Woodland Hills personal injury attorney Barry P. Goldberg is a constant critic of accident lawyers that insert unfair provisions into Retainer Agreements. No wonder why prospective new clients are weary of signing attorney fee agreements and have a distrust of plaintiff lawyers! Usually, my biggest complaint are provisions granting the lawyer “Power of Attorney” to sign all checks in the client’s name. However, this law firm has gone a giant leap passed that— they gave themselves sole authority the settle the case if they determine it is in the client’s “best interests!”
The case of Amjadi v. Jerrod West Brown (August 30, 2021) from Orange County should give pause to all plaintiff lawyers that are overreaching. In that case, the attorney fee agreement inserted a seemingly innocuous paragraph that essentially gave the lawyers the sole authority to decide if a case should be settled, and for how much:
“CLIENT agrees that if a settlement offer is tendered in the case by any defendants and the ATTORNEY believes in good faith that the settlement offer is reasonable, and that acceptance of the offer is in the CLIENT’s best interest, and should be accepted, CLIENT authorizes ATTORNEY to accept said offer on CLIENT’s behalf, at ATTORNEY’s sole discretion.”
As it turned out, plaintiff’s relationship with her attorneys soured, in part over a disagreement about whether to ask for a further continuance of trial. One of plaintiff’s attorneys e-mailed plaintiff the night before trial asking plaintiff how she wished to proceed, and indicating the attorneys were preparing a substitution of attorney.
On the morning of trial, plaintiff’s attorneys sought to be relieved as counsel for plaintiff based upon a conflict of interest. The trial court denied their motion to be relieved. Then, plaintiff’s approached defense counsel about a potential settlement for $150,000, an amount plaintiff had previously rejected. Defense counsel renewed the $150,000 offer. Jolly then advised plaintiff he was accepting the settlement offer on her behalf.
This circumstance was enough to raise eyebrows even if the odd provision was not in the Retainer agreement because it presented an obvious conflict of interests. The situation was made worse because it was a duress situation and it appeared that the plaintiff attorney was acting in his sole best interests. It may not have reached the level of a legal case and complaint to the State Bar if there was not a souring of the attorney-client relationship. Had the client actually discussed the range of possibilities, including settlement ranges, there might not have been a dispute at all, even though the provision violates State Bar Rules. Paramount for lawyers should be good communication with clients.
In Amjadi, supra, the court cited In the Matter of Guzman (Review Dept. 2014) 5 Cal. State Bar Ct. Rptr. 308, 314-315 (Guzman) for the proposition that retainer agreements purporting to grant the attorney the unfettered right to settle the client’s case are invalid. In Guzman, an attorney settled his clients’ case without their knowledge or consent, and relied upon a provision of his retainer agreement which provided him with sole authority to settle. (Guzman, supra, 5 Cal. State Bar Ct. Rptr. at pp. 313-314.)
In agreeing with Guzman, the Court held an attorney may not settle a client’s case over the client’s objection and any provision of a retainer agreement purporting to give an attorney such authority violates the Rules of Professional Conduct and is void. Consequently, the settlement was entered without authority and was voidable by plaintiff.
Next, the Court referred the matter to the State Bar for discipline of the plaintiff’s attorney. Business and Professions Code section 6086.7, subdivision (a)(2) requires the Court to notify the State Bar “[w]henever a modification or reversal of a judgment in a judicial proceeding is based in whole or in part on the misconduct, incompetent representation, or willful misrepresentation of an attorney.” Similarly, Canon 3D(2) of the Code of Judicial Ethics states “Whenever a judge has personal knowledge, or concludes in a judicial decision, that a lawyer has committed misconduct or has violated any provision of the Rules of Professional Conduct, the judge shall take appropriate corrective action, which may include reporting the violation to the appropriate authority.”
As a plaintiff’s attorney in Woodland Hills and the balance of Los Angeles County and Ventura County, I get the opportunity to view many attorney fee agreements and see provisions which are truly surprising and probably illegal. While I had never seen an agreement like the one at issue—giving the lawyer sole authority to settle a case—I have seen provisions that decidedly favor the lawyer over the client. As mentioned before, I question the “Power of Attorney” provisions permitting the lawyer to sign the client’s names to deposit checks. This provision is in many plaintiff attorney fee agreements.
Attorneys like to handle the money in the case without the client’s interference. Often, attorneys receive Medical Payment checks made payable directly to the client to reimburse for out-of-pocket medical expenses. Many lawyers like to “control” that money and decide who gets it and when. In addition, some lawyers actually take a fee on medical payments which can be dubious. Afterall, the client made the contract with his or her own insurance company to pay those medical expenses. Why should the attorney lay claim to that money at all?
In addition to Medical Payments, I have seen many plaintiff lawyers endorse the ultimate bodily injury settlement checks, deposit the money in trust and pay themselves first. This is usually sharp practice because the client has no input on the ultimate distribution of the settlement funds and is often left with small remains, while the attorney is paid early and in full. Best plaintiff attorney practice, in my opinion, is to involve the client in the distribution process to increase the understanding of where and how the bodily injury settlement money is being spent. This has a collateral benefit of having a happy client and for obtaining referrals in the future.