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ON ETHICS: Don’t get pricked

Nate Cade is a solo attorney who previously served on and chaired the State Bar’s Ethics Committee and served on the ABA’s Standing Ethics Committee. You can contact him at nate@cade-law.com

Nate Cade is a solo attorney who previously served on and chaired the State Bar’s Ethics Committee and served on the ABA’s Standing Ethics Committee. You can contact him at nate@cade-law.com

One of the thorniest issues we deal with as attorneys is also one of the most critical: getting paid.

And when an already-difficult client is the one who has yet to pay, collecting gets even pricklier.

A friend, I’ll call him Matt, contacted me recently for advice on resolving a payment problem with a challenging client. Matt was trying to consummate a settlement deal, conclude the matter, avoid a perceived threat of a claim for malpractice and, of course, get paid.

Matt had negotiated a good settlement that the client had accepted. But rather than being happy with the typical contingency split, which the client already had agreed to in writing, the client intimated he wanted more than what he was entitled to receive under the agreement.

That same client also made it clear that he thought the settlement could have been higher if not for potential errors he believed had occurred during the course of a lengthy representation.

Matt, of course, wanted to be done with the client but did not want to acquiesce to any of his demands for more money and then subsequently get tagged with a malpractice lawsuit. Naturally, Matt wanted the client to accept the settlement proceeds but also waive the right to later sue Matt’s firm. So Matt wanted to know if I had an agreement that he could get the client to sign to waive the perceived threat of malpractice.

But there were way too many nuances and ethical problems that would arise from the proposed deal, so I had to advise against it.

Supreme Court Rule 1.8(h) provides, among other things, that, “A lawyer shall not … (2) 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.”

While the rules make it clear Matt could have the client sign an agreement to limit his right to make a potential claim for legal malpractice, there are certain requirements that Matt would need to meet. In particular, Matt would have to strongly suggest his client consult another lawyer about the agreement and give him time to find that lawyer.

And there’s one more hurdle: Matt also has a duty to keep the client reasonably informed (Rule 1.4). And if Matt thinks there is even an inkling of potential malpractice, Matt would have to outline the potential malpractice, probably in writing.

Obviously, that was not what Matt wanted to hear, especially at year-end when everyone is trying to get their books in order. But the fact remains that Matt’s better course was to pay the client what is owed and not overreach. Maybe the client never would file suit, and even he did, the client would have to prove far too much in a malpractice suit to recover, especially after the client agreed to the settlement.

Especially when dealing with a difficult client, it’s best not to overreach. Take what you can and get out.

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