DISCUSSING MEDIATION AND SETTLEMENT WITH CLIENTS
Ethical standards exist in California as to various phases of mediation, including the duty to appear (messages 7 and 11), to maintain confidentiality (messages 11 and 17), to avoid conflicts of interest where multiple clients exist (Rule of Professional Conduct 3-310) and to provide notice and obtain waivers when aggregate settlements are involved (message 4). Left uncovered are whether attorneys have an obligation to advise clients about mediation opportunities and the scope of a client’s authority needed by an attorney to settle a matter. The first area is still open to debate in California; on the other hand, it is surprising that there is no specific ethical rule concerning the scope of a client’s consent to settle his or her case. (Note that Rule of Professional Conduct 3-510 only obligates attorneys to promptly communicate to their clients the amounts, terms and conditions of written and not oral settlement offers.)
Notwithstanding this legal vacuum, the American Bar Association, Section of Litigation, Ethical Guidelines for Settlement Negotiations does provide some guidance on these two subjects. Regarding mediations, Guideline 3.1.1 states that “A lawyer should consider and should discuss with the client, promptly after retention in a dispute, and thereafter, possible alternatives to conventional litigation, including settlement.”
Guideline 3.2.1, regarding settlement terms, provides that “A lawyer can exercise broad and general authority from a client to pursue a settlement if the client grants such authority, but a lawyer must not enter into a final settlement agreement unless either (a) all of the agreement’s terms unquestionably fall within the scope of that authority, or (b) the client specifically consents to the agreement.” Compliance with either alternative (a) or (b) could be a problem if the client is not present at the mediation and the contemplated terms are numerous or complex. Accordingly, it is always preferable, besides being legally mandated by California Rule of Court 1634 and Los Angeles Superior Court Rule 12.15, that clients be physically present at mediations so that their awareness of the terms in and subsequent approval of settlements are unquestioned and unambiguous.
Copyright, Michael D. Marcus, January 2005