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Civil Procedure — settlement

By: WISCONSIN LAW JOURNAL STAFF//October 16, 2012//

Civil Procedure — settlement

By: WISCONSIN LAW JOURNAL STAFF//October 16, 2012//

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Wisconsin Court of Appeals

Civil

Civil Procedure — settlement

Where the parties settled a case without participation of their attorneys, and the claim including a fee-shifting provision, the settlement is void.

“The law in Wisconsin and elsewhere is clear: Although, generally, nothing forbids a party from settling with a represented party without the presence or consent of the represented party’s lawyer, such settlements, like all contracts, are scrutinized in light of public-policy interests. The public-policy considerations here are obvious; as we have seen, the legislature created fee-shifting statutes to help persons who might not otherwise get legal redress. To permit one side to go behind the backs of the other side’s lawyers in order to get a settlement that removed the fee-shifting incentives that prompted the lawyers to take the case, would nullify the legislative fee-shifting scheme.”

“It is true, of course, that the client retains the right to settle or not settle, on terms that he or she deems appropriate. SCR 20:1.2 (‘A lawyer shall abide by a client’s decision whether to settle a matter.’). But to sustain the settlement here, where, as we have seen, Betz assigned to Megna Betz’s rights to collect attorneys fees, violates the public-policy considerations inherent in the legislature’s creation of the fee-shifting statutes. Just as, for example, Diamond Jim’s could not have eliminated or limited by one of its sales contracts a customer’s recourse to a fee-shifting statute, see Cook, 2008 WI App 155, ¶¶84–85, 89, 314 Wis. 2d at 473–475, 477, 761 N.W.2d at 668–669, 670; Wisconsin Central Farms, 2006 WI App 199, ¶¶24–25, 296 Wis. 2d at 798–799, 724 N.W.2d at 373–374, it may not circumvent a fee-shifting statute by negotiating a settlement with a represented party without the presence or consent of that party’s lawyer. The settlement agreement here is void. See Bussian, 56 Wis. at 335, 14 N.W. at 456.”

Reversed and Remanded.

Recommended for publication in the official reports.

2012AP183 Betz v. Diamond Jim’s Auto Sales

Dist. I, Milwaukee County, White, J., Fine, J.

Attorneys: For Appellant: Megna, Vincent P., Milwaukee; Grzeskowiak, Susan M., Milwaukee; For Respondent: Drabot, Lawrence J., Milwaukee

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