Did the U.S. Supreme Court's decision in Evans v. Jeff D. change Tennessee's ethics guidance on settlements that condition relief on a waiver of the plaintiff's attorney's fees?

Plain-English summary

This opinion restates Formal Ethics Opinion 85-F-96 nearly verbatim, addressing the ethical consequences of settlement negotiations that include provisions on attorney's fees, a subject the Board found arising more often with structured settlements, class actions, and the Civil Rights Attorney's Fee Awards Act of 1976, 42 U.S.C. § 1988. It again cites Opinion 84-F-77's recognition of a potential or actual conflict whenever a structured settlement is considered, and Opinion 80-F-1's holding that letting an opposing party participate in setting the attorney's fee conflicts with DR 5-107 and EC 5-22. It again discusses Jeff D. v. Evans, 743 F.2d 648 (9th Cir. 1984), where defendants conditioned virtually all of the relief plaintiffs sought on plaintiffs' counsel waiving fees, and the Ninth Circuit's concern that such conditioning creates a severe conflict between the lawyer's interest and the class's interest, leading that circuit to disapprove simultaneous negotiation of settlement and fees.

What this opinion adds is a footnote tracking the case's subsequent history: the district court had denied the attorney's fee application following the settlement's fee waiver; the Ninth Circuit held that a stipulated fee waiver obtained solely as a condition of obtaining class relief should not be accepted, and that the court should independently determine reasonable fees, remanding for that determination; and the United States Supreme Court then granted certiorari and, on April 21, 1986, held in Evans v. Jeff D., 106 S.Ct. 1531 (1986), that the district court had discretion to refuse a fee award, and that given the extent of relief obtained in the settlement, the district court did not abuse its discretion in upholding the fee waiver and denying the fee application. Despite that outcome, the Board reaffirmed its conclusion that settlement negotiations including attorney's-fee provisions are not inherently improper and may be appropriate, provided plaintiff's counsel fully advises the client of every step of the negotiations, advises that independent legal advice may be obtained, and lets the client approve or disapprove the entire settlement, fee provisions included, with any court whose approval is required fully advised of the fee provisions.

Currency note

This opinion was issued in 1986, before Tennessee's adoption of the 2003 Rules of Professional Conduct, which replaced the former Code of Professional Responsibility. 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: Did the U.S. Supreme Court prohibit settlements that condition relief on a plaintiff's lawyer waiving attorney's fees?

A: No. The opinion reports that the Supreme Court in Evans v. Jeff D. held the district court had discretion to refuse a fee award and to uphold a stipulated fee waiver, finding no abuse of discretion given the extent of relief the settlement provided to the class.

Q: Does this Supreme Court ruling change the Board's ethical guidance on fee provisions in settlements?

A: No. The Board reaffirmed the same conclusion as Opinion 85-F-96: fee provisions in settlement negotiations are not inherently improper, provided counsel fully discloses the negotiations to the client, advises that independent legal advice is available, and lets the client approve or disapprove the entire settlement, fee provisions included.

Background and rules framework

The opinion applied Disciplinary Rule 5-107 and Ethical Consideration 5-22 of the Code of Professional Responsibility, the same provisions applied in Opinion 85-F-96, and tracked the U.S. Supreme Court's resolution of Evans v. Jeff D. The modern correlates are Model Rule 1.7 (conflicts of interest) and Model Rule 1.5 (fees), cited here as navigational cross-references rather than rules the opinion itself applied.

Citations and references

Cases:

• Jeff D. v. Evans, 743 F.2d 648 (9th Cir. 1984), Ninth Circuit disapproval of a stipulated fee waiver as a condition of class relief
• Evans v. Jeff D., 106 S.Ct. 1531 (1986), Supreme Court holding that the district court had discretion to accept the fee waiver

Other opinions cited:

• Tennessee Formal Ethics Opinion 80-F-1, opposing party's participation in setting attorney's fee
• Tennessee Formal Ethics Opinion 84-F-61, structured settlements
• Tennessee Formal Ethics Opinion 84-F-77, conflict of interest in structured settlements
• Tennessee Formal Ethics Opinion 85-F-96, original opinion this one supplements

See also

• Tennessee Op. 84-F-61: Contingent Attorney Fees in Structured Settlements
• Tennessee Op. 84-F-77: Attorney Fees in Structured Settlements
• LACBA Op. 445: Attorney's Fees: Settlements Restricting Fees in Civil Rights and Civil Liberties Cases
• Tenn. Ethics Op. 85-F-96: Settlement Negotiations Including Attorney's Fees (the original opinion this one supplements)

Source

• Landing page: https://www.tbpr.org/ethic_opinions/85-f-96a

Original opinion text

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

85-F-96(a) - Settlement Negotiations including attorney fees

BOARD OF PROFESSIONAL RESPONSIBILITY OF THE SUPREME COURT OF TENNESSEE

FORMAL ETHICS OPINION 85-F-96(a)

Inquiry is made concerning the ethical consequences of settlement negotiations which include provisions relating to attorney's fees.

The subject of this inquiry arises with increased frequency following the advent of structured settlements, class actions and the Civil Rights Attorney's Fee Award Act of 1976, 72 U.S.C. Section 1988.

Formal Ethics Opinions 80-F-1, 80-F-1(a), 84-F-61 and 84-F-77 have addressed the matter relating to structured settlement. Formal Ethics Opinion 84-F-77 states:

There is a potential, if not an actual, conflict of interest between the attorney and client in every instance where structured settlements are discussed or considered as a settlement option. It is recognized that, in some instances, an immediate cash settlement would be more beneficial to the client, whereas the attorney may prefer to receive the payment of his attorney fee periodically; or, vice versa. The preferences of the attorney or client are often dependent or based upon their respective ages, economic station or tax consequences. These factors will seldom, if ever, be viewed from the same perspective by the attorney and the client.

Formal Ethics Opinion 80-F-1 states:

... any arrangement by which the opposing party participates in the setting of the fee charged by the attorney to his client conflicts with the language and intent of DR 5-107 and EC 5-22 of the Code. (emphasis added)

The matter of civil rights attorney's fee awards has not been addressed in a Formal Ethics Opinion. It appears the conflict in such instances may be more severe than in cases involving structured settlements. For example, in the case of Jeff D. et al v. Evans, 743 F.2d 648 (9th Cir. 1984), during the settlement negotiations, the defendants offered virtually all of the relief sought by plaintiff's conditioned upon waiver of attorney's fees by plaintiff's counsel.

The Ninth Circuit Court of Appeals in considering the matter states:1

The crux of the problem is the possibility of diverging interests of the lawyer and the class. The attorney may be tempted with a generous fee offer as a quid pro quo for less than optimal settlement. Alternatively, the defendant may condition settlement on the attorney's waiver of fees, creating a particularly severe conflict when important interests of class members are at stake....

To avoid this conflict, this circuit has ... disapproved simultaneous negotiation of settlements and attorney's fees.

In such instances, settlement negotiations which include provisions for attorney's fees are not inherently improper and may be appropriate, provided plaintiff's counsel:

(i) Fully advises the plaintiff or plaintiffs concerning each and every step and aspect of the negotiations;

(ii) Advises that independent legal advice may be obtained regarding the matter; and

(iii) The client should be allowed to approve or disapprove of the entire settlement, including provisions relating to attorney's fees. When consent, approval or permission of a court is

required, the court should be fully advised of all matters relative thereto, including the provisions for attorney fees.

This 26th day of September, 1986.

ETHICS COMMITTEE:

W. J. Flippin, Chairman

Edwin C. Townsend

Henry H. Hancock

APPROVED AND ADOPTED BY THE BOARD

1The District Court denied attorney's application for fees following a settlement agreement providing for a waiver of attorney's fees. The Ninth Circuit held that a stipulated waiver of

attorney's fees obtained solely as a condition for obtaining relief for the class should not be accepted and the Court should make its own determination of reasonable fees, remanding the case for such a determination. The United States Supreme Court granted certiorari and, on April 21, 1986, held that the District Court had discretion to refuse to award fees, and considering the extent of relief in the settlement, there was no abuse of discretion by the District Court in upholding the waiver of fee and denying attorney's application for fees. See Evans v. Jeff D., 106 S.Ct. 1531 (1986).