LEO: Scope of Representation - Settlement  LE Op. 1264


Scope of Representation - Settlement Offers: Informing Client of

Settlement Proposal Even If It Is Not in the Best Interest of the



September 21, 1989


You have advised that you represent two former employees of a corporation

who claim the right to stock in the company under an oral agreement. One

employee has begun litigation; the other has not done so to date. Prior to

the institution of litigation, accusations of embezzlement were made

against the former employee who has not yet begun litigation, although no

charges were ever brought against either former employee. You have now

received a settlement offer which involves your clients' dropping their

claim for stock, making some cash payment to the corporation (which has no

pending suits or counterclaims against either of them), admitting what

they have done (details of which you have not provided), agreeing to the

entry of an injunction prohibiting them from future acts damaging to the

corporation, and agreeing to cooperate and give complete and truthful

information about the corporation's president in a pending divorce

proceeding. In exchange, the corporation and its president agree not to

initiate criminal proceedings against your clients or to volunteer

incriminating information to the authorities.


You indicate that you believe the settlement offer to be an absurd

proposal and offered as sheer intimidation. You request that the Committee

opine on whether you are compelled to pass this offer on to your clients.


The appropriate and controlling disciplinary rules are DR:6-101(C)

which provides that a lawyer shall keep a client reasonably informed about

matters in which the lawyer's services are being rendered, and DR:6-101(

D) which provides that a lawyer shall inform his client of facts pertinent

to the matter and of communications from another party that may

significantly affect settlement or resolution of the matter.

Notwithstanding DR:6-101(C) and DR:6-101(D), a lawyer may exercise his

professional judgment to limit or vary his client's objectives and waive

or fail to assert a right or position of his client only if he has his

client's express or implied authority to do so. (See DR:7-101(B)(1))


It is the view of the Committee that all settlement offers must be

promptly communicated to the client unless the attorney has received prior

express or implied authorization from the client to reject offers below a

predetermined threshold of acceptability. The Committee opines that,

absent any such prior authorization, the attorney is required to

communicate all settlement proposals and not just ones that the lawyer

believes are in the client's best interest. The question of whether the

lawyer has express or implied authorization is a legal issue beyond the

purview of this Committee. Where no such authority exists and the lawyer

has received what is believed to be a less than acceptable settlement

offer, the Committee believes that it is incumbent upon the lawyer to

counsel the client as to the pitfalls of accepting such a settlement. The

decision to settle, however, belongs only to the client and not the

lawyer. (See New York County Lawyers' Association Opinion 667 (undated))


Committee Opinion September 21, 1989