June 1, 2007
Aggregate Settlements and the Ethics Rules
It continues to amaze me how much confusion exists over the ethical obligations of lawyers when handling non-class aggregate settlements. The ABA's partly to blame. The model rule (RPC 1.8(g)) is sound as far as it goes, but there's a lot that it doesn't explain. And the most recent ABA ethics opinion expounding on the rule (ABA Formal Op. 06-438) obscures as much as it explains.
I returned today from the ABA National Conference on Professional Responsibility in Chicago, where I chaired a panel on the ethics of aggregate settlements. The other panelists were New York mass torts lawyer Paul Rheingold and Los Angeles ethics lawyer Diane Karpman. We addressed four issues: (1) the definition of "aggregate settlement" for purposes of the aggregate settlement rule (RPC 1.8(g), DR 5-106, Cal. 3-310, etc.); (2) the extent of disclosure required for informed consent; (3) whether advance consent should be permitted; and (4) restrictions on future practice in connection with settlement. Every one of the issues engendered significant debate among the panelists and serious questions from the audience. The one thing the panelists could all agree on, however, was dissatisfaction with Op. 06-438.
But mostly, I was struck by the extent to which even the most basic questions (like the definition of "aggregate settlement" or the appropriate disclosure) remain topics of debate and uncertainty. No wonder mass tort lawyers worry so much about aggregate settlements. Even when they take careful steps to obtain each client's informed consent to the deal, they have to worry about whether their steps will fail to satisfy someone else's interpretation of the rule.
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