Personal injury attorneys in California and around the country often attract business by offering to charge their clients no fees in return for a share of any future award or settlement. This means the client pays nothing unless the lawyer wins the case. When an attorney and client enter into this kind of arrangement, they sign what is known as a contingent fee agreement. These agreements specify how much of the money recovered can be retained by the attorney to cover their expenses and how much should go to the client, but they should not authorize the attorney to ignore the client’s wishes during settlement negotiations.
One of the ethical rules that all attorneys are expected to follow requires them to respect a client’s decision to reject a settlement and proceed to court even if the offer is reasonable. This creates a dilemma for attorneys working on a contingency basis who would much rather resolve things at the negotiating table and avoid the costs of a trial. To get around this problem, some attorneys include provisions in their contingent-fee agreements that authorize them to accept settlement offers over the objections of their clients.
A case involving such a provision was decided by a California appeals court on Aug. 31. The case involved a car accident victim who became dissatisfied with her attorney and filed a motion to have him replaced. The motion was denied as the trial was about to begin. On the morning lawyers were scheduled to make their opening arguments, the woman’s attorney accepted a $150,000 settlement offer even though his client had rejected it. The judge accepted the settlement and dismissed the case. The appeals court considered the provision to be a form of legal malpractice and reversed the dismissal. The court also referred the woman’s lawyers to the state bar.
Choosing lawyers carefully
Attorneys should always act in the best interests of their clients, but the legal profession is grueling and working on a contingency is risky. This is why accident victims should always take great care when choosing an attorney. They should also consider having a lawyer with legal malpractice experience check any contingency fee agreement they are asked to sign.