Professional Responsibility in Multi-Plaintiff Settlements
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1 Presented By: Jon W. Green, Esq Researched & Drafted By: Dylan C. Dindial, Esq. Green Savits, LLC Professional Responsibility in Multi-Plaintiff Settlements April 18, 2015
2 Relevant ABA Model Rules ABA Model Rule 1.7: General Conflict of Interest Rule ABA Model Rule 1.2(a): Client has final say to settle ABA Model Rule 1.4(a): Keep client informed ABA Model Rule 1.8(g): Aggregate Settlement Rule
3 ABA Model Rule 1.7: Conflict of Interest (a) Except as provided in paragraph (b), a lawyer shall not represent a client if the representation involves a concurrent conflict of interest. A concurrent conflict of interest exists if: 1) the representation of one client will be directly adverse to another client; or 2) there is a significant risk that the representation of one or more clients will be materially limited by the lawyer's responsibilities to another client, a former client or a third person or by a personal interest of the lawyer. (b) Notwithstanding the existence of a concurrent conflict of interest under paragraph (a), a lawyer may represent a client if: 1) the lawyer reasonably believes that the lawyer will be able to provide competent and diligent representation to each affected client; 2) the representation is not prohibited by law; 3) the representation does not involve the assertion of a claim by one client against another client represented by the lawyer in the same litigation or other proceeding before a tribunal; and 4) each affected client gives informed consent, confirmed in writing.
4 ABA Model Rule 1.2(a) Subject to paragraphs (c) and (d),... [a] lawyer shall abide by a client's decision whether to settle a matter.
5 ABA Model Rule 1.8(g) A lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of or against the clients, or in a criminal case an aggregated agreement as to guilty or nolo contendere pleas, unless each client gives informed consent, in a writing signed by the client. The lawyer's disclosure shall include the existence and nature of all the claims or pleas involved and of the participation of each person in the settlement.
6 Characteristics of an Aggregate Settlement Conditionality All-or-nothing deal Allocation Lump sum settlement to settle entire group of claims, allocation determined by plaintiffs and their lawyer. All-or-nothing with Defendant right to walk away Subgroups with different conditions with differing conditions for right to walk away by subgroup Individual amounts negotiated for each Plaintiff within a capped total amount. Determining each Plaintiff s share by a formula or matrix Providing a fixed per capita amount for each Plaintiff. Setting up a claims mechanism to determine values
7 Informed Consent, generally Under ABA Model Rule 1.8(g), the lawyer must disclose the existence and nature of all the claims or please involved and of the participation of each person in the settlement. ABA Formal Opinion : Lawyer must disclose: (1) total amount of the aggregate settlement, (2) existence and nature of all claims involved in the settlement, (3) details of every other client s participation in the settlement, (4) total fees and costs to be paid to the lawyer, and (5) method by which the costs are to be apportioned among the clients.
8 Informed Consent, cont d Rule 1.8(g) also does not explicitly require allocation of particular sum to each client in order to satisfy the informed consent rule. See Scamardella v. Illiano, 126 Md.App. 76 (1999) (finding no violation of the Rule when [a] method for formulating the apportionment was agreed upon, and any resulting apportionment either would be disclosed or would be transparent ). But see, Tilzer v. Davis, Bethune & Jones, LLC, 288 Kan. 477 (2009) (because the settlement did not provide information re how much each participant would receive, it was impossible for the attorney to obtain informed consent under the Rule). Also see, G.H. v. Eli Lilly & Co., 412 S.W.3d 326 (Missouri 2013) (Rule was meant to protect clients from situations where an attorney fails to disclose information known to him or her ).
9 Advanced Consent & Majority Rules- A Big NO NO for all States! Advanced consent and agreements to follow the majority or a committee decision regarding settlement do not comply with 1.8(g) and other RPC discussing informed consent and/or settlement. Hayes v. Eagle-Picher Industries, Inc., 513 F.2d 892 (10 th Cir.1975) ( an agreement that authorized settlement of a case contrary to the wishes of a client and without his approving the terms of the settlement is opposed to the basic fundamentals of the attorney-client relationship ) In re Hoffman, 883 So.2d 425 (La. 2004) ( The requirement of informed consent cannot be avoided by obtaining client consent in advance to a future decision by the attorney or by a majority of the clients about the merits of an aggregate settlement. ) The Tax Auth., Inc. v. Jackson Hewitt, 898 A.2d 512 (N.J. 2006) ( RPC 1.8(g) forbids an attorney from obtaining consent in advance from multiple clients that each will abide by a majority decision in respect of an aggregate settlement.
10 Choice of Law: Rule 8.5b Choice of Law. In any exercise of the disciplinary authority of this jurisdiction, the rules of professional conduct to be applied shall be as follows: 1. for conduct in connection with a matter pending before a tribunal, the rules of the jurisdiction in which the tribunal sits, unless the rules of the tribunal provide otherwise; and 2. for any other conduct, the rules of the jurisdiction in which the lawyer s conduct occurred, or, if the predominant effect of the conduct is in a different jurisdiction, the rules of that jurisdiction shall be applied to the conduct. A lawyer shall not be subject to discipline if the lawyer s conduct conforms to the rules of a jurisdiction in which the lawyer reasonably believes the predominant effect of the lawyer s conduct will occur. Almost all states have adopted a rule identical or similar to the ABA Model Rule. Exceptions: Hawai i, Alabama & Texas (have committees studying the issue), Mississippi (recommendation to adopt pending in highest court).
11 Thank you for your time. Any questions?
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