Inside Track: Ethical Dilemmas: Is It Ethical for Me, as a Condition of Settlement, to Agree to Personally Indemnify Opposing Party and Counsel from Any Claims by Third Persons?:

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  • Inside Track
    September
    18
    2013

    Ethical Dilemmas: Is It Ethical for Me, as a Condition of Settlement, to Agree to Personally Indemnify Opposing Party and Counsel from Any Claims by Third Persons?


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    Sept. 18, 2013 – Ethical dilemmas affect every lawyer’s practice. This series of questions and answers appears regularly in InsideTrack. The answers, offered by the State Bar’s ethics counsel Timothy Pierce and assistant ethics counsel Aviva Kaiser, provide guidance only and are not legal authority. Each situation will depend on the facts and circumstances involved.

    Question

    I represent plaintiffs in personal injury cases. Recently, I have been asked, as a condition of settlement, to personally indemnify the opposing party and counsel from any and all claims by third persons, such as hospitals, health care providers, Medicare and Medicaid, and worker’s compensation insurers. Is it ethical for me to enter into such an agreement? Is it ethical for opposing counsel to propose or demand that I enter into such agreement?

    Answer

    No, it is not ethical for a lawyer to enter into such an agreement, and it is not ethical for opposing counsel to propose or demand that a lawyer enter into such an agreement. A plaintiff’s or claimant’s lawyer may not agree, as a condition of settlement, to personally indemnify the opposing party and counsel from any and all claims by third persons to the settlement proceeds. Such an indemnification agreement constitutes improper financial assistance to the client in violation of SCR 20:1.8(e). Such an agreement would obligate the lawyer to pay the client’s debts, which are the subject of, and therefore connected to, the pending litigation. Moreover, the exceptions to SCR 20:1.8(e) do not apply: the client’s debts are neither court costs nor expenses of litigation.

    Just as a plaintiff’s or claimant’s lawyer may not agree, as a condition of settlement, to personally indemnify the opposing party and counsel from any and all claims by third persons to the settlement proceeds, a lawyer may not propose or demand that other lawyers enter into such an indemnification agreement. It is an ethical violation under SCR 20:8.4(a) for a lawyer to “knowingly assist or induce another” to violate the Rules of Professional Conduct.

    References: State Bar of Wisconsin Formal Ethics Opinion E-87-11; Utah State Bar Ethics Advisory Opinion 11-01; Virginia Legal Ethics Opinion 1858 (2011); Ohio Supreme Court Ethics Opinion 2011-1; Florida Bar Staff Opinion 30310 (2011); Alabama Ethics Opinion RO 2011-01; Maine Ethics Opinion 204 (2011).