Tuesday, January 26, 2021

Rights Of In-House Counsel

The New Jersey Appellate Division has held that ethics rules do not preclude a discharged in-house counsel from recovering contract damages.

In 2009, the [Elizabeth] Board [of Education] hired Nelson to a full-time, salaried in-house position as board counsel and the parties executed a one-year employment contract which was renewed annually through June 2012. In 2011 and 2012, the Board was served with several state and federal grand jury subpoenas related to its administration of the National School Lunch Program and other investigations which led to the filing of criminal charges against several Board members, including its president.

The parties then executed a three-year employment agreement but later fired him.

After he was fired, Nelson was unable to find legal employment of any kind. At one point, he was offered a management position at a local hospital, but the position was rescinded after a criminal background check. Nelson also unsuccessfully attempted to obtain employment at FedEx, UPS, Uber, and various construction jobs. In 2015, Nelson was hired through a prisoner reentry program to work overnights cleaning "vent hoods, grease traps and . . . grease exhaust hoods." He testified that he worked for approximately six months, forty hours a week, and earned $13 per hour

The attorney was acquitted of the criminal charges.

Here, both the motion and trial judges correctly concluded that the parties entered an enforceable contract that was not vitiated by RPC 1.16(a)(3). Nelson never sought reinstatement to his former position, he simply sought compensation for the Board's clear breach of the agreement. Nothing in that limited remedy impaired the Board's inherent right to hire and fire Nelson, it simply was required to answer, like any party, for the consequences of that breach. Nordling, 478 N.W.2d at 503.

To conclude otherwise would effectively eviscerate an in-house counsel's basic contract rights. Indeed, arms-length negotiated employment contracts, like the agreement here, would be rendered illusory, as an employer would be permitted to fire counsel without cause and ramification, effectively converting in-house lawyers with employment agreements to at-will employees contrary to New Jersey law.

Unlike outside counsel

Nelson was not an outside lawyer compensated pursuant to a retainer agreement, rather, he worked for the Board exclusively pursuant to a three year employment agreement.


an attorney appointed to a public counsel position with a statutory term cannot be removed from office prior to the expiration of that term pursuant to RPC 1.16(a)(3). Ibid. That rule, however, does not limit Nelson's remedy here. Again, Nelson sought monetary damages, not reinstatement to his prior position, which would directly contravene the principles underlying RPC 1.16(a)(3).

(Mike Frisch)


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