May a Colorado lawyer draft a majority-rule settlement agreement for jointly represented clients and later enforce it against a dissenting client?

Plain-English summary

Opinion 134 distinguishes drafting an advance agreement from participating in a particular aggregate settlement. The Committee concludes that Rule 1.8(g) does not apply while the lawyer is only preparing an agreement that sets a non-unanimous decision procedure for future settlement proposals. Rule 1.7 does apply, however, because the lawyer jointly represents clients whose willingness to settle, valuation of claims, and preferred allocation may diverge. The lawyer must identify whether those conflicts are consentable, explain the material risks and alternatives, and obtain each client's informed consent confirmed in writing.

The rule changes when an actual settlement proposal arrives. Rule 1.8(g) then bars the lawyer from participating in an aggregate settlement unless every client gives informed consent in a signed writing, and Rule 1.2(a) requires the lawyer to abide by each client's settlement decision. If a client refuses to follow the majority, the lawyer may not accept the settlement for that client, compel the client to settle, or represent the majority in enforcing the agreement against the dissenter.

The dissent may create a breach-of-contract claim between the clients, but the joint lawyer cannot take sides in that dispute and may need to withdraw from representing everyone. Before drafting the agreement, the lawyer must explain that outcome and other risks, including unequal claim strength or settlement allocations, the effect withdrawal could have on the litigation, possible enforcement claims among the clients, and uncertainty about whether a court would enforce the agreement.

In practice

Under Opinion 134, an advance majority-rule provision is not itself the clients' consent to a later aggregate settlement. The drafting stage is governed by Rule 1.7 and informed consent. A specific settlement triggers Rules 1.2(a) and 1.8(g), which preserve each client's authority to accept or reject and prevent the joint lawyer from enforcing the majority's decision against a dissenting client.

Common questions

Q: May the lawyer draft the majority-rule agreement before any settlement offer exists?

A: Yes. The Committee concludes that drafting the agreement is not participating in making an aggregate settlement under Rule 1.8(g), but the lawyer must comply with Rule 1.7 and obtain informed consent to the joint representation and its risks.

Q: Does the advance agreement let the lawyer accept a later settlement over one client's objection?

A: No. Rule 1.8(g) requires each client to consent to the specific aggregate settlement in a signed writing, and Rule 1.2(a) requires the lawyer to abide by each client's settlement decision.

Q: Can the lawyer represent the majority clients in enforcing the agreement against the dissenter?

A: No. The opinion concludes that doing so would place the lawyer on one side of a dispute among current joint clients and create an unwaivable conflict under Rule 1.7(b)(3).

Q: What must the lawyer disclose before preparing the agreement?

A: The opinion requires disclosure of the ways clients' interests may diverge, the need for unanimous consent to a particular aggregate settlement, the possibility of withdrawal, possible claims between majority and minority clients, effects on the litigation, and uncertainty about enforceability.

Background and rules framework

The opinion interprets Colorado RPC 1.7 on joint-representation conflicts and informed consent, Rule 1.2(a) on client authority over settlement, and Rule 1.8(g) on aggregate settlements. It applies the multiple-representation framework from CBA Formal Opinion 68 and distinguishes an advance governance agreement from consent to a specific settlement proposal.

Citations and references

Rules of Professional Conduct:

• Colo. RPC 1.0(e) (informed consent)
• Colo. RPC 1.2(a) (client authority over settlement)
• Colo. RPC 1.7(b) (consentable and nonconsentable concurrent conflicts)
• Colo. RPC 1.8(g) (aggregate settlements and signed informed consent)

Cases:

• Hayes v. Eagle-Picher Industries, Inc., 513 F.2d 892 (10th Cir. 1975), majority-rule settlement agreement and client consent
• Abbott v. Kidder Peabody & Co., 42 F. Supp. 2d 1046 (D. Colo. 1999), aggregate settlement authority
• Nichols v. Orr, 63 Colo. 333, 166 P. 561 (1917), agreement depriving a litigant of control over the case
• Jones v. Feiger, Collison & Killmer, 903 P.2d 27 (Colo. App. 1994), settlement-control provisions and public policy

Other opinions cited:

• ABA Formal Opinion 06-438: aggregate settlements and client disclosures
• CBA Formal Opinion 68: conflicts in multiple representation
• New York City Formal Opinion 2009-06: aggregate settlements

See also

• ABA Formal Op. 06-438: Aggregate Settlements
• NYC Bar Formal Op. 2009-06: Aggregate Settlements
• CBA Formal Op. 68: Multiple Representation Conflicts
• CBA Formal Op. 135: Joint Representation

Source

• Landing page: https://www.cobar.org/ethicsopinions
• Original PDF: Colorado Formal Ethics Opinion 134