If a settlement offer the client wants to accept requires the lawyer to waive statutory attorney's fees, what must the lawyer do?

Plain-English summary

The inquirer asked two questions: what is the ethical duty of an attorney who receives a settlement offer that is wholly acceptable to the client but conditioned on the attorney waiving the potential of statutory prevailing-party fees, and whether the attorney who makes such an offer violates the Rules of Professional Conduct.

The committee answered the first question by applying RPC 1.4(a) and RPC 1.2: the attorney has a duty to promptly inform the client of the offer and to abide by the client's decision whether to accept or reject it. It added that if the attorney's pecuniary interest in the settlement may materially limit the advice the attorney gives the client, the attorney must satisfy the requirements of RPC 1.7. The committee declined to answer the second question, explaining that its purpose is to advise on the inquirer's own contemplated conduct and that it may refuse to opine on the proposed conduct of someone other than the inquirer.

In practice

Under this opinion, when a settlement offer the client wants is conditioned on the lawyer giving up statutory fees, the duty to communicate (RPC 1.4(a)) and the duty to abide by the client's decision (RPC 1.2), as those rules stood at the time, govern: the lawyer conveys the offer and the client decides. The opinion holds that the lawyer must also satisfy RPC 1.7 where the lawyer's own financial stake in the settlement may materially limit the advice the lawyer gives. The committee declined to opine on whether the lawyer who made the offer violated the rules.

Common questions

Q: Does the lawyer have to tell the client about a settlement that wipes out the lawyer's statutory fees?

A: Yes. The committee concluded that under RPC 1.4(a) and RPC 1.2 the lawyer must promptly inform the client of the offer and abide by the client's decision to accept or reject it.

Q: What if the lawyer's own fee interest could color the advice?

A: The committee said that if the lawyer's pecuniary interest in the settlement may materially limit the advice the lawyer gives, the lawyer must satisfy the requirements of RPC 1.7.

Q: Did the committee say whether the lawyer making the fee-waiver offer acted improperly?

A: No. The committee declined to opine on the conduct of someone other than the inquirer, so it expressed no view on the offering lawyer's conduct.

Background and rules framework

The opinion applied RPC 1.2 (Model Rule 1.2, scope and the client's decision to settle), RPC 1.4(a) (Model Rule 1.4, communication), and RPC 1.7 (Model Rule 1.7, conflicts arising from a lawyer's personal interest) as those Washington rules stood in 2005. It treated the decision whether to accept a settlement conditioned on a fee waiver as the client's to make, with the lawyer's personal financial interest analyzed under the conflicts rule.

Citations and references

Rules of Professional Conduct:

• Model Rule 1.2 / Washington RPC 1.2 (client's decision to settle)
• Model Rule 1.4 / Washington RPC 1.4(a) (communication)
• Model Rule 1.7 / Washington RPC 1.7, 1.7(b) (personal-interest conflict)

See also

• WSBA Ethics Op. 191: Contingent Fee and a Rejected Settlement
• WSBA Ethics Op. 2094: Contingent Fee on a Statutory Fee Award
• ABA Formal Op. 06-438: Aggregate Settlements

Source

• Landing page: https://ao.wsba.org/print.aspx?ID=1541

Original opinion text

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

Advisory Opinion: 2102
Year Issued: 2005
RPC(s): RPC 1.2, 1.4(a), 1.7(b)
Subject: Conflict of interest; waiver of statutory attorney`s fees

The inquirer asks the following questions:

1. What is the ethical duty of an attorney who receives a settlement offer wholly acceptable to the client and which requires the attorney to waive the potential of statutory fees awarded to a prevailing party?

2. Does the attorney making the offer violate the Rules of Professional Conduct?

Under RPC 1.4(a) and RPC 1.2 the attorney has a duty to promptly inform the client of the offer and to abide by the client’s decision whether to accept or reject it. If the attorney’s pecuniary interest in the settlement may materially limit the advice the attorney gives the client then the attorney must satisfy the requirements of RPC 1.7

The purpose of the committee is to advise members of the bar on the ethical propriety of their contemplated professional conduct. The committee may refuse to issue an opinion as to the proposed conduct of someone other than the inquirer. The committee declines to express an opinion regarding the conduct of the lawyer making the offer.