May a lawyer negotiate a statutory attorney-fee claim before or at the same time as settling the underlying case?

Plain-English summary

In Grievance Commission Opinion No. 17 (1981), Maine had determined it would be unethical for plaintiffs' counsel to negotiate settlement of a statutory attorney-fee claim before or simultaneously with settlement of the underlying action. In 1986, the U.S. Supreme Court decided Evans v. Jeff D., holding that under section 1988 of the Federal Civil Rights Act it was not illegal for fee settlement discussions to occur before or with resolution of the underlying claim; the Court cited but did not adopt the reasoning of Opinion No. 17. Bar Counsel asked whether Opinion No. 17 should be reconsidered.

The Commission concluded that such pre-settlement or simultaneous discussions of statutory fee claims should no longer be regarded as unethical in Maine and that Opinion No. 17 must be disapproved. It acknowledged that Evans addressed only the legal question under section 1988 and not state ethics codes (the dissent had encouraged states to declare the conduct unethical), but it was persuaded by two considerations. First, it agreed with the Supreme Court that discouraging advance fee discussions could work against the policy of fee-shifting statutes by reducing settlement; while permitting the discussions lets defendants try to drive a wedge between plaintiff and lawyer, the contrary rule gives plaintiffs' lawyers an unfair advantage where accruing fee liability exceeds the cost of relief, so a general prohibition is unwise and reasonableness is better left to courts case by case. Second, the Commission was wary that maintaining a prohibition contrary to the Supreme Court's view might raise a constitutional preemption question that the Court expressly left open in Evans; since the Supreme Judicial Court had not imposed such a prohibition in the Code, the Commission was reluctant to read one into it. The Commission noted Opinion No. 17 had itself observed that no Code provision dealt directly with the question and had relied on federal decisions such as Prandini, an approach Evans disapproved.

Currency note

This opinion was issued in 1989, before Maine's replacement of the former Maine Bar Rules with the Maine Rules of Professional Conduct (effective August 1, 2009). Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Is it unethical in Maine to negotiate statutory attorney fees before settling the merits?

A: The opinion concluded no, after Evans v. Jeff D. It disapproved the contrary Opinion No. 17 and held such pre-settlement or simultaneous discussions are no longer unethical.

Q: Did the Supreme Court's decision directly govern Maine's ethics rules?

A: The opinion acknowledged Evans addressed only the legal question under section 1988, not state ethics codes, but the Commission found its reasoning and policy persuasive and disapproved Opinion No. 17 anyway.

Q: Why not keep a rule against driving a wedge between plaintiff and lawyer?

A: The opinion concluded a general prohibition is unwise because the contrary rule can give plaintiffs' lawyers an unfair advantage, and it preferred to leave the reasonableness of each party's settlement behavior to the courts case by case.

Q: Did a constitutional concern factor in?

A: The opinion noted that maintaining a prohibition contrary to the Supreme Court's view might raise a preemption question the Court left open in Evans, making the Commission reluctant to read such a prohibition into the Code.

Background and rules framework

The opinion reconsiders Grievance Commission Opinion No. 17 in light of Evans v. Jeff D., 475 U.S. 717 (1986), and 42 U.S.C. section 1988 (statutory attorney's fees under the Civil Rights Act). It notes the rules most closely related, Maine Bar Rule 3.4(f) (personal-interest conflicts) and Rule 3.7(c) (proprietary interest in litigation), are not strictly applicable. These correspond to ABA Model Rule 1.7 (concurrent conflicts of interest) and Model Rule 1.8 (specific conflicts).

Citations and references

Rules of Professional Conduct:

• Model Rule 1.7 (concurrent conflicts); Model Rule 1.8 (specific conflicts)
• Maine Bar Rule 3.4(f), 3.7(c)

Statutes:

• 42 U.S.C. section 1988 (statutory attorney's fees)

Cases:

• Evans v. Jeff D., 475 U.S. 717 (1986); Prandini v. National Tea Co., 557 F.2d 1015 (3d Cir. 1977); Lazar v. Pierce, 757 F.2d 435 (1st Cir. 1985); Mendoza v. United States, 623 F.2d 1338 (9th Cir. 1980)

Other opinions cited:

• Maine Grievance Commission Formal Op. 17 (1981), disapproved

See also

• Maine Ethics Op. 103: Splitting a Fee for a Pure Referral
• Maine Ethics Op. 119: Class Action Against a Government-Agency Payor

Source

• Landing page: https://mebaroverseers.org/attorney_services/opinion.html?id=91489

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

Issued by the Professional Ethics Commission

Date Issued: March 13, 1989

Question

In Opinion No. 17, issued on January 15, 1981, the Grievance Commission of the Overseers of the Bar[1] determined that it would be unethical for plaintiffs' counsel to negotiate a settlement of plaintiffs' statutory claim for attorney's fees with the defendant prior to or simultaneous with settlement of the underlying action. On April 21, 1986, the United States Supreme Court decided the case of Evans v. Jeff D., 475 U.S. 717 (1986), in which it held that, with regard to the settlement of claims for attorney's fees pursuant to section 1988 of the Federal Civil Rights Act, 42 U.S.C. § 1983, et seq., it was not illegal for settlement discussions to occur prior to or simultaneous with the resolution of the underlying claim. In reaching this conclusion, the Supreme Court cited, but did not adopt the reasoning of, Opinion No. 17. Id. at 728, n. 15; 737, n. 29. Under these circumstances, Bar Counsel now inquires of the Professional Ethics Commission whether Opinion No. 17 should be reconsidered.

Opinion

In view of the Supreme Court's action, the Professional Ethics Commission is of the view that settlement discussions of statutory attorney's fees claims in advance of or simultaneous with settlement of the underlying action should no longer be regarded as unethical in Maine. It is true, of course, that the Supreme Court's Opinion relates only to the legal question of whether such settlement discussions may occur under section 1988 of the Federal Civil Rights Act, and, as the dissent correctly points out, is unrelated to the question of whether such discussions would violate state or local ethical codes.[2] Id. at 765. Nonetheless, in view of the Supreme Court's considered conclusion that a prohibition against the pre-settlement negotiation of attorney's fees claims might actually impede the purpose of a fee-shifting statute by reducing the attractiveness of settlement, id. at 732-38, and in view of the confusion - of possible constitutional dimension - which might result if this Commission were to adhere to the position that such discussions remain unethical, the Commission believes that Opinion No. 17 must now be disapproved.

In reaching the opposite conclusion from that of the Supreme Court in Opinion No. 17, the Grievance Commission was careful to point out that none of the provisions of the Maine Code of Professional Responsibility dealt directly with the question of pre-settlement negotiation of statutory attorney's fees claims. Grievance Comm'n of Bd. of Bar Overseers, Formal Op. 17, at 1, n. 1 (1982).[3] Thus, in resolving the question, the Commission looked to the decisions of the federal courts under federal fee-shifting statutes. Prominent among these was Prandini v. National Tea Company, 557 F.2d 1015 (3rd Cir. 1977), which held that discussion of attorney's fees should be postponed until after settlement of the underlying action. As the Supreme Court observed, however, since the decision in Prandini (and Mendoza v. United States, 623 F.2d 1338 (9th Cir. 1980)),[4] four other Circuits, including the First Circuit, Lazar v. Pierce, 757 F.2d 435 (1st Cir. 1985), had approved the pre-settlement discussion of statutory attorney's fees claims, at least in some circumstances. Evans v. Jeff D., supra at 726, n. 11. Thus, the Supreme Court's decision represents a disapproval of the Prandini approach, as well as that of the other federal courts relied upon in Opinion No. 17.

The Commission is thus left in the position of having to determine whether, in the absence of a specific prohibition in the Code of Professional Responsibility, it should nonetheless adhere to the position of Opinion No. 17 that pre-settlement negotiations of statutory attorney's fees claims are unethical, now that the legal underpinnings of that Opinion have been definitively removed.[5] The Commission believes that such adherence would not be warranted for two reasons.

First, and most important, the Commission is persuaded that the Supreme Court is correct that discouraging advance discussion of statutory attorney's fees claims would actually work against the policy underlying such statutes by reducing the possibility of settlement. The Commission recognizes, as did the Grievance Commission and the Supreme Court, that permitting such discussions to occur does confer on defendants the possibility of driving a wedge between the plaintiff and his lawyer by insisting that the lawyer receive little or no fee if the plaintiff is to obtain substantial or full relief in settlement. On the other hand, plaintiffs' lawyer may also have an unfair advantage under the approach of Opinion No. 17 because defendants are frequently faced with cases where the accruing liability for attorney's fees is far greater than the total cost of the relief sought, and thus may be induced to settle simply to keep those fees from accruing further if they are prohibited from negotiating on the subject. Thus, the Commission concurs that the maintenance of a general rule prohibiting such discussions is unwise. Rather, the Commission would prefer to leave the question of the reasonableness of the settlement behavior of either party in a case involving statutory attorney's fees claims to the courts, for resolution on a case-by-case basis. See the discussion of the problem of handling vindictive or other unreasonable behavior by either party in such circumstances contained in Evans v. Jeff D., supra at 738-42. Any attempt by the Commission to set out ground rules for such discussions in advance is very unlikely to be helpful, and much more likely to prove damaging to the interests of justice.

Second, as indicated above, the Commission is well aware that any attempt on its part to impose a rule of ethics contrary to the views of the Supreme Court in this area might raise constitutional questions. The issue is whether the Congress, through the enactment of the attorney's fees portion of the Federal Civil Rights Act or other fee-shifting statutes, has preempted state legislatures or ethical bodies from enacting prohibitions which interfere with those statutes. The Supreme Court expressly declined to rule on this point in Evans, because it found that the State of Idaho had not passed a statute or otherwise attempted to interfere with the operation of the attorney's fees portion of the Federal Civil Rights Act. Id. at 739-40. Nonetheless, were this Commission to maintain the kind of prohibition set forth in Opinion No. 17, a significant constitutional question would arise. Thus, in view of the fact that the Supreme Judicial Court has not seen fit to impose such a prohibition expressly in the Code of Professional Responsibility, the Commission, for this additional reason, is reluctant to read one into it.

Footnotes

[1] At the time of the promulgation of the Maine Bar Rules, November 1, 1978, the Grievance Commission was entrusted with the responsibility both of resolving disputes as to past behavior of lawyers and of rendering advice as to their future conduct. On February 15, 1985, this latter function was transferred to the newly established Professional Ethics Commission. The determinations of the Grievance Commission prior to 1985 are therefore precedent for Ethics Commission advisory opinions.

[2] Indeed, the dissent expressly encouraged state and local organizations to declare such conduct unethical. Id.

[3] The Opinion notes that the rules most closely related to the question, Rules 3.4(f) and 3.7(c) and (i), "dealing with the interest of a lawyer in or antagonistic to his client's interest, are not strictly applicable because counsel in a class action never really has an 'interest' in the client's cause of action." Id.

[4] As well as Opinion No. 17, decided on January 15, 1981.

[5] Indeed, the Supreme Court characterized the Opinion as "bottomed ultimately on Section 1988," id. at 728, n. 15, and therefore not an opinion on ethics at all.