Opinion 1987

The inquiring lawyer writes that his firm has a plaintiffs’ personal injury practice. He states that his firm generally opposes the use of confidentiality provisions in settlement agreements and would like to limit their use when possible:

“[W]e are considering placing the following paragraph in our retainer agreements. This would be discussed with the clients at the beginning of our legal relationship. Our intent is not that there could never be a confidentiality clause in a settlement, but that we would go into the relationship with our client with an understanding that absent some compelling circumstances for the benefit of the client, we would not agree to a confidentiality provision. In other words, if it were in the interests of the plaintiffs, we would not oppose the concept, but if it is simply a condition of settlement by the tortfeasor, we would have an ongoing policy to oppose such a provision.

“The following is the language that we have drafted for potential insertion into our fee agreement:

“The law firm… supports the legal concept that in addition to assisting clients in this case, a goal of the case will be to advance the law and benefit society in general and other injured persons specifically by helping to deter negligent conduct by wrong-doers. In order to meet that goal, settlements that may be reached in this case should not be made secret or confidential. Client agrees that client will not agree to a confidentiality agreement proposed by any defendant as a condition of settlement of the client’s case unless client firmly believes that such confidentiality is for the benefit of client. Client agrees that attorneys may refuse to agree to any confidentiality agreement proposed by any defendant in this case.”

The Rules of Professional Conduct Committee believes that this inquiry raises issues under RPC 1.2(a), RPC 1.2(c), RPC 1.7(b) and RPC 1.15(b). These provisions, for reference, provide, in pertinent part:

RPC 1.2(a):
A lawyer shall abide by a client’s decisions concerning the objectives of representation, subject to sections (c) [set out below], (d) [not relevant to this inquiry] and (e) [again, not relevant to this inquiry], and shall consult with the client as to the means by which they are to be pursued. A lawyer shall abide by a client’s decision whether to accept an offer of settlement of a matter. * * *

RPC 1.2(c):
A lawyer may limit the objectives of the representation if the client consents after consultation.

RPC 1.7(b):
A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer’s responsibility to another client or to a third person, or by the lawyer’s own interests, unless:

(1) The lawyer reasonably believes the representation will not be adversely affected; and

(2) The client consents in writing after consultation and a full disclosure of the material facts (following authorization from the other client to make such a disclosure). * * *” (see footnote 1)

RPC 1.15(b):
Except as stated in section (c) [which requires a lawyer to remain in a case if directed by a court], a lawyer may withdraw from representing a client if withdrawal can be accomplished without material adverse effect on the interests of the client * * *.

RPC 1.2(c) allows a lawyer to limit the scope of a representation provided that the client consents. Similarly, RPC 1.7(b) allows a lawyer to undertake a representation where the interests of the client and the lawyer may conflict as long as the lawyer reasonably believes that the representation will not be adversely affected and the client consents in writing “after consultation and a full disclosure of the material facts.”

At the same time, RPC 1.2(a) requires a lawyer to abide by a client’s decision on settlement. If the lawyer disagrees with that decision, RPC 1.15(b) would only allow the lawyer to withdraw “without material adverse effect on the interests of the client” and, in the litigation setting contemplated here, the court involved permitted the withdrawal.

Here, the retainer provision contains no discussion of the potential adverse consequences to the client of the proposed limitation on the representation and the nature of the conflict between the interests of the client and those of the law firm. Although the law firm apparently contemplates some oral discussions with the clients concerned, it does not indicate that those disclosures will go beyond the face of the retainer provision. As such, the retainer provision violates RPC 1.2(c) and RPC 1.7(b) due to the inadequacy of the disclosure. (see footnote 2)

Further, even if RPC 1.2(c) and RPC 1.7(b) were satisfied, RPC 1.2(a) still requires that a lawyer abide by a client’s decision regarding settlement. If a lawyer disagreed with that decision, RPC 1.15(b) would only allow the lawyer to withdraw if the withdrawal could be accomplished without material adverse impact on the client and, in the litigation setting involved here, with the approval of the court involved. The obligations under RPC 1.2(a) and RPC 1.15(b) are not subject to waiver under the circumstances presented here.

Footnote 1: The “Terminology” section of the RPCs defines “consultation” as follows: “‘Consult’ or ‘Consultation’ denotes communication of information reasonably sufficient to permit the client to appreciate the significance of the matter in question.”
Footnote 2: As the inquiry notes, it would likely be necessary to revisit the issue of disclosure and consent later in any given case depending on the facts. Because we are not presented with those facts, our analysis is limited here to the adequacy of disclosure at the outset of the representation.