Can a lawyer make a client, a former client, or opposing counsel promise not to file or take part in a bar complaint as a condition of settling a dispute?

Plain-English summary

Opinion 16-02 addresses what a lawyer may and may not put into a settlement when the lawyer's own conduct is at issue. The Committee considers three fact patterns: a lawyer for one party demanding that opposing counsel forgo a bar complaint as a settlement condition; a lawyer settling a dispute with a former client and wanting a term that the former client will not file or participate in a bar complaint the lawyer believes frivolous; and a party demanding terms that would limit the lawyer's ability to take future cases against the settling party or that waive a former client's malpractice claim.

The Committee concludes that requesting an opposing attorney, an opposing party, or a client or former client to refrain from filing or participating in a bar complaint as a condition of settlement violates the Rules of Professional Conduct, including Rules 8.3 and 8.4, and that agreeing to such a term violates the same rules. Rule 8.3 requires a lawyer with knowledge that another lawyer committed a violation raising a substantial question as to honesty, trustworthiness, or fitness to inform the appropriate authority, so a lawyer cannot agree to forgo a meritorious complaint. Rule 8.4(a) makes it misconduct to knowingly assist or induce another to violate the rules, so a lawyer cannot make the request either. The Committee adds that such demands are also prejudicial to the administration of justice under Rule 8.4(d), and that even a complaint the lawyer believes frivolous cannot be the subject of such a term, because responding to non-substantial complaints is a price lawyers pay for the powers granted the profession.

On limiting malpractice liability, the Committee reads Rule 1.8(h): a lawyer may not prospectively limit malpractice liability unless the client is independently represented, and may not settle a malpractice claim with an unrepresented client or former client unless that person is advised in writing of the desirability of, and given a reasonable opportunity to seek, independent counsel. The Committee notes that Rule 1.8(h) addresses only "malpractice" and not agreements to forgo bar reporting, which reinforces that such reporting waivers are not permitted. It also flags that settlement terms restricting the lawyer's future practice or requiring the lawyer to indemnify the opposing party (citing its own Opinion 11-01) can create impermissible conflicts under Rule 1.7 and run afoul of Rule 5.6(b).

In practice

Under this opinion, a settlement term by which a client, former client, opposing party, or opposing counsel agrees not to file or participate in a bar complaint is impermissible, and a lawyer who requests such a term violates Rule 8.4(a) by inducing a Rule 8.3 violation. Per the opinion, the rule applies even when the lawyer regards the threatened complaint as frivolous or non-substantial. The opinion also holds that a lawyer settling a malpractice claim must satisfy Rule 1.8(h) (independent representation, or written advice to seek independent counsel for an unrepresented client), and that settlement terms restricting the lawyer's right to practice or requiring lawyer indemnification of the opposing party can violate Rules 5.6(b) and 1.7. The opinion was issued in 2016; confirm the current text of the Utah Rules it cites before relying on the numbering here.

Common questions

Q: Can I ask opposing counsel to agree not to file a bar complaint as part of a settlement?

A: No. The opinion concludes that asking an opposing attorney, party, or client to refrain from filing or participating in a bar complaint as a settlement condition violates Rules 8.3 and 8.4, because under Rule 8.4(a) the request knowingly assists or induces a violation of the other lawyer's Rule 8.3 reporting duty.

Q: Does it matter that the bar complaint the client threatens is frivolous?

A: No. The opinion states that even if the threatened complaint is believed to be frivolous or not substantial, a request to forgo it still violates the rules; responding to such complaints is, in the Committee's words, "a price lawyers pay" for the powers granted the profession.

Q: Can a lawyer settle a malpractice claim directly with a former client?

A: Only on Rule 1.8(h)'s terms. The opinion explains that a lawyer may not prospectively limit malpractice liability unless the client is independently represented, and may not settle a claim or potential claim with an unrepresented client or former client unless that person is advised in writing of the desirability of seeking, and given a reasonable opportunity to seek, independent counsel.

Q: What about a settlement term limiting the lawyer's right to take future cases against the other side?

A: The opinion treats such terms as problematic, noting Rule 5.6(b) specifically precludes restrictions on the lawyer's right to practice as part of a settlement, and that conditions creating conflicts of interest under Rule 1.7 are impermissible.

Background and rules framework

The opinion interprets several Utah Rules of Professional Conduct that correspond to the ABA Model Rules of the same numbers: Rule 8.3 (reporting professional misconduct), Rule 8.4 (misconduct, including 8.4(a), (c), and (d)), Rule 1.8(h) (limiting malpractice liability and settling malpractice claims), Rule 5.6(b) (restrictions on the right to practice in a settlement), Rule 1.7(a)(2) (concurrent conflicts arising from responsibilities to third persons), Rule 4.4 (means with no substantial purpose other than to embarrass, delay, or burden), and Rule 1.4 (keeping a client reasonably informed). The Committee also invokes the Preamble's account of the legal profession's self-governance and ties the analysis to the disciplinary system's purpose of protecting the public.

Citations and references

Rules of Professional Conduct:

• MR 1.4 / Utah RPC 1.4 (communication)
• MR 1.7 / Utah RPC 1.7(a)(2) (concurrent conflict of interest)
• MR 1.8 / Utah RPC 1.8(h) (limiting malpractice liability; settling malpractice claims)
• MR 4.4 / Utah RPC 4.4 (respect for rights of third persons)
• MR 5.6 / Utah RPC 5.6(b) (restrictions on right to practice)
• MR 8.3 / Utah RPC 8.3 (reporting professional misconduct)
• MR 8.4 / Utah RPC 8.4(a), (c), (d) (misconduct)

Other opinions cited:

• Utah State Bar Ethics Advisory Opinion No. 11-01 (lawyer indemnification of opposing party against unknown medical claims)
• ABA Comm. on Ethics & Prof'l Responsibility, Formal Op. 92-363 (1992) (threats of prosecution to gain advantage in civil matter)

See also

• Utah Ethics Op. 11-01: Lien Indemnification in Settlements
• ABA Formal Op. 00-417: Settlement Terms Limiting Use of Information
• ABA Formal Op. 93-371: Restrictions on Representing Future Clients
• ABA Formal Op. 94-381: Restrictions on Right to Practice

Source

• Landing page: https://www.utahbar.org/ethics-opinions/2016-02/
• Original PDF: https://www.utahbar.org/wp-content/uploads/2022/12/2016-02.pdf

Original opinion text

Best-effort transcription from a two-column PDF, reassembled in the opinion's own paragraph order. Minor errors may remain; the linked PDF is authoritative.

Opinion No. 16-02

Utah Ethics Opinion

Utah State Bar Ethics Advisory Opinion Committee

March 23, 2016

Posted on March 24, 2016

Issues

1. What are the ethical constraints on lawyers settling potential legal malpractice claims or bar complaints with clients?

Opinion

2. A lawyer may neither request nor agree to limit his or her duties to the administration of justice regarding filing or participating in a bar complaint.

3. A lawyer may not request that a present or former client refrain from filing or participating in a bar complaint as a condition to settling disputes between the client and the lawyer.

4. A lawyer may not participate in an agreement that limits the lawyer's liability for malpractice or prohibits the lawyer from accepting future clients except as permitted by rule or law.[1]

Background

5. There are three factual situation to consider:

6. In the context of settling civil litigation a lawyer for one party demands as a condition of settlement that the lawyer for the opposing party agree to forgo filing or participating in a bar complaint.

7. A lawyer is settling a dispute with a former client. That client has threatened to file a bar complaint which the lawyer believes frivolous. As a condition of settling the dispute the lawyer wishes to include a provision precluding the former client from filing or participating in a bar complaint.

8. Finally, in consideration of settlement, a party demands conditions that would limit the lawyer's ability to take further cases against the settling party or waives a former client's malpractice claim.

Discussion

6. Requesting an opposing attorney, an opposing party, or a client or former client to refrain from filing or participating in a bar complaint as a condition of settlement of outstanding disputes violates several of the Rules of Professional Conduct including Rules 8.3 and 8.4.[2] Agreeing to refrain from filing or participating in such a complaint also violates these same rules.

7. Rule 8.3 of the Rules of Professional Conduct requires that a lawyer who has knowledge[3] "that another lawyer has committed a violation of the Rules of Professional Conduct that raises a substantial[4] question as to that lawyer's honesty, trustworthiness or fitness as a lawyer in other respects shall[5] inform the appropriate professional authority" (emphasis added). Accordingly, Rule 8.3(a) would preclude a lawyer from agreeing to refrain from filing or participating in a meritorious bar complaint.

8. Rule 8.4 (a) provides that "it is professional misconduct" for a lawyer to "knowingly assist or induce another" to "violate . . .the Rules of Professional Conduct." Because it is unethical for an attorney to agree not to report a serious breach of the Rules of Professional conduct, Rule 8.4 (a) would preclude a lawyer from making such a request as his conduct would knowingly "assist or induce" a violation of the other lawyer's obligation to report under Rule 8.3.

9. Demands to forego reporting as a condition of settlement would hinder bar authorities from meeting their responsibilities of deterrence of serious matters and the protection of the public. As the Comment to Rule 8.3 notes, "An apparently isolated incident may indicate a pattern of misconduct that only a disciplinary investigation can uncover."

10. Simply because the opposing party or client is a lay person without duties to the public and the bar does not lessen the misconduct in attempting to obtain an agreement not to file a complaint. It is "professional misconduct" to "engage in conduct that is prejudicial to the administration of justice." Rule 8.4(d). Seeking to prevent a client or opposing party from filing or participating in a bar complaint is "prejudicial to the administration of justice."

11. Similarly, it is "professional misconduct" to "engage in conduct involving dishonesty, fraud, deceit or misrepresentation." Rule 8.4 (c). Requesting a client or former client to not file a bar complaint could possibly involve "dishonesty, fraud, deceit or misrepresentation." Where an attorney has made mistakes in handling the client's case, the attorney must nevertheless "keep the client reasonably informed about the status of the matter" and "explain a matter to the extent reasonably necessary to permit the client to make informed decisions." Rule 1.4. Where the attorney is attempting to resolve a possible malpractice case with a client or former client, the lawyer may be tempted to provide less than thorough or candid information, which could constitute "conduct involving dishonest, fraud, deceit or misrepresentation."

12. Rule 1.8(h) deals with an attorney settling a claim or prospective claim for "malpractice" with a client or former client. It requires that the client be "independently represented" in an agreement "prospectively limiting" malpractice liability and that the client or former client be "advised in writing" of the desirability of having "independent counsel" to settle a "claim or potential claim" for malpractice. Tellingly, this rule addresses only settlement for "malpractice" and does not address the protocol for settling claims for violations of the Rules of Professional Conduct or complaints to the Bar. This suggests that including agreements that a client or former client will decline to report an attorney to the bar is not permitted under the Rules of Professional Conduct.

13. The purpose of attorney discipline is "to protect the public and the administration of justice from those who have demonstrated by their conduct that they are unable or unlikely to properly discharge their professional responsibilities." Supreme Court Rules 14-501 (a). Requesting an agreement not to report misconduct might fall within this provision. Violation of Rule 8.4(d) of the Utah Rules of Professional Conduct is grounds for disbarment under Supreme Court Rule 14-605(a).

14. Even if the threatened bar complaint is believed to be frivolous, or not substantial, a request to forego a bar complaint still violates the Rules of Professional Conduct. Paragraph 10 of the Preamble to the Rules of Professional Conduct provides, "Although other professions also have been granted powers of self-government, the legal profession is unique in this respect because of the close relationship between the profession and the processes of government and law enforcement." Responding to frivolous, or not substantial, complaints is simply a price lawyers pay for the extensive societal power granted members of the profession.

15. In settling cases, placing other conditions may also violate the Utah Rules of Professional Conduct. The Committee warned against analogous requests requiring a settling lawyer to indemnify the defendant against unknown medical claims in Ethics Advisory Opinion No. 11-01. The Committee found that requesting or agreeing to indemnify against unknown medical claims created a conflict of interest between the lawyer and the client. Further, Rule 5.6(b) specifically precludes the inclusion of restrictions on the lawyer's right to practice as a portion of a settlement agreement. Simply put, a lawyer may not include conditions in a settlement agreement that would raise impermissible conflicts of interests for either settling lawyer.

16. A request to a lawyer as a condition of settlement of a civil lawsuit to waive reporting an incident of serious professional misconduct places the lawyer in conflict with her duties to the client to settle the matter and her duties to the court and to the public.[6] This is because in litigation, a lawyer owes duties to the public and the court. "In the nature of law practice, however, conflicting responsibilities are encountered. Virtually all difficult ethical problems arise from conflict between a lawyer's responsibilities to clients, [and] to the legal system...."[7]

17. If the request was not related to a violation of the rules, it would violate Rule 4.4's prohibition on a lawyer using means that have no substantial purpose other than embarrass, delay or burden a third person.[8] This is mere harassment, analogous to using frivolous threats of criminal prosecution to obtain civil settlements.

Notes:

[1] Rule 1.8(h) of the Utah Rules of Professional Conduct provides:

A lawyer shall not:

1(h)(1) make an agreement prospectively limiting the lawyer's liability to a client for malpractice unless the client is independently represented in making the agreement; or

1(h)(2) settle a claim or potential claim for such liability with an unrepresented client or former client unless that person is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel in connection therewith.

[2] We note that the lawyer is dealing with an unrepresented party. "In dealing with a person who is not represented by counsel, a lawyer shall not state or imply that the lawyer is disinterested." RPC 4.3(a).

[3] "Knowledge" denotes actual knowledge of the fact in question. Utah Rules of Prof'l Conduct R. 1.0(g).

[4] "Substantial" when used in reference to degree or extent denotes a material matter of clear and weighty importance." Utah Rules of Prof'l Conduct R. 1.0(m).

[5] "Some of the Rules are imperatives, cast in the terms 'shall' or 'shall not.' These define proper conduct for purposes of professional discipline." Utah Rules of Prof'l Conduct, Preamble, ¶ 14.

[6] Rule 1.7(a)(2) prohibits representation if there is a significant risk that the representation would be materially limited by the lawyer's responsibilities to third persons which would include responsibilities to the Court as well as to the general public. Utah Rules of Prof'l Conduct R. 1.7(a)(2).

[7] Utah Rules of Prof'l Conduct, Preamble, ¶¶ 8-9.

[8] While Rule 4.4 does not prohibit such threats, "[a] baseless threat to inform a prosecutorial or regulatory authority would constitute 'means that have no substantial purpose other than to embarrass.'" Hazard, Hodes, & Jarvis, The Law of Lawyering 40.4 n. 6 (2008) (citing ABA Comm. on Ethics & Prof'l Responsibility, Formal Op. 92-363 (1992)).