Legal Ethics Opinion #1550

Zealous Representation--Limiting Liability to Client: Attorney
Settling Potential Legal Malpractice Claim by Former Client 

You have presented a hypothetical situation in which a lawyer had
failed to file suit on behalf of a former personal injury client,
allowing the two-year statute of limitations period to expire. 
The lawyer negotiates and has his former client execute a
settlement agreement releasing the lawyer from any liability for
negligence.  The former client executes a written "full and final
release" in exchange for a sum of money paid by the lawyer to the
former client.  Throughout the negotiations, the former client
was not represented by independent legal counsel, nor was he
advised to secure independent counsel.

You have asked the committee to opine whether, under the facts of
the inquiry, Disciplinary Rule 6-l02(A) prohibits the lawyer from
settling a potential malpractice claim by his former client, or
does the Rule operate prospectively, i.e., prohibit agreements
limiting the lawyer's liability when executed at the outset of
the representation.  In addition, you ask, if DR 6-l02(A) does
not per se prohibit this conduct, does Canon 5 impose any duties
or restrictions before the lawyer may ethically settle the
malpractice claim with the client.

The appropriate and controlling disciplinary rules relative to
your inquiry are DR 6-l02(A) which precludes a lawyer from
limiting his liability to his client for his personal
malpractice; and DR 7-l03(A)(2) which prohibits a lawyer from
giving advice to a person who is not represented by a lawyer,
other than the advice to secure counsel, if the interests of such
person are or have a reasonable possibility of being in conflict
with the interests of his client.  
The committee has previously opined that it is not ethically
improper for an attorney to include in a retainer agreement with
a client a provision for binding arbitration or nonbinding but
admissible arbitration of any malpractice claim which may arise
out of the professional employment, provided that the client
consents after full disclosure of the effect of such a provision
and after the client is advised to seek independent counsel in
regard to the advisability of such a provision.  See LEO #638. 
However, the committee interprets that Opinion to indicate that
the inclusion of such an arbitration provision in retainer
agreements is not violative of the prohibited limitation of
liability since any such arbitration does not specifically limit
the liability but merely identifies a procedure by which the
liability (and damages) may be determined.

In the facts you present, the committee believes that it would
not be improper for a lawyer to secure from his client a release
from liability for specific completed acts, in exchange for
consideration paid to the client, provided, however, that (l)
there is full disclosure to, and consent received from, the
client; (2) the client is first advised to seek independent
counsel as to whether to sign such an agreement; and (3) provided
that the transaction was no unconscionable, unfair or inequitable
when made.

Conversely, however, the committee reiterates its earlier
conclusions, predicated on the plain language of the Rule,
finding that it would be improper and violative of DR 6-l02(A)
for a lawyer to prospectively limit his liability to a client at
the outset of the attorney-client relationship or through a
general release for prospective conduct during the course of the
relationship.  See LEO #l487.

Committee Opinion
March 23, 1992