California Standing Committee on Professional Responsibility and Conduct, Formal Op. No. 2009-176

Brief Summary
The California Standing Committee on Professional Responsibility and Conduct opined that a waiver of the right to attorney fees pursuant to a settlement agreement is generally permissible.

Complete Summary
The Standing Committee on Professional Responsibility and Conduct addressed three issues related to waiver of a right to attorney fees in a settlement agreement. Such fee-waiver settlements commonly arise under fee shifting statutes when the defendant makes an offer of settlement contingent on the plaintiff waiving her right to request attorney fees. This was the hypothetical on which the Committee based its opinion.

The Committee first opined that, as with settlement agreements in general, the plaintiff’s lawyer must inform his or her client of the fee-waiver settlement offer and abide by the client’s decision to settle — even if that decision substantially reduces the lawyer’s ultimate fee.

Second, the Committee opined that defense counsel may ethically recommend and convey fee-waiver settlements on behalf of the defendant. The only reason such conduct was at issue was the existence of Los Angeles County Bar Association, Formal Op. No. 445 (1987) (“Opinion 445”), which found that such settlement offers are unethical. The conclusion in Opinion 445 was based on both the lawyer’s obligation to provide pro bono legal services and to avoid entering contracts that restrict the lawyer’s right to practice law. The Committee acknowledged the legitimacy of both obligations, but found no connection between these obligations and the issues surrounding fee-waiver settlement offers.

Finally, the Committee expanded its opinion to encompass cases in general rather than limiting it to the hypothetical situation it was presented with. The Committee acknowledged the risk that a broad availability of fee-waiver in settlements would discourage lawyers from representing plaintiffs who are granted statutory rights to attorney fees. But the Committee believed this fear unfounded based on empirical evidence. For example, the Committee noted that attorneys apparently have not been deterred from taking cases under the Civil Rights Attorney’s Fees Awards Act of 1976, even though the Supreme Court held in 1986 that fee-waiver settlement agreements were permissible under the Act.

Significance of Opinion
This opinion is in line with a nearly unanimous majority of opinions on this subject.

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