When a lawyer represents multiple clients and settles their claims together, what does each client have to be told and agree to?

Plain-English summary

Opinion 386 (published November 2023) addresses aggregate settlements: how a lawyer who represents two or more clients in civil litigation may settle their claims together. The governing rule is Rule 1.8(f), which bars a lawyer from participating in an aggregate settlement of multiple clients' claims unless each client gives informed consent in a writing signed by the client after consultation, including disclosure of the existence and nature of all the claims and of each person's participation in the settlement. The Committee notes the D.C. Rules do not define "aggregate settlement," and it draws on ABA Formal Opinion 06-438 and the ALI Principles of Aggregate Litigation, which describe such settlements as the interdependent resolution of two or more claimants' claims.

The opinion stresses that, at the outset of a joint representation, the lawyer must address conflicts under Rule 1.7, owes equal duties of loyalty and confidentiality to each client, and must explain the settlement-related risks of common representation, including that the attorney-client privilege generally does not attach between commonly represented clients if they later litigate against each other. Because the lawyer must share relevant settlement information among the joint clients, the opinion concludes the lawyer should obtain the clients' informed consent at the outset to share confidential information within the group.

On entering the settlement, the opinion concludes the lawyer must disclose all material terms before any client consents, including the total settlement, all claims and defenses, every other client's participation (contribution or receipt), the lawyer's total fees and costs paid from the settlement, and the method of apportioning costs. It concludes that a lawyer ordinarily cannot rely on an advance waiver of a client's right to object, that "majority rules" arrangements and committee-decides arrangements are impermissible because each client's decision to accept or reject a settlement is absolute under Rule 1.2(a), and that where some clients accept and others reject, the lawyer must work through Rules 1.6, 1.7, 1.8, 1.9, and 1.16 to decide whether continued representation is possible. It notes that, with the clients' written consent, a lawyer may sometimes describe the nature of each claim without disclosing each client's identity where privacy is a concern.

In practice

Under this opinion, a D.C. lawyer settling for multiple clients at once must get each client's informed consent in a signed writing under Rule 1.8(f), and the disclosure must be specific: the total settlement, all the claims and defenses, what each other client will receive or pay, the lawyer's fees and costs from the settlement, and how costs are apportioned. The opinion concludes those disclosures must be tied to a concrete offer or demand, so a client cannot validly waive the right to object in advance.

The opinion concludes that the decision to accept or reject a settlement belongs to each individual client under Rule 1.2(a), so "majority rules" or committee-decides structures are impermissible. It concludes that the lawyer should set the clients' expectations about confidentiality-sharing and privilege at the outset of the joint representation, and that if clients split over a settlement the lawyer must analyze Rules 1.6, 1.7, 1.8, 1.9, and 1.16 to determine whether the lawyer may keep representing some or all of them.

Common questions

Q: Can I settle several clients' cases in one deal without telling each of them what the others get?

A: No. The opinion concludes Rule 1.8(f) requires the lawyer to disclose to each client all the material terms, including what every other client will receive or pay and the lawyer's fees from the settlement, and to obtain each client's informed consent in a signed writing.

Q: Can my clients agree up front to be bound by whatever the majority decides?

A: No. The opinion concludes that advance "majority rules" waivers and committee-decides arrangements are impermissible, because under Rule 1.2(a) each client's right to accept or reject a settlement is absolute and cannot be exercised until the actual terms are known and disclosed.

Q: When can I obtain the clients' informed consent?

A: The opinion concludes consent ordinarily cannot be obtained until the settlement terms are known and fully disclosed, which usually is not possible until a specific offer or demand has been made; an earlier consent does not satisfy Rule 1.8(f).

Q: What if some clients accept the settlement and others reject it?

A: The opinion concludes the lawyer may or may not be able to continue representing any of them, and must review Rules 1.6, 1.7, 1.8, 1.9, and 1.16, including whether continued representation of some clients would be adversely affected by duties to the others, and whether further informed consent is needed.

Q: Can I protect clients' privacy in a large settlement?

A: The opinion concludes that, with the clients' written consent, a lawyer may sometimes disclose the nature of each individual's claim without disclosing each client's identity, since Rule 1.8(f) requires disclosing the existence and nature of the claims and each person's participation, not necessarily personal identifying details.

Background and rules framework

The opinion centers on Rule 1.8(f) (the D.C. counterpart to ABA Model Rule 1.8(g)), which conditions any aggregate settlement of multiple clients' claims on each client's signed, informed, written consent after disclosure of all the claims and each person's participation. It reads that rule together with Rule 1.7 (conflicts in common representation), Rule 1.6 (confidentiality and information-sharing among joint clients), Rule 1.2(a) (the client's authority over settlement), Rule 1.4(c) (communicating settlement offers), and Rules 1.9 and 1.16 (former-client duties and withdrawal when clients split).

Citations and references

Rules of Professional Conduct:

• D.C. RPC 1.8(f) / Model Rule 1.8(g) (aggregate settlements; written informed consent)
• D.C. RPC 1.7 / Model Rule 1.7 (conflicts in common representation)
• D.C. RPC 1.2(a) / Model Rule 1.2 (client's authority to accept or reject settlement)
• D.C. RPC 1.4(c) / Model Rule 1.4 (communicating settlement offers)
• D.C. RPC 1.6 / Model Rule 1.6 (confidentiality; sharing among joint clients)
• D.C. RPC 1.9, 1.16 / Model Rules 1.9, 1.16 (former clients; withdrawal)

Cases:

• In re Kennedy, 281 A.3d 36 (D.C. 2022), lawyer who kept 67% of settlement funds without disclosure violated Rule 1.8(f)
• In re Hoffman, 883 So. 2d 425 (La. 2004), informed consent cannot be obtained by advance agreement to a future settlement
• Tax Authority, Inc. v. Jackson Hewitt, Inc., 898 A.2d 512 (N.J. 2006), advance "majority rules" consent is forbidden
• Florida Bar v. Kane, 202 So. 3d 11 (Fla. 2016), disbarment where lawyers controlled disbursement of an aggregate settlement
• In re Gatti, 333 P.3d 994 (Or. 2014), no written informed consent to the division formula violated the rule

Other opinions cited:

• ABA Formal Op. 06-438 (2006): aggregate settlements and the minimum required disclosures
• D.C. Bar Ethics Ops. 289, 296 (2000), and 327 (2005): the client's right to decide settlement; joint-representation confidentiality

See also

• ABA Formal Op. 06-438: Aggregate Settlements
• ABA Formal Op. 05-436: Informed Consent to Future Conflicts
• Alabama Ethics Op. 1982-591: Representing Co-Plaintiffs in Civil Litigation

Source

• Landing page: https://www.dcbar.org/for-lawyers/legal-ethics/ethics-opinions-210-present/ethics-opinion-386