Exploring Early Settlements: A Sign of Weakness or Ethical Duty?

By Charlotte E. Thomas
Special to the Legal

Some time ago, a client asked me to explore the possibility of an early settlement with opposing counsel just after he had filed an answer and counterclaim. I was happy to do this. In chatting with a colleague about the approach, he cautioned that opposing counsel would probably view the call as a sign of weakness. I disagreed. How could trying to make a prompt resolution of a lawsuit be a sign of weakness?

Undeterred, in accordance with my client's instructions, I called opposing counsel and asked if he wanted to talk settlement. His response: "Most people would interpret the call as a sign of weakness." That case did not settle early.

Actually, the case stormed on for five years through bitter discovery battles, expensive summary judgment motions, and motions for sanctions. In the end, the resolution was one that easily could have been crafted in that initial telephone call before the vast expenditures by both camps.

It is not a sign of weakness to try to settle a case early. It doesn't mean that a lawyer views her case as tenuous and has decided to throw in the towel. Nor does it mean that a lawyer is scared of a prominent opposing counsel or the thought of a jury trial. After all, most of us chose litigation for the thrill of trial, not because we are afraid of it. Rather, trying to settle a case early usually is the right thing to do for our clients to save money, time and the psychological commitment of litigation.

In the vast majority of cases, an early settlement is in the client's best interest. Take, for example, the instance of a "wasting" insurance policy or whenever fees and expenses are borne directly by a business or individual. To be sure, in some types of cases -- the pro bono defense in mortgage foreclosure actions, for example -- delay in and of itself is the "best result" for the client. Such a broad stroke, however, cannot always be prescribed, even for the category of "delay is the best result" litigation. All clients must eventually close the book and move on, and usually it is in their interest to do so earlier rather than later. 

While it may be very much in a client's interest to settle early, some litigators prefer to allow a case to develop before settling it. These attorneys may justify their stance by claiming that some fact development is critical before exploring settlement. At some subconscious level, however, the lawyer may also want the legal representation -- and the attorney fees -- to continue.

The Rules of Professional Conduct can be read to prescribe an ethical duty to explore early settlement options in litigation. Rule 1.4 directs lawyers to "reasonably consult" with a client as to strategies to accomplish the client's objectives. An attorney-client discussion about settlement is a necessary component of any discussion of litigation "objectives," since settlement is the outcome -- if not the express objective -- of most litigation. Rule 2.1 adds that a lawyer's duty to provide independent professional judgment and candid advice should take into account economic facts that may be relevant to the client's situation.

The interplay of these rules counsel that lawyers should speak to their clients early about crafting a settlement strategy for litigation. An attempt at early resolution of litigation is pragmatic and cost-effective, but it may also be past and parcel of a lawyer’s ethical duty to represent his or her client.

Charlotte E. Thomas is a partner with Duane Morris, where she practices in the area of complex business litigation. She represents parties in securities actions, broker-dealer and financial advisor arbitrations, lender liability actions, directors and officers actions, intellectual property lawsuits, environmental and toxic tort actions, actions under 42 U.S.C. § 1983, and the defense of class actions. She can be contacted by e-mailing cthomas@duanemorris.com.

Comments

[Union County Orthodontist]

Asking for an early settlement option could be viewed as a sign of weakness but is the best use of resources both economic and judicial and should be encouraged. Mediation tries to get to the same end-result