Settlement talks happen in and outside mediation and often are reduced to a Rule 11 Agreement. Settlement negotiations are typically related to the needs and interests of the client represented by counsel and limited to the case at hand. Sometimes a defendant seeks to bargain for protection against future representation of additional or future plaintiffs against defendant by the plaintiff’s attorney. This request might be motivated by a subjective desire for self-protection or perhaps a propensity for overzealousness. Such might look like this:
(a) a partnership or employment agreement that restricts the rights of a lawyer to practice after termination of the relationship, except an agreement concerning benefits upon retirement; or
(b) an agreement in which a restriction on the lawyer’s right to practice is part of the settlement of a suit or controversy, except that as part of the settlement of a disciplinary proceeding against a lawyer an agreement may be made placing restrictions on the right of that lawyer to practice.”
Comment 2 to Rule 5.06 is very much on point, that “Paragraph (b) prohibits a lawyer from agreeing not to represent other persons in connection with settling a claim on behalf of a client”
This rule (or one like it) is rarely interpreted and here are two instances where it came before a court. An agreement entered into by counsel for a plaintiff and the defendant to receive compensation in exchange for not pursuing claims for clients in the future has been held to be a violate Rule 5.6(b) of the District of Columbia Rules of Professional Conduct. See In re Hager, 812 A.2d 904 (D.C. 2002). Even when an individual lawyer might say he bargains in an individual capacity, rather than on behalf of clients, such spin is not enough to change the outcome of the Rules interpretation. On top of that, it is a conflict of interest to bargain for consideration for the plaintiff’s attorney and also for the client at the same time.
Another way to skin the cat involves the defendant retaining the plaintiff’s counsel, creating a conflict from representing future plaintiffs. In such an instance, the plaintiffs’ counsel might negotiate a retainer agreement to represent the defendant concurrently with the negotiation of a current plaintiffs’ claims. The reasoning may be that more plaintiffs may retain the plaintiff’s counsel while the instant dispute is still ongoing. The Oregon Supreme Court addressed this issue and held a retainer agreement with defendant, with the retainer held in escrow pending the outcome of the initial case for the plaintiff is a conflict of interest. In re Conduct of Brandt, 10 P.3d 906, 917-19 (Or. 2000). There, the Court determined that a limitation on the plaintiffs’ attorneys’ capacity to practice law was made “in connection” with the settlement of the plaintiffs’ claims and that this violated Disciplinary Rule 2-108(B) of the Oregon Code of Professional Responsibility. Id. at 917 n. 10. These non-Texas holdings are indicative of what could result where these matters to arise in Texas.
Still another issue is that the agreement impliedly affects those the attorney already or may already represent which is a conflict of interest that may violate TDRPC 1.09, “Conflict of Interest.” The attorney is agent and fiduciary for the client and for any future client. To make an agreement, the client needs to be consulted and to make this theoretical agreement about a future client would require the future (perhaps already represented client) would the trigger the obligation of the attorney to ensure a third party attorney counsels the client in advance of the agreement. In the absence of such consultation, what remains is a conflict of interest.
There is also a question as to whether or not the very request is a solicitation to violate an ethics rule— and whether this solicitation to violate an ethical obligation needs itself to be reported to those in the jurisdiction who enforce the ethics rules.