Here’s a risk management tip for litigators: before advising your client to accept a pretrial settlement offer, make it clear whether attorney fees are part of the deal or not.
Otherwise, you might get sued for malpractice if your client is later ordered to pay the other side’s fees.
It happened in Westchester County, New York, where a jury awarded $397,000 to a municipality that alleged its counsel gave bad advice in a civil rights lawsuit.
The case began in 2004, when three people brought a federal lawsuit against White Plains for false arrest and malicious prosecution. The city offered a settlement of $10,000 for each plaintiff, which was accepted. And that, it would seem, was the end of that.
After the settlement, a U.S. District Judge awarded the plaintiffs nearly $291,000 in attorney fees. This came as a surprise to the city, which thought the $30,000 payment had fully resolved the matter. It alleged its attorney “made a crucial mistake by failing to state that the award was intended to cover all costs, including attorney fees.”
The city appealed. In 2012, the fee award was upheld – and an additional $106,000 in counsel fees was tacked on.
Two years later, White Plains sued its former lawyer and his firm for malpractice. The presiding judge granted the city’s motion for partial summary judgment, finding the defendants negligent for departing from the “good and accepted practice of law.”
Subsequently, the “case within the case” was tried before a jury, which found that the city would have won the underlying civil rights case but for its lawyer’s negligence. It awarded the city $397,000 – the total of fees and costs it had previously been ordered to pay.
Rule of Professional Conduct 1.4: Communication
Rule 1.4 spells out a lawyer’s obligation communicate with the client:
“(a) A lawyer shall: (1) promptly inform the client of any decision or circumstance with respect to which the client’s informed consent, as defined in Rule 1.0(f), is required by these rules; (2) reasonably consult with the client about the means by which the client’s objectives are to be accomplished; (3) keep the client reasonably informed about the status of the matter;
(b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.
Comment 5 to Rule 1.4 says: “[W]hen there is time to explain a proposal made in a negotiation, the lawyer should review all important provisions with the client before proceeding to an agreement. In litigation a lawyer should explain the general strategy and prospects of success and ordinarily should consult the client on tactics that are likely to result in significant expense or to injure or coerce others. On the other hand, a lawyer ordinarily will not be expected to describe trial or negotiation strategy in detail. The guiding principle is that the lawyer should fulfill reasonable client expectations for information consistent with the duty to act in the client's best interests, and the client's overall requirements as to the character of representation.”
How do you make sure your client is fully informed about “every important provision” in a settlement agreement? What steps do you take to protect yourself?
· Bluestone Law Blog http://blog.bluestonelawfirm.com/2017/02/uncategorized/a-legal-malpractice-verdict/ · New York Law Journal http://www.newyorklawjournal.com/id=1202779166548/Jury-Awards-397K-Legal-Mal-Verdict-to-City-Over-Advice-in-Civil-Rights-Case?mcode=1202615069279&curindex=1&slreturn=20170706214858
· NC State Bar https://www.ncbar.gov/for-lawyers/ethics/rules-of-professional-conduct/rule-14-communication/