September 17, 1993
A lawyer may not instruct a client to tender a settlement offer directly to an opposing party represented by counsel unless the opposing party's counsel consents.
A lawyer who knows that another lawyer has not communicated a settlement offer to a client is required to report the matter to the Attorney Grievance Commission.
References: MRPC 1.2(a), 1.4, 4.2, 8.3(a), 8.4(a) and (c); RI-145; CI-920; ABA Op 92-362; In re Marietta, 223 Kan 11, 569 P2d 921 (1971).
A lawyer has raised two questions concerning communications of the settlement of a dispute between the lawyer's client and another party. First, the lawyer asks if the client, a defendant in a lawsuit, can be instructed to directly tender a settlement offer to the plaintiff, although the plaintiff is represented by counsel. Secondly, the lawyer asks if the lawyer knows that the offer has not been previously tendered to the plaintiff, is the lawyer obligated to report the matter to the Attorney Grievance Commission.
MRPC 4.2 states:
"In representing a client, a lawyer shall not communicate about the subject of the representation with a party whom the lawyer knows to be represented in the matter by another lawyer, unless the lawyer has the consent of the other lawyer or is authorized by law to do so."
MRPC 8.4 states:
"It is professional misconduct for a lawyer to:
"(a) violate or attempt to violate the Rules of Professional Conduct, knowingly assist or induce another to do so, or do so through the acts of another;
"(b) engage in conduct involving dishonesty, fraud, deceit, misrepresentation, or violation of the criminal law, where such conduct reflects adversely on the lawyer's honesty, trustworthiness, or fitness as a lawyer;
"(c) engage in conduct that is prejudicial to the administration of justice;
"(d) state or imply an ability to influence improperly a government agency or official; or
"(e) knowingly assist a judge or judicial officer in conduct that is a violation of the Code of Judicial Conduct or other law."
MRPC 8.4(a) prohibits a lawyer from doing indirectly what the lawyer could not do directly. MRPC 4.2 forbids a lawyer from communicating with a party known to be represented by counsel in the matter, unless the counsel consents.
ABA Op 92-362 addressed the situation in which a lawyer representing a plaintiff in civil litigation made a settlement offer to opposing counsel, but received no response. The lawyer suspected the offer had not been communicated to the opposing party by opposing counsel, and asked what contacts could be made directly to the opposing party and what counsel could be provided to the lawyer's client regarding independent contacts the client could make to the opposing party. The ABA Committee concluded that ABA Model Rule 1.1 [competent representation], 1.2 [consultation with the client as to the means by which the objectives of the representation are pursued], and 1.4 [providing the client with information necessary for informed decision-making] require the lawyer for the offeror-party to "advise that party with respect to the lawyer's belief as to whether the offers are in fact being communicated to the offeree-party," and "to discuss not only the limits on the lawyer's ability to communicate with the offeree-party, but also the freedom of the offeror-party to communicate with the opposing party offeree-party."
The ABA Committee noted that prior to adoption of Rule 4.2 an amendment was defeated which would have added the phrase "or cause another to communicate." The history of the ABA Model Rules indicates that the amendment was defeated because Rule 8.4(a) generally prohibited a lawyer from violating a Rule through the acts of another. Nevertheless, the ABA Committee refused to address the impact of Rule 8.4(a) on the inquiry before it.
We find the reasoning of the ABA Committee troublesome, and do not agree with the ABA Committee's result.
In CI-920 we distinguished between the situation of a lawyer providing a copy of a draft settlement agreement to a client for discussion purposes, and the situation of asking a client to take a document to the represented opposing party for signature. "The former is ethical, the latter is not." We cautioned in that opinion that "under no circumstances should a lawyer encourage a client to take action which might tend to interfere with the attorney-client relationship of the adverse party."
If the basic premise of MRPC 4.2 is valid, then it matters not if the lawyer communicates directly or indirectly, through the client. Although not binding, it is instructive to note that the Kansas Supreme Court found it impermissible for a lawyer to communicate with another party through the client, when the other party was represented by a lawyer. In re Marietta, 223 Kan 11; 569 P2d 921 (1971). In RI-145 we found that the conduct of a lawyer assisting in the negotiation of a property settlement between the parties without the presence, consent or knowledge of the opposing counsel was so egregious that it must be reported to disciplinary authorities.
The Rules set parameters for the conduct of lawyers, and not clients. The lawyer is responsible for the lawyer's behavior and not that of the client. Admittedly, there is a tension between the competing interests of informing one's client and the knowledge of what the client will do with that information. As noted in CI-920, even if the lawyer knows the client may share the draft settlement document with the opposing party, the lawyer does not violate the Rules if the lawyer does not advise or encourage the client to tender the offer.
A lawyer's telling a client that the lawyer believes a settlement offer has not been conveyed by opposing counsel, advising the client that the lawyer may not contact the opposing party directly, and finally advising the client that the client is free to contact the opposing party directly, as condoned in ABA Op 92-362, is tantamount to an invitation to the client to contact the opposing party.
It is "encouraging a client to take action which might tend to interfere with the attorney-client relationship of the adverse party" contrary to CI-920. MRPC 4.2 forbids contact with a represented party unless the party's counsel consents; the ABA formulation totally ignores this requirement.
Thus, MRPC 4.2 and 8.4(a) prohibit a lawyer from instructing a client to directly tender a settlement offer to a represented opposing party.
The inquirer asks whether the opposing counsel's failure to communicate a settlement offer to the opposing party must be reported to disciplinary authorities. MRPC 8.3(a) states:
"(a) A lawyer having knowledge that another lawyer has committed a significant violation of the Rules of Professional Conduct and raises a substantial question as to that lawyer's honesty, trustworthiness, or fitness as a lawyer, shall inform the Attorney Grievance Commission."
It should be noted that anyone alleging attorney misconduct may bring the matter to the attention of the Attorney Grievance Commission, MCR 9.112(a); a lawyer need not wait until reporting is required under MRPC 8.3(a) before reporting a matter. The comment to MRPC 8.3 states in part:
"If a lawyer were obliged to report every violation of the Rules, failure to report any violation will, itself, be a professional offense. Such a requirement existed in many jurisdictions, but proved to be unenforceable. This Rule limits the reporting obligation to those offenses that a self-regulating profession was vigorously endeavored to prevent. A measure of judgment is, therefore, required and confirmed with the provisions of this Rule. The term 'substantial' refers to the seriousness of the possible offense and not the quantum of evidence of which the lawyer is aware."
This Rule does not require every violation of the Michigan Rules of Professional Conduct be reported to the Attorney Grievance Commission. Instead, only those things that go to the core of being a lawyer need be reported to the Attorney Grievance Commission by another lawyer. Thus, the standard for whether or not a lawyer shall inform the Attorney Grievance Commission requires one to determine that a fellow lawyer has committed a serious offense that speaks to the lawyer's honesty, trustworthiness or fitness as a lawyer.
Having considered the standard, we next address the substantive Rules that are alleged to have been violated. MRPC 1.2(a) states in pertinent part:
"A lawyer shall seek the lawful objectives of a client through reasonably available means permitted by law and these rules. A lawyer does not violate this rule by acceding to reasonable requests of opposing counsel which do not prejudice the rights of the client, by being punctual in fulfilling all professional commitments, by avoiding offensive tactics, or by treating with courtesy and consideration all persons involved in the legal process. A lawyer shall abide by a client's decision whether to accept an offer of settlement or mediation evaluation of a matter . . . ."
MRPC 1.4 states:
"(a) A lawyer shall keep a client reasonably informed about the status of a matter and comply promptly with reasonable requests for information. A lawyer shall notify the client promptly of all settlement offers, mediation evaluations, proposed plea bargains.
"(b) A lawyer shall explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation."
The Comment to MRPC 1.4 states in part:
"A lawyer who receives an offer of settlement or a mediation evaluation in a civil controversy, or a proffered plea bargain in a criminal case, must promptly inform the client of its substance. See Rule 1.2(a). Even when a client delegates authority to the lawyer, the client should be kept advised of the status of the matter."
In failing to communicate a settlement offer, a lawyer may rob the client of the ability to make an informed decision. The lawyer has substituted the lawyer's judgment for that of the client regarding the acceptability of the settlement proposal. Only two circumstances come to mind where such substitution of judgment is understandable: (1) when the client's ability to make decisions about the representation is impaired and MRPC 1.14 is triggered; and (2) where a client has previously given the lawyer precise instructions regarding the settlement terms which are acceptable, and the proposed settlement terms are totally out of the range of what the client has described, i.e., client seeks $50,000 and the offer is for $500.
The role of a lawyer is to seek the lawful objectives of the lawyer's client. Those objectives may shift during the course of the lawyer's representation of a client on a matter. To illustrate that point, a lawyer may be told by the client that the client would not accept less than X amount of dollars after a lawyer enters negotiations on Monday. That same client, because of business reversals, may find that a sum less than X would be acceptable on Friday and would be unable to accept a settlement offer for that amount if the lawyer does not carry that settlement offer back to the client. Obviously, a lawyer cannot abide by a client's decision whether or not to accept the offer of settlement or mediation evaluation of a matter if the offer has never been presented to the client by the lawyer.
Unless there are circumstances which cast the opposing lawyer's refusal to communicate the settlement offer in a different light, it could be concluded that the opposing lawyer's refusal not only breaches duties to the client's opposing party, but also is conduct prejudicial to the administration of justice, MRPC 8.4(c).
Although it is unclear how the inquirer would come by the "knowledge" that opposing counsel has failed to communicate a settlement offer, if the inquirer in fact has such knowledge the incident should be reported to the Attorney Grievance Commission.