Proposed 2026 Formal Ethics Opinion 2 : Release of Claims and Non-Disparagement Clause in Fee Agreement or as a Condition of Fee Dispute Resolution

Inquiry #1:

Lawyer represented Clients in a civil matter. At the end of the representation, Clients filed a petition for resolution of a disputed fee with the State Bar’s Fee Dispute Resolution Program. In the petition, Clients allege that Lawyer did not perform legal services diligently or competently and did not earn the fee they paid. Lawyer is participating as a respondent in the mandatory fee dispute resolution process. Lawyer denies that she did not perform legal services diligently or competently, and denies that she did not earn the fee paid. Lawyer indicates that she is nonetheless willing to resolve the fee dispute by refunding a portion of the fee—to buy her peace—in exchange for Clients’ execution of a release that reads:

We, [Clients], do hereby release [Lawyer and Lawyer’s law firm] from any and all liability for [the representation]. We also agree not to publish any negative comments about [Lawyer] or her law practice.

The consideration for this release is $750 from [law firm]. A check for that amount shall be mailed once this contract is signed in the presence of a notary and sent back to [Lawyer].

As a condition for resolving a fee dispute, may Lawyer obtain a collateral benefit—such as requiring Clients to sign a release of all liability claims arising from the representation—in exchange for a partial refund of the legal fee?

Opinion #1:

It depends.

Under Rule 1.5(a) of the Rules of Professional Conduct, a lawyer may not charge or collect an excessive fee. If, at the conclusion of the representation, Lawyer knows or should know that a portion of the fee collected was unearned, Lawyer must refund the unearned portion. Upon termination of representation, a lawyer shall surrender property to which the client is entitled and refund any advance payment of fee or expense that has not been earned or incurred. Rule 1.16(d). In such circumstances, Lawyer may not obtain a collateral benefit and condition the refund on Clients’ agreement to release all liability claims arising from the representation.

However, if after reviewing the circumstances Lawyer reasonably believes that competent and diligent representation was provided but the Clients are dissatisfied, the fee is properly considered disputed. In that situation, and subject to the requirements of Rule 1.8(h), Lawyer may offer a partial refund in exchange for Clients’ execution of a release of all liability claims arising from the representation.

Rule 1.8(h)(2) provides that “a lawyer shall not settle a claim or potential claim for such liability with an unrepresented client or former client unless that person is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel in connection therewith.” Accordingly, before negotiating a release of potential claims, Lawyer must:

1. Advise Clients in writing of the desirability of seeking independent counsel; and

2. Provide Clients a reasonable opportunity to consult such counsel.

Provided that these requirements are satisfied, Lawyer may include in a settlement agreement resolving the fee dispute filed with the State Bar a release of all claims related to the representation. Notwithstanding the foregoing, the release may not include language that prohibits Clients from filing a grievance with the State Bar. See RPC 84.

Finally, the facilitators of the State Bar Fee Dispute Resolution Program have no authority to determine when a fee has been earned. When there is a legitimate dispute over whether the fee was earned, the fee dispute process will conclude in an impasse. Lawyer and Clients may, however, negotiate settlement terms—including any release—outside of the State Bar fee dispute process.

Inquiry #2:

Same facts as Inquiry #1. As a condition for resolving a fee dispute, may Lawyer obtain a collateral benefit—such as including a non-disparagement clause in a settlement agreement —in exchange for a partial refund of the legal fee?

Opinion #2:

It depends. If it is clear that Lawyer owes a refund, she may not condition the settlement of the fee dispute with a requirement that Clients sign the release containing a non-disparagement clause. If the fee is truly in dispute, Lawyer may negotiate a settlement that results in the lawyer receiving the collateral benefit of a narrowly tailored non-disparagement clause. See Opinion #1.

A broadly worded non-disparagement clause—particularly one that bars a client from making any negative public comment—could impermissibly restrict the client’s rights, including the ability to file a grievance with the North Carolina State Bar or to provide truthful public commentary about their legal experience. Such a clause can appear to coerce silence and deter clients from reporting legitimate concerns, which undermines the public interest in the regulation of the legal profession.

While it is understandable that Lawyer wishes to protect her professional reputation, that interest must be balanced against the client’s rights and the lawyer’s ethical obligations under the Rules of Professional Conduct. Any restrictions in a fee-dispute settlement agreement must therefore be narrowly tailored. A non-disparagement clause is permissible so long as it:

1. Does not interfere with the client’s ability to file a grievance with the North Carolina State Bar or any other regulatory authority, or to participate in the disciplinary process;

2. Is not coercively presented as a condition of resolving the fee dispute; and

3. Does not limit the client’s access to the Fee Dispute Resolution Program or other disciplinary procedures.

Lawyer and Clients may negotiate settlement terms—including a narrowly tailored non-disparagement clause—outside of the State Bar fee dispute process. See Opinion #1.

Inquiry #3:

Lawyer entered into a representation agreement with Client, reading in part:

You and the Firm agree and request that this retainer agreement will remain confidential, and the parties agree that all matters involving the representation or any communications between attorney and client are to remain confidential on both sides. It is agreed by client that he/she shall refrain from any type of internet postings or public internet communications of any kind including social media, review sites, etc., with regard to any aspect of this representation, and that any such postings may operate to waive confidentiality and expose certain amounts of client’s information to the public. Full confidentiality by both sides is hereby confirmed before, during, and after the representation and is a condition to employment being accepted by lawyer.

May Lawyer include this provision in the representation agreement?

Opinion #3:

No. The Consumer Review Fairness Act (CRFA) of 2016 generally applies to lawyers and law firms, as it prohibits businesses from using non-disparagement clauses in form contracts that restrict consumers’ ability to post honest reviews. Consumer Review Fairness Act of 2016, Pub. L. No. 114-258, 130 Stat. 1355, sec. 2(b)(1)(A) (2016). This means that if a law firm uses a standardized contract with a clause preventing clients from leaving negative reviews, that clause is likely void under the CRFA. Id.

Lawyers have a professional responsibility to review the law to determine if a non-disparagement clause can be included in the written fee agreement as a condition of employment of the lawyer. Lawyers must follow the law; failure to follow the above-referenced law in this scenario would be prejudicial to the administration of justice in violation of Rule 8.4(d). If the law prohibits the use of language in a fee agreement to prevent clients from posting comments about the lawyer and her services, the lawyer cannot include a non-disparagement clause in the written fee agreement.

Inquiry #4:

May Lawyer condition her representation of Client upon Client’s execution of a representation agreement containing this provision?

Opinion #4:

No. See Opinion #3.

Inquiry #5:

Same facts as Inquiry #3. May Lawyer enforce the provision described in Inquiry #3 against Client by civil action for damages, termination of services, claim of offset for unearned fees, or other remedy available at law or in equity?

Opinion #5:

No. See Opinion #3.