Can a lawyer condition settling a fee or returning the client's file on the client releasing or agreeing to arbitrate malpractice claims against the lawyer?

Plain-English summary

Opinion E-85-12 addressed a lawyer who had represented a client, obtained a judgment, and later handled unrelated work; the client became dissatisfied on unrelated grounds and requested the file. The committee was asked two questions: whether a lawyer may compromise an outstanding fee in exchange for the client signing a release of legal malpractice claims, and whether the lawyer may ask the client to agree to arbitrate any malpractice claims before commencing a legal action in exchange for compromising the fee.

The committee concluded that a lawyer may not ethically condition the return of client documents and the settlement of related fees claimed by the lawyer upon the client's release of legal malpractice claims that might arise from the past representation, or upon the client's agreeing to submit any such claims to arbitration before commencing any legal action, unless the client is advised in writing to secure independent counsel in negotiating and completing such an agreement. It cited former SCR 20.33 and 20.31(6), Model Rule 1.8(h), and State v. Tadych.

Currency note

This opinion was issued in 1985, before Wisconsin's July 1, 2007 adoption of the revised Rules of Professional Conduct for Attorneys (the state's Ethics 2000 update), and it analyzes conduct under the former Code. Agreements limiting or settling a lawyer's malpractice liability are now governed by SCR 20:1.8(h) / Model Rule 1.8(h), and the obligation to surrender client papers on termination by SCR 20:1.16(d) / Model Rule 1.16(d). 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 Treat this page as historical context, not current guidance.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: Can a lawyer settle a fee in exchange for the client releasing malpractice claims?

A: The committee concluded a lawyer may not condition the fee settlement or return of the file on such a release unless the client is advised in writing to secure independent counsel.

Q: Can a lawyer require the client to agree to arbitrate malpractice claims before suing?

A: The committee treated this the same way: it may not be a condition of returning the file or settling fees unless the client is advised in writing to secure independent counsel.

Q: Can the lawyer withhold the client's documents to force the deal?

A: No. The committee concluded the lawyer may not condition the return of client documents on the client's release or arbitration agreement under these terms.

Background and rules framework

The opinion interpreted the former Code provisions on limiting liability and handling client property (SCR 20.33 and 20.31(6)) and referenced Model Rule 1.8(h). The concern is now governed by SCR 20:1.8(h) / Model Rule 1.8(h), which restricts agreements prospectively limiting malpractice liability and settling claims with unrepresented clients or former clients, together with SCR 20:1.16(d) / Model Rule 1.16(d) on surrendering client papers.

Citations and references

Rules of Professional Conduct:

• Wis. SCR 20.33, 20.31(6) / Model Rule 1.8(h) (limiting liability to a client) (former Code provisions)
• Model Rule 1.16(d) (surrender of client papers on termination)

Cases:

• State v. Tadych, 69 Wis. 2d 77, 230 N.W.2d 162 (1975)

See also

• WI Ethics Op. EF-16-03: Surrendering the File Upon Termination
• WI Ethics Op. EF-20-01: Responsibilities When a Grievance Is Filed
• WI Ethics Op. E-87-4: Malpractice Counsel Who Is Regular Opposing Counsel

Source

• Landing page: https://www.wisbar.org/formembers/ethics/pages/formal-opinions.aspx
• Original PDF: https://www.wisbar.org/formembers/ethics/Ethics%20Opinions/E-85-12.pdf