a retirement benefit? Robert W. Hillman has a helpful analysis in his treatise, Hillman on Lawyer Mobility. Hillman suggests that the applicability of the retirement benefits exception centers on whether the firm’s purpose in providing departure payments is in fact to fund its partners’ retirement from the practice of law. Robert W. Hillman, Hillman on Lawyer Mobility § 2.3.5, at 2:89 (2d ed. Supp.1999). Hillman notes that retirement benefits are provided under firm agreements in recognition of the fact “that some partners, upon reaching a certain age,- will cease practicing law and as a result suffer a substantial drop in income.” Id. at 2:89-90. This situation is to be distinguished from those types of provisions which provide for a method of terminating a partner’s interest in unfinished business or settling the account of a withdrawing partner. Id. at 2:89.
In distinguishing retirement benefits from other types of departure payments, then, Hillman identifies three criteria that prove helpful in evaluating whether the retirement benefits exception is applicable. Id. at 2:90-91. First, and most important, is the existence of minimum age and service requirements. Id. A second factor to consider is “the existence of provisions *684 dealing independently with withdrawal for purposes of retirement and withdrawal for other reasons.” Id. at 2:91 (“The existence of independent and substantial provisions covering retirement and nonretirement withdrawals ... give[s] credence to the argument that the provisions dealing with retirement ... have been designed for the purpose suggested by their label.”). Finally, Hillman asserts that the time period over which the benefits are to be paid is significant in determining their character because “the payment of benefits over an extended period supports the conclusion that the payments are in fact for the purpose of funding a retirement.” Id.
Turning to the facts before us, I agree with the majority’s conclusion that the continuation payments qualify as retirement benefits. First, in order to be eligible for continuation benefits, the attorney has to meet specific age and longevity requirements. Second, the agreement has a specific provision dealing with withdrawal for reasons other than retirement. Third, the payment of the benefits is over an extended period of time-ten years. In addition to the presence of these factors, the firm’s operating agreement states that the firm is willing to cooperate with a retired partner to adjust payment of the benefits so as not to adversely affect the retiree’s social security benefits. Under the analysis espoused in Hillman, these elements of the agreement indicate that the continuation payments were intended to fund a partner’s retirement from the practice of law. Therefore, they qualify as retirement benefits within the contemplation of DR 2-108(A).
Once one concludes that the continuation payments are true retirement benefits, it is not necessary to consider the scope of the restriction placed upon the retiring attorney, i.e., whether full retirement is required or whether retirement from the private practice of law in Iowa is sufficient. That is because the exception to DR 2-108(A) allows noncompete restrictions on a lawyer who wants to collect retirement benefits. The breadth of the restriction is not important.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/9719470. Public record. Not legal advice.