Lawyers should be careful and look out only for the client's interest.

I represented a client on a minor matter and I missed the statute of limitations. The value of the case is about $4,000 or $5,000. I brought the client in and reached an agreement to settle the case for the client for $3,500 with a release from liability. The client is happy. Did I do anything wrong?

Yes. The problem here is Rule 1.8(h) of the Rules of Professional Conduct and indirectly Rule 1.7, the generalized conflict of interest rule. Rule 1.8 is the specialized conflict of interest rule.  Rule of Professional Conduct 1.8(h) under Subsection 2 states as follows:

“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.”

Therefore, that rule prohibits a lawyer from settling with the client the legal malpractice claim if their client is unrepresented. The rule has a very good purpose and reason. There is a conflict between the lawyer and client. At this point, the lawyer has, unfortunately, caused the client to lose their cause of action. The lawyer is offering a sum of money to resolve it. That sum of money may be very reasonable or it may be very low. The client is really not in a position to evaluate the amount. Therefore, the client has to be given the right to seek independent counsel and the lawyer has to send a letter to that effect. The client then has to waive that right before the lawyer can engage in any settlement negotiations. A smart lawyer would make sure that if the client is going to waive the right, the client does it in writing and sets that forth in the letter. In the letter the lawyer sends, the lawyer is to fully explain the conflict so the client is fully aware of the conflict and the importance of seeking independent legal advice.

Although the lawyer in question may have the best intentions, the lawyer has a serious conflict and the client has the right to get good independent advice before reaching any settlement with the former lawyer. The lawyer did the right thing by telling the client immediately when the lawyer discovered that the statute of limitations was missed. If the lawyer had not told the client and the client later found out, that could have enhanced any disciplinary problems.

But, having told the client,  the lawyer has an obligation to take the second step of advising the client to seek independent advice. Comment 15 to Rule 1.8 discusses the rationale.

“Agreements settling a claim or potential claim for malpractice are not prohibited by this rule.  Nevertheless, in view of the danger that a lawyer will take unfair advantage of an unrepresented client or former client, the lawyer must first advise such person in writing of the appropriateness of independent representation in connection with such a settlement.  In addition, the lawyer must give a client or former client a reasonable opportunity to find and consult independent counsel.”

The question is would the settlement be enforceable if the lawyer did not advise to seek independent counsel? If the lawyer didn't so advise the client and they reached a settlement, could the client then later get new counsel and seek to overturn the settlement because of the violation of Rule 1.8(h)? It would appear that would be a reasonable argument to make, but there is no case law, to this writer's knowledge, on that point in Pennsylvania. There is some case law in some other jurisdictions where the courts would not enforce this kind of settlement because of the violation of the Rule of Professional Conduct.

This all comes down to whether law is a business or a profession. Since law is a profession then there are duties owed to clients and former clients. Finally, it is important for a lawyer to comply with Rule 1.8(h). Settling with a client, particularly if the settlement is low, could cause discipline. If a lawyer didn't tell the client, that could cause potentially more serious discipline.  If the lawyer settles the case without giving the client the opportunity to seek independent advice, that can also result in serious discipline. In Pennsylvania, each case is looked at individually. Lawyers should be careful and look out only for the client's interest. Never should a lawyer put his interest ahead of the client.

Explain all options to your client before they accept representation from another member of your firm.

I represented a client recently and ultimately had to withdraw for personal reasons. I referred the client to another member of my firm. Can that lawyer represent the client?

The question is an interesting one. If this question was asked back in 1999 or 2000, the answer would have been no, no partner could.  But, the Rules of Professional Conduct were amended around 2000 or 2001.

The issue of a personal conflict is found in Rule 1.7(a)(2). That rule defines a concurrent conflict of interest and finds there is a concurrent conflict of interest if “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.”

That is the so-called personal interest conflict. Personal interest could be a number of things. A lawyer might have a personal interest or relationship with the other side. The lawyer may have some formal involvement.

The rule involving imputation of conflict of interest is found at Rule 1.10 of the Rules of Professional Conduct. This rule sets forth when a conflict of one lawyer is imputed to all lawyers in the firm. This rule was amended and an exception was added somewhere around 2000 or 2001. Rule 1.10 starts out by noting lawyers and lawyers in a firm cannot represent a client if the lawyer was prohibited under Rule 1.7, the general conflict rule, or Rule 1.9. the conflict rule involving past clients. But, the 1.10 then states as follows:

“Unless the prohibition is based on a personal interest of the prohibited lawyer and does not present a significant risk, materially limiting the representation of the client by the remaining lawyers in the firm or unless permitted by Rules 1.10(b) or (c).”

Therefore, there is a personal exception to Rule 1.10  that allows other members of the firm to take over a case even though one of the lawyers in the firm couldn't continue the representation because of a conflict for personal reasons.

If one wants to look at personal interest, the comments to Rule 1.7 help to give examples of personal interest conflict. Comments to Rule 1.7 involving the personal interest conflict are Comment 10, Comment 11 and Comment 12. Examples are if the lawyers was discussing employment with the firm representing the opponent. Another example under these comments is a lawyer who is involved in the transaction and might be a witness. Another example is if a lawyer had related business interests that could affect the representation. A lawyer is related to another lawyer or opposing lawyer or in a very close relationship that could be personal interest. A lawyer who is having a sexual relationship with a client that could be a personal interest as discussed in Comments 10 through 12 of Rule 1.7.

Therefore, if the lawyer has to get out of representation of a client for personal reasons, under Rule 1.7(a)(2) of the Rules of Professional Conduct, that does not mean that the other lawyers in the lawyer's firm would be prevented from representing the client. Only if the other lawyers felt that their representation would also be limited by the personal reasons of the other lawyer would the representation be prohibited. Otherwise, other lawyers in the firm can be involved and the general imputation of conflict to all members of the firm would not apply for those personal interest types of conflicts. The client should be fully explained all options prior to accepting representation by other members of the conflicted lawyer's firm.

Chester County lawyer Samuel C. Stretton has practiced in the area of legal and judicial ethics for more than 35 years. He welcomes questions and comments from readers. If you have a question, call Stretton directly at 610-696-4243 or write to him at 301 S. High St. P.O. Box 3231, West Chester, Pa. 19381.