ABA-438
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| ABA Model Rule 1.8(g) provides specific rules for aggregate settlements. Such settlements are not defined in the Model Rules, but do not include certified class actions or derivative actions. Aggregate settlements occur "when two or more clients who are represented by the same lawyer together resolve their claims or defenses or pleas," even if all of the lawyer's clients do not face criminal charges, have the same claims or defenses, or "participate in the matter's resolution." Aggregate settlements may arise in connection with a joint representation in the same matter, but "they also may arise in separate cases" -- as with "claims for breach of warranties against a home builder brought by several home purchasers represented by the same lawyer, even though each claim is filed as a separate law suit and arises with respect to a different home, a different breach, and even a different subdivision." Similarly, aggregate settlements may "take a variety of forms." For instance, "a settlement offer may consist of a sum of money offered to or demanded by multiple clients with or without specifying the amount to be paid to or by each client," when "a claimant makes an offer to settle a claim for damages with two or more defendants," or when "a prosecutor accepts pleas from two or more criminal defendants as part of one agreement." Model Rule 1.8(g) "deters lawyers from favoring one client over another in settlement negotiations by requiring that lawyers reveal to all clients information relevant to the proposed settlement." Among other things, lawyers may not enter into agreements "that allow[] for a settlement based upon a 'majority vote' of the clients" the lawyer represents. "[B]est practices would include the details of the necessary disclosures in . . . writings signed by the clients." Information required to be disclosed under Model Rule 1.8(g) might be protected by Model Rule 1.6, which requires the clients' consent for disclosure to the other clients. "The best practice would be to obtain this consent at the outset of representation if possible, or at least to alert the clients that disclosure of confidential information might be necessary in order to effectuate an aggregate settlement or aggregated agreement." Lawyers should also advise their clients "of the risk that if the offer or demand requires the consent of all commonly represented litigants, the failure of one or a few members of the group to consent to the settlement may result in the withdrawal of the offer or demand." |