NOTE: The term “mediation” in this opinion refers to “case evaluation” pursuant to the amendments to MCR 2.403 effective August 1, 2000.
May 28, 1992
A lawyer who represents multiple plaintiffs in a matter must withdraw from representation of all the clients if a mediation award in the matter is accepted by some clients and rejected by others, unless all clients consent to the lawyer's continued representation.
References: MRPC 1.2(a), 1.7(a) and (b), 1.8(g).
A mediation determination of $7,500 is to be divided equally among three plaintiffs, $2,500 to each. The lawyer who represents all three plaintiffs asks about the ethics ramifications if one client rejects the mediation award and the other clients accept, and whether payment of three separate mediation fees would have avoided ethics problems.
MRPC 1.8(g) states:
"A lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of or against the clients, or, in a criminal case, an aggregated agreement as to guilty or nolo contendere pleas, unless each client consents after consultation, including disclosure of the existence and nature of all the claims or pleas involved and of the participation of each person in the settlement."
A lawyer has the obligation to consult with each of the clients and advise each as to the consequences of accepting the mediation award. If one or more of the clients does not want to accept the mediation award, the lawyer has a conflict of interest. MRPC 1.8(g) prohibits a lawyer from making an aggregate settlement unless each client agrees, but does not address the consequences when the clients do not agree. MRPC 1.7 states:
"(a) A lawyer shall not represent a client if the representation of that client will be directly adverse to another client, unless:
"(b) A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer's responsibilities to another client or to a third person, or by the lawyer's own interests, unless:
"(1) the lawyer reasonably believes the representation will not adversely affect the relationship with the other client; and
"(2) each client consents after consultation.
"(1) the lawyer reasonably believes the representation will not be adversely affected; and
"(2) the client consents after consultation. When representation of multiple clients in a single matter is undertaken, the consultation shall include explanation of the implications of the common representation and the advantages and risks involved."
MRPC 1.2(a) reserves the decision concerning acceptance or rejection of a settlement offer to the client. One client's rejection of the mediation award is directly adverse to the interests of the other clients who wish to accept, and MRPC 1.7(a) applies. The acceptance of the mediation award by two clients also materially limits the lawyer's responsibilities to the client who rejects the mediation award, so MRPC 1.7(b) applies.
We now consider whether a disinterested lawyer could reasonably believe the representation would not adversely affect the relationship with the other clients [MRPC 1.7(a)(1)], or that the representation would be adversely affected [MRPC 1.7(b)(1)]. If so, the lawyer must withdraw from the representation of all clients, and client consent will not vitiate the conflict. See e.g., RI-98, RI-111.
Under court rules, the mediation award is deemed rejected unless all clients accept. We assume that the clients received thorough counseling regarding that consequence, both at the outset of the multiple representation and at the point when the mediation determination was presented for consideration. Therefore, the clients should have been counseled that failure to agree to accept the mediation award would result in the matter being taken to trial and may expose the clients to sanctions if they do not prevail at trial. Similarly, if the clients accept the mediation award and the opposing party does not, the matter will be set for trial. In any circumstance, the lawyer's responsibility is to handle the matter at trial. Since the conflict arises between the clients due to the clients' decision about settlement, and not because of any factual dispute, differing legal argument or benefit or detriment to a client in pursuing the representation matter, the lawyer's ability to handle the trial would not be adversely affected. Therefore, the clients may waive the conflict. MRPC 1.7(a)(2) and 1.7(b)(2).
Paying individual mediation fees in order to receive separate mediation awards for each client does not relieve the conflict question. The conflict does not arise because the mediation award is aggregate or individual, but because the lawyer has undertaken duties to each client which are in conflict if the clients make differing decisions regarding acceptance of the award. When an individual mediation fee is paid for each client, the lawyer may continue representation if all clients consent. MRPC 1.7(a)(2), 1.7(b)(2).