In Amjadi v. Brown (Nos. G059069, G059273 – 8.30.2021), the Fourth Appellate District Court of Appeal reversed a trial court judgment and subsequent order, holding, “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.”
Sayedeh Amjadi (“Amjadi”) sued Jerrod Brown (“Brown”) for bodily injuries from an auto accident. Her attorneys’ contingent fee agreement contained language giving them the authority, at their “sole discretion,” to accept a settlement offer on Amjadi’s behalf, so long as they believed in good faith that the offer was reasonable and in the client’s best interest. On the day of trial, the attorneys moved unsuccessfully to be relieved as counsel for Amjadi based on an alleged conflict of interest. They then met privately with defense counsel and accepted a $150,000 settlement offer that Amjadi had previously rejected. They then advised the court about the settlement, over Amjadi’s objection, and executed a settlement agreement on Amjadi’s behalf. The trial court accepted the settlement, dismissed the case over Amjadi’s objection, and denied her subsequent motion to vacate the judgment. In support of her now-former attorneys’ opposition to such motion, the attorneys submitted declarations which disclosed numerous privileged communications with Amjadi, as well as certain of her communications with prior counsel concerning her mental health, feelings of religious persecution, and intimacy issues. The trial court denied the motion to vacate.
In reversing, the appellate court relied on Rule of Professional Conduct (“RPC”) 1.2(a), which provides, in relevant part, “A lawyer shall abide by a client’s decision whether to settle a matter.” The court explained that under Rule 1.2(a), an attorney may not settle a client’s case over the client’s objection. As a result, a provision in an attorney-client fee agreement purporting to give an attorney such advance authority violates the RPC and is void. The court found that such a provision in a contingency fee matter would also create an immediate, direct conflict of interest under RPC 1.7(b), as well as violate the attorney’s duty of confidentiality to the client by disclosing details of the retainer agreement to opposing counsel.
Moreover, the court rejected the attorneys’ argument that they had entered into the settlement prior to Amjadi’s objection and revocation of their authority to settle, noting, to the contrary, that Amjadi provided unrebutted testimony that she objected to the settlement at all times and that she had rejected the same settlement offer several months earlier. The court also disagreed with the attorneys’ argument that their conduct was authorized pursuant to a Comment to RPC 1.2, which states, “At the outset of, or during a representation, the client may authorize the lawyer to take specific action on the client’s behalf without further consultation. Absent a material change in circumstances and subject to rule 1.4, a lawyer may rely on such an advance authorization. The client may revoke such authority at any time.” (RPC 1.2, comment .). The court found that “the commentary permits clients to provide their attorneys advance authorization to settle, but does not permit an attorney to settle a case over the client’s contemporaneous objection.” As such, because the underlying settlement was entered without authority, it was voidable by Amjadi, which she accomplished by objecting to the settlement and resulting dismissal. Absent an effective settlement, there was no basis for dismissal, and the judgment was reversed.
However, the appellate court did not stop there. Under the authority of Business & Professions Code section 6086.7(a)(2), it referred each of Amjadi’s three attorneys to the California State Bar for potential disciplinary proceedings regarding their conduct in effecting the settlement over their client’s objections, their apparent disclosure of the client’s confidential communications, and their opposition to the former client’s motion to vacate the dismissal.
The lesson here is that while a client may certainly authorize an attorney to take certain actions on the client’s behalf, including accepting a settlement proposal, an attorney cannot effect a settlement over the client’s objection. A blanket, advance authorization to the attorney to accept a settlement offer the attorney believes in good faith to be “reasonable” and in the client’s “best interest” is improper, violates the Rules of Professional Conduct, and renders any such settlement voidable by the client.