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Action on behalf of clients whose attorneys “allegedly” breached fiduciary duties relating to settlement offers and demanding improper contingency fees and costs. (Click here for more details).

The terms of the agreement demanded by the lawyers in this case as a condition of settlement (they were very sensitive to word about this case getting out), do not allow us to disclose any details about this case. However, as a service to readers, we describe the nature of the issues so they may be alert to and guard against this kind of conduct in their own cases. The case involves what can happen after a settlement (in this case, a very large one) is reached, and attorney over-reaching takes place.

Many cases we are presented with involve clients who believe they were pressured, perhaps even coerced into accepting a settlement they did not want. In this case, however, the attorneys did just the opposite; they pressured the clients not to accept a settlement. Indeed, the attorneys allegedly did not disclose settlement offers to the client, and when an offer was eventually disclosed, attorneys coerced clients into rejecting it in order to force the case to go further toward trial, where coincidentally, attorney’s contingency fee would increase from 33% to 40%. Through the Court’s intervention (after seeing how distressed clients were), the case was settled. After the settlement, attorneys claimed that clients had “orally” agreed to give them a flat fee to cover fees and costs (clients denied this) which flat fee coincidentally paid them substantially more than they would have been entitled under their fee agreement. After we became involved, and attorneys realized their “oral” agreement was not going to be enforceable, they demanded their 40% and unreasonable amounts of money they claimed they had spent on costs. The problem was that the plaintiffs (my clients) were the last of a larger group of plaintiffs in the case, and were being saddled with the entirety of the costs expended on the whole case, none of which had been deducted from other plaintiffs’ shares. The case was settled approximately a month before it was set to be heard.

The lessons readers should take from this case vignette are several. First, don’t be bullied into either accepting or rejecting a settlement offer. Many of the people we hear from believe they have been pressured into a settlement, sometimes with a threat that the attorney will withdraw or abandon the client if they don’t accept. You are the one that has absolute and ultimate authority over settling the case. Undoing a settlement you’ve actually agreed to, either in a mediation or a settlement conference, or put on the record, is extremely difficult. If you have any uncertainty about accepting or rejecting an offer, ask that the offer be kept open for at least 24, 48 or even 72 hours to allow you to think about it. Secondly, understand what your agreement says about how fees and costs are to be deducted. Clear this up before you settle, and GET IT IN WRITING FROM THE LAWYER. Third, at the very least demand to see an accounting of the costs the attorney is claiming, and on anything that seems strange or questionable, ask for the documentation (a bill, statement or cancelled check) to determine what the item was, and why it was incurred.