Wednesday, April 25, 2012

What should the judge do when an attorney claims he settled a case without consent from the client?

Should a lawyer be allowed to change his mind about a settlement agreement after realizing that the jury would have given his client more money than he agreed to settle the case for?  My guess is that your quick answer would be something along the lines of  "No. A deal is a deal and if you make a bad deal you have to live with the consequences."

OK, but what if the lawyer argues that he settled the case without authorization from this client (thus, by the way, admitting to unethical conduct)?  Hmm. Well, in that case, you'd think that the client should not suffer the negative consequences of the lawyer's unethical conduct.  But, even then, can't you argue that the deal is valid and that the client's claim has to be against his own lawyer for breach of fiduciary duty? 

These questions were presented to a judge in California based on the following facts (as reported in The Recorder).

The plaintiff in the case was to be transported from a Los Angeles hospital to a psychiatric facility in San Diego.  Once loaded into the ambulance, the EMTs buckled him onto a gurney but allowed his left arm to remain free because, they said, he was not being combative.  After a few minutes, the plaintiff had taken off the restraints and jumped out of the moving vehicle onto the freeway.  He filed a claim alleging ”severe, permanent brain injury” and seeking $21 million in damages.  After a full trial, the jury came back with a verdict after four hours of deliberations.

Apparently, the lawyer for the plaintiff thought a four hour deliberation meant that the jury would return a verdict for the defense and he requested a recess to suggest a last-minute settlement negotiation with defense counsel.  The parties conferred in the hallway, with their clients present, and agreed to settle for $350,000.  The parties returned to the courtroom and after they announced they’d reached a settlement, the judge dismissed the jury.

At that point, instead of entering the terms of the settlement into the record, the plaintiff's attorney went to poll some of the dismissed jurors.  The terms of the settlement were not officially entered into the record by the defendant's counsel either.

When plaintiff's lawyer learned that the jury’s verdict would have favored the plaintiff with a damages award of $9 million, he went back into the courtroom and argued that he had made a mistake and that he did not have his client's consent to agree to the settlement.

Some have argued that the claim is ridiculous because the client was present during the settlement negotiation.  I don't necessarily agree with this.  The fact that the client is present, in and of itself, does not mean the client agreed to what the lawyer did.  But the argument does raise a number of questions.  If it is true that this particular client had diminished capacity and had brain damage the attorney may very well have acted without authority. If the client had diminished capacity why didn't he have a guardian or a representative helping make decisions?  On the other hand, if the client had enough capacity to make decisions up to the point of settlement, how come the lawyer now claims he didn't?   Either way, the lawyer seems to have acted improperly.

In a post trial motion, the attorney for the defendant argued that "If plaintiff is allowed to get away with such gamesmanship in this case there is nothing to prevent any plaintiff's counsel from testing the waters with one jury, settling the case without authority from the client, interviewing the jurors to see which way they actually were leaning, and then repudiating the settlement and seeking a retrial."

After listening to arguments, the judge decided to order a new trial.  The lawyer either acted unethically or falsely admitted to unethical conduct in order to get out of a settlement he had agreed to (which is unethical itself because it is dishonest), and may have committed malpractice, but the judge has given him a second chance.

What do you think of the judge's decision?