Can a lawyer put a clause in a contingency fee agreement requiring the lawyer's consent before the client settles the case?

Plain-English summary

A lawyer asked whether he could insert language in his contingency-fee employment agreements providing that no settlement of the claim would be made without the consent of both the client and the lawyer, which would let the lawyer refuse a settlement amount the client was willing to accept and try the case instead if the lawyer thought the offer was below the claim's settlement value. The lawyer recognized that the language would have the client waive his exclusive right to settle, and asked whether it would violate Canon VII and Rule 7.1.

The opinion concluded that the clause would be improper. Rule 7.1(c)(1) provides that a lawyer shall abide by a client's decision whether to accept an offer of settlement of a matter, so a lawyer cannot divest a client of his exclusive authority to settle his case.

The opinion added that there was no ethical impropriety in including the separate sentence confirming that the client had read and understood the contract, agreed to it, and signed it of his own free will.

Currency note

This opinion was issued in 1993, before the North Carolina State Bar's adoption of the 2003 revisions to the Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer require the client to get the lawyer's consent before settling?

A: No. The opinion held that under Rule 7.1(c)(1) the lawyer must abide by the client's decision whether to accept a settlement offer, so a clause giving the lawyer a veto over settlement improperly divests the client of his exclusive authority to settle.

Q: Who decides whether to accept a settlement offer?

A: The client. The opinion held the authority to settle is the client's exclusively, and the lawyer cannot contract that authority away.

Q: Is a clause confirming the client read and understood the agreement permissible?

A: Yes. The opinion found no ethical impropriety in a sentence stating that the client read and understood the contract, agreed, and signed it of his own free will.

Background and rules framework

The opinion applied North Carolina Rule 7.1(c)(1), which required a lawyer to abide by the client's decision whether to accept a settlement offer (corresponding to Model Rule 1.2(a)'s allocation of settlement authority to the client). The inquiry also referenced the former Canon VII framework.

Citations and references

Rules of Professional Conduct:

• MR 1.2 (allocation of authority; client decides whether to settle)
• North Carolina Rule 7.1(c)(1) (lawyer shall abide by the client's decision to accept settlement)

See also

• NC Ethics Op. RPC 155: contingent fees in child support cases
• NC Ethics Op. RPC 159: settlement conditioned on not reporting to a licensing board

Source

• Landing page: https://www.ncbar.gov/for-lawyers/ethics-and-governing-rules/ethics-opinions/opinions/rpc-145/

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Inquiry:

I write to request an opinion from the North Carolina State Bar regarding the following language which I contemplate inserting in my employment agreements for contingency fee cases:

No settlement of my claim shall be made without the consent of both me and my attorney.

I have read this contract and understand it, agree, and sign it of my own free will.

Clearly, through this language, the client contracts to waive his exclusive right to settle the case. Would this allow me to refuse to settle the case for a given amount, and, if need be, try the case if I thought an offer the client was willing to accept was less than the settlement value of the case; or would the use of this language violate Canon VII and Rule 7.1 of the Rules of Professional Conduct? What language, if any, do you suggest I insert in an employment agreement that would assist me in resolving a situation where the client and I disagree on the value of a settlement offer?

Opinion:

Rule 7.1(c)(l) provides that a lawyer shall abide by a client's decision whether to accept an offer of settlement of a matter. Therefore, a lawyer cannot divest a client of his exclusive authority to settle his case.

There is no ethical impropriety in having the sentence, "I have read this contract and understand it, agree, and sign it of my own feel will," in the retainer agreement.