Sept. 20, 2017 – What happens when a critical provision is inadvertently left out of a proposed settlement agreement? The lawyer should tell the opposing lawyer – but must a lawyer get permission from the client before doing so?
I represent a client in a civil matter. We have worked out an agreement with the opposing party represented by a lawyer I know and respect.
Opposing counsel sent me a proposed settlement agreement that did not include a critical provision to which my client had agreed as part of the settlement. The omission of this provision works to the benefit of my client, and it is obvious that the omission is a mistake by opposing counsel. I would like to notify opposing counsel that the draft does not reflect the complete agreement of the parties because of the omission of the provision.
Have an Ethical Dilemma?
Ethical dilemmas affect every lawyer’s practice. This series of questions and answers appears each month in InsideTrack. The answers, offered by the State Bar’s ethics counsel Timothy Pierce and Aviva Kaiser, are intended to provide guidance only and are not legal authority. Each situation will depend on the facts and circumstances involved.
As a State Bar member, you have access to informal guidance in resolving questions regarding Wisconsin’s Rules of Professional Conduct for Attorneys. To informally discuss an ethics issue, contact Pierce or Kaiser. They can be reached at (608) 229-2017 or (800) 254-9154, Monday through Friday, 9 a.m. to 4 p.m.
Do I need the permission of my client to notify opposing counsel that the provision has been left out of the draft settlement agreement?
This is the situation that was considered in ABA Informal Opinion 86-1518, which considered the lawyer’s duty of communication to the client (SCR 20:1.4) and confidentiality (SCR 20:1.6) in such circumstances.
In reaching the conclusion that there was no need to consult with the client and the lawyer was free to correct the error, the opinion noted that agreement had already been reached between the parties, stating in footnote 1:
Assuming for purposes of discussion that the error is “information relating to [the] representation,” under Rule 1.6 disclosure would be “impliedly authorized in order to carry out the representation.” The Comment to Rule 1.6 points out that a lawyer has implied authority to make “a disclosure that facilitates a satisfactory conclusion” — in this case completing the commercial contract already agreed upon and left to the lawyers to memorialize. We do not here reach the issue of the lawyer's duty if the client wishes to exploit the error.
In concluding that the lawyer had no duty to communicate the fact of the omission to the client, the opinion states:
A's lawyer does not have a duty to advise A of the error pursuant to any obligation of communication under Rule 1.4 of the ABA Model Rules of Professional Conduct (1983). “The guiding principle is that the lawyer should fulfill reasonable client expectations for information consistent with the duty to act in the client's best interests and the client's overall requirements as to the character of representation.” Comment to Rule 1.4. In this circumstance there is no “informed decision,” in the language of Rule 1.4, that A needs to make; the decision on the contract has already been made by the client. Furthermore, the Comment to Rule 1.2 points out that the lawyer may decide the “technical” means to be employed to carry out the objective of the representation, without consultation with the client.
The client does not have a right to take unfair advantage of the error. The client's right pursuant to Rule 1.2 to expect committed and dedicated representation is not unlimited. Indeed, for A's lawyer to suggest that A has an opportunity to capitalize on the clerical error, unrecognized by B and B's lawyer, might raise a serious question of the violation of the duty of A's lawyer under Rule 1.2(d) not to counsel the client to engage in, or assist the client in, conduct the lawyer knows is fraudulent. In addition, Rule 4.1(b) admonishes the lawyer not knowingly to fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a fraudulent act by a client, and Rule 8.4(c) prohibits the lawyer from engaging in conduct involving dishonesty, fraud, deceit, or misrepresentation.
While limited to a circumstance in which the client had already agreed to the terms of the agreement, the opinion is noteworthy in taking the position that the lawyer is not obligated to consult with the client about the possibility of exploiting the mistake. It is also noteworthy as being one of the few opinions to consider exactly what information a lawyer is “impliedly authorized” to disclose under SCR 20:1.6(a).1
1 For a Wisconsin case addressing “impliedly authorized” disclosures see Disciplinary Proceedings against Duchemin, 2003 WI 19, 658 N.W.2d 81.
In Case You Missed It: Read Past Ethical Dilemmas
Ethical Dilemmas appears monthly in InsideTrack. Check out these topics from recent issues: