Can I settle a claim with my own client?

Like many lawyers, I’m not dealing with most of my clients on their best day. Their license is being investigated, they’ve discovered a mistake, or their client is demanding money because of an actual or perceived problem. My clients often want to get their matters over with quickly. A question I get frequently, often in the initial consultation, is whether the lawyer can offer to settle the matter financially with their client to make everything go away.

This is a “no, not everything” answer.

First, if you’re in a position where you’re being asked to pay or are considering it on your own, it may be the right time to put your malpractice carrier on notice. I know that seems counter-intuitive; chances are, you’re wanting to avoid involving your insurer and potentially increasing your premiums. However, your insurance company can be a good resource—they’re not emotionally involved like you probably are, and they may be able to appoint counsel or otherwise make sure any settlement is done appropriately.

But, beyond that, SCR 20:1.8(h)(2) prohibits lawyers from settling malpractice claims unless they’ve advised their unrepresented client or former client in writing that they should consult with independent counsel, and give them reasonable time to do so. However, unless this agreement is prospective—i.e. in a fee agreement or otherwise before any inkling of a malpractice claim has arisen—the client does not have to actually be represented independently. An agreement to prospectively limit such liability requires the client actually have independent counsel. SCR 20:1.8(h)(1). (Also, tread carefully in other states—Wisconsin departs from the Model Rule.)

The Rule is silent about settling a pure fee dispute (which is not malpractice, but contractual), probably for good reason—most of us have cut a bill or refunded money, even when we didn’t think we should have—to placate an angry client and head off a fee arbitration or small claim.

Importantly, SCR 20:1.18(h)(3) prohibits lawyers from making an agreement limiting a person’s right to file a grievance against the lawyer. (This is a Wisconsin-specific prohibition not found in the Model Rule, but some other states have variations.) This Rule is broad, and is not limited to clients. In practicality, such a provision can’t appear in any agreement, ever.

That said, it is unlikely (though not impossible) that a client who has received a refund or a settlement of a malpractice claim will subsequently file a grievance—most people feel their concerns have been heard, they’ve been made whole, they move on.