Higgins Settlement Law, L.L.P is a tax-law firm that specializes in the taxation of settlements. As part of that specialization, we advise attorneys on the ethical rules applicable to aggregate settlements.

Questions and Answers re Aggregate Settlement Ethics Rule:

What ethics rule applies to aggregate settlements?

Every state has an ethics rule based upon Rule 1.8(g) of the American Bar Association Model Rules of Professional Conduct, in substantially the following form:
“(g) A lawyer who represents two or more clients shall not participate in making an aggregate settlement of the claims of or against the clients, or in a criminal case an aggregated agreement as to guilty or nolo contendere pleas, unless each client gives informed consent, in a writing signed by the client. The lawyer’s disclosure shall include the existence and nature of all the claims or pleas involved and of the participation of each person in the settlement.”

This rule applies whether an offer of settlement is for two clients1 suing in an automobile accident or for hundreds of clients in a mass tort.

Where do I find the rule in my state?

The ethics rule that applies to aggregate settlements in your state is here.

What does the rule require me to do?

In every state, a lawyer must consult and obtain written consent from each of his or her clients of an aggregate settlement offer before accepting the offer.

What if I fail to comply fully?

The penalty for failure to obtain the informed written consent resulting in the allocation prior to acceptance is fee forfeiture2 or license suspension3.

Can I use a grid or a simple letter?

As long as the information required is conveyed, then either a grid or a letter will satisfy the rule.

1 In the Matter of Disciplinary Proceedings Against Jeffrey D. Berlin, 306 W.2d 288,290, 743 N.W.2d 683 (2008) (“by participating in making an aggregate settlement of both C.B.’s individual claims and the claims of D.B.’s estate without consulting with and obtaining the informed consent of C.B. and someone authorized by the probate court to act on behalf of D.B.’s estate, Attorney Berlin engaged in a prohibited transaction, in violation of former SCR 20:1.8(g).”)

2 Burrow v. Arce, 997 S.W. 2d 229, 240 (Texas Sup. Ct. 1999) (“An attorney’s compensation is for loyalty as well as services, and his failure to provide either impairs his right to compensation.”)

3 Berlin, supra note 11.