No, You Cannot Settle Your Client’s Case Over Your Client’s Objection

Amjadi v. Brown, 2021 WL 3855831 makes it clear that California lawyers may not settle a case over the client’s objection, even if the retainer agreement authorizes the attorney to do so. And if lawyers do so, they face State Bar discipline.

Plaintiff’s counsel, Jolly Berry Law, had their client sign a retainer agreement stating, ““CLIENT agrees that if a settlement offer is tendered in the case by any defendants and the ATTORNEY believes in good faith that the settlement offer is reasonable, and that acceptance of the offer is in the CLIENT’s best interest, and should be accepted, CLIENT authorizes ATTORNEY to accept said offer on CLIENT’s behalf, at ATTORNEY’s sole discretion.”

Right before trial, the attorney-client relationship substantially deteriorated. Jolly Berry Law filed a motion to withdraw, and the trial court denied the motion. Kevin Jolly of Jolly Berry Law asked defense counsel about a potential settlement of $150,000 which plaintiff previously rejected. Defense counsel renewed the offer and Jolly told plaintiff he was accepting the offer over plaintiff’s objection. Plaintiff instructed Jolly Berry Law to sign a substitution of attorney form and objected to the settlement. Nevertheless, Jolly signed a settlement agreement on plaintiff’s behalf. The trial court accepted the settlement and set a hearing to dismiss the case.

Plaintiff filed a declaration objecting to the settlement and dismissal. Surprisingly, the trial court dismissed the case. Plaintiff hired new counsel who filed a motion to vacate the settlement. Even more surprisingly, Jolly Berry opposed the motion and submitted attorney-client privileged information (including the retainer agreement) in support of the opposition. The trial court denied the motion to vacate and an appeal followed.

Thankfully, the appellate court reversed and wrote an opinion that should guide California lawyers going forward. First, the appellate court made clear that, “an attorney may not settle a client’s case over the client’s objection and any provision of a retainer agreement purporting to give an attorney such authority violates the Rules of Professional Conduct and is void. Consequently, the settlement was entered without authority and was voidable by plaintiff. And when plaintiff objected to the settlement and resulting dismissal, she voided the settlement. Without the settlement, the dismissal cannot stand and the judgment must be reversed.”

Second, the appellate court found the actions of Jolly Berry so egregious that it referred the case to the California State Bar. The appellate court stated as follows:

“Because we based our reversal in this matter on the Jolly Berry firm’s violation of rule 1.2 of the Rules of Professional Conduct, we refer plaintiff’s former attorneys Kevin Jolly, Leah Berry, and Joseph Nazarian to the State Bar for potential discipline.

In addition to our finding of a violation of rule 1.2 of the Rules of Professional Conduct, we also note potential violations of rules 1.6 (when plaintiff’s former attorneys disclosed various confidential communications to opposing counsel & the court), 1.7 (for largely the same reasons as those supporting our finding on rule 1.2), and 1.9 (when plaintiff’s former attorneys opposed their own former client’s motion to vacate the dismissal, arguably to preserve their ability to collect fees from the settlement proceeds).”

When lawyers represent themselves, they frequently made mistakes. When preparing your firm’s fee agreement and when engaging in fee disputes with clients, it’s wise to first review the Rules of Professional Conduct. Sometimes, it’s a good idea for law firms to hire another attorney who specializes in ethics to handle these matters.

Mark Wilson, a trial attorney, has won nearly every case he has tried or arbitrated. He lost only one jury trial and obtained a complete reversal on appeal. Mr. Wilson represents clients in business litigation and legal malpractice cases and was named in the 2017 – 2020 SuperLawyers Top 50 Orange County lists. Mr. Wilson is a California State Bar certified specialist in Legal Malpractice Law and can be reached at 949-239-0907; [email protected]; https://www.kleinandwilson.com