Introduction 2 I. What Lawyers May Not Do 8 A. Lawyers May Not Take Away Clients' Rights to Make Settlement Decisions 8 B. Lawyers May Not Vary the Allocation of Decision-Making Authority on Settlement through Contract 9 C. Lawyers May Not Contract with Clients for the Right to Withdraw Following Rejection of Settlement Advice 10 II. What Lawyers May Do 13 A. Lawyers May Limit the Scope and Duration of Their Representation Obligations 14 B. Lawyers May Recoup Fees for Client Representations 22 1. The Problem of Evans v. Jeff D 24 2. The Solution in Venegas v. Mitchell 27 C. Lawyers May Use Representation Arrangements that Transfer Funding Risks to Third-Party Payers 30 1. Third-Party Payer Arrangements 31 2. Third-Party Funder Requests for Litigation Risk Assessments from Public Interest Lawyers 34 Conclusion 39 Appendix 41 INTRODUCTION
More than thirty years ago, in a famous article entitled Against Settlement, Professor Owen Fiss argued against settlement in public interest cases. (1) Fiss's provocation spawned an outpouring of responses over many years. Many commentators criticize Fiss's argument for a host of reasons. (2) Today, no one argues that public interest lawyers should not settle cases. Yet, an ongoing preoccupation with Fiss's article arguably reflects a deep, continuing ambivalence about case settlement in public interest law.
The issues that confront public interest lawyers in settling cases are often basic but thorny ones. (3) For example, what should a lawyer do when a non-fee-paying client decides against accepting a settlement offer the lawyer believes is the best outcome the client is likely to obtain? Sometimes it may be the client who wants to settle and the lawyer who wants to continue pursuing a case in order to establish a certain point of law. (4) Ethics precepts instruct lawyers to follow the client's instructions in both of these situations. Yet, when public interest lawyers are called upon to continue providing legal services to clients with hopeless cases, these lawyers face financial detriment and may soon find themselves out of business if they receive no compensation for their services. (5)
Settlement poses special difficulties for public interest lawyers because, in economic terms, clients who receive free legal services do not have to "internalize" the costs of these services. They do not face the economic considerations that help discipline clients' decisions about how much legal services to consume. Practical and monetary considerations necessarily constrain the ambitions of fee-paying clients. Clients who do not have to pay for legal services do not need to focus on the financial implications of settlement decisions in the same way that fee-paying clients do.
Moreover, political and ideological goals, rather than strictly monetary ones, often motivate clients in public interest cases. The potential complexity of such goals can further complicate client decisions about when and whether to settle. And clients who have decided to sue powerful institutions for breaches of the public interest often may not be the "settling" type. They may have a greater-than-average willingness to confront authority, and they may not be disposed towards accepting their counsel's advice about when and how to end legal confrontations. In this Article, I refer to this basic set of problems involving non-fee-paying clients who do not want to heed their lawyers' advice about whether to accept settlement offers as the settlement problem in public interest law.
Following many commentators and the Supreme Court in In Re Primus, (6) I define public interest law as having two features. First, public interest law involves legal services arrangements in which clients typically do not pay for the services they receive, usually because they cannot afford to do so. Second, in public interest law, attorneys typically provide legal services primarily for public-regarding reasons rather than primarily out of pecuniary motives. Public interest lawyers must make a living, of course, but their primary motive, as the Supreme Court has pointed out, is to advance public justice rather than to enrich themselves financially. (7) This, indeed, was why Fiss so ardently opposed case settlement in public interest cases and why ambivalence about settlement in this context remains: the role of public interest lawyers is or should be to achieve public justice, rather than to simply "settle" for something less. (8) Drawing from In Re Primus, Fiss, and many other sources, I use this two-part definition of public interest law, i.e., nonpaying clients + public regarding objectives = public interest law, for operational purposes in this Article. (9)
Public interest lawyers not only face potentially difficult clients, but also confront many other difficulties in settling cases. As many critics of Fiss's anti-settlement position have pointed out, in the real world--as opposed to Fiss's ideal world of pure "public justice" (10)--public interest lawyers confront an imperfect and harried judiciary. Over the past several decades, the judiciary has crafted increasingly restrictive legal doctrines, which embody values far different from those Professor Fiss would endorse under the public justice banner. Public interest lawyers typically handle crushing caseloads, striving to do the best they can for as many desperate clients as possible. Public interest lawyers have altruistic motives; they want to help people, and they realize that the clients who end up in their offices lack the resources to obtain legal help elsewhere. They thus face great pressure to do as much for as many people as possible. They commonly must perform triage among many needy clients, while facing long odds with few resources in David-versus-Goliath-type legal contests. (11)
At the same time, public interest lawyers must sustain financially viable practice models. Scott Cummings and Deborah Rhode have tracked public interest lawyers' experimentation with new practice forms in response to decreases in public funding for delivering legal services to poor and other vulnerable populations. (12) In this environment (as, indeed, in all practice settings), settling cases offers an important avenue for resolving disputes. Settlement may produce better results for clients than going forth with the risks of litigating claims to final judgment. (13)
Legal ethics rules strictly regulate lawyers' actions in handling case settlements. Quite properly, the American Bar Association's ("ABA") Model Rule of Professional Conduct ("Model Rule" or "MR") 1.2(a) and its state equivalents dictate that lawyers may settle cases only when their clients authorize them to do so. (14) Moreover, as the Supreme Court has held, public interest lawyers are ethically required to accept settlement offers that deprive lawyers of statutory attorneys' fees when this is best for their clients or when their clients want them to do so. (15) Many critics have argued that the Court's picture of public interest lawyers as able to continue to practice despite receiving no payment for their services when they settle cases ignores practice reality. (16) Public interest lawyers who rely on attorneys' fees can continue to practice only if they are able to receive the attorneys' fees Congress has authorized. Congress has done so in more than one hundred statutes that shift attorneys' fees to plaintiffs when they have successfully pursued cases affecting the public interest in areas such as civil rights, environmental law, and whistleblower protection. (17)
This Article addresses the basic but pressing legal ethics problems public interest lawyers face when non-fee-paying clients do not want to accept lawyers' settlement advice. (18) After analyzing the problem, this Article offers several ethically permissible paths towards a solution. Part I addresses the law under MR 1.2(a) and other legal ethics rules. (19) These rules provide a legal baseline for how the settlement problems in public interest law can be addressed. The rules state that clients must have unrestrained rights to instruct their lawyers as to settlement. Lawyers who disregard this principle face potential disciplinary consequences, and no lawyer should risk this, no matter how frustrating settlement problems in public interest law may be. This does not necessarily mean, however, that public interest lawyers must accede to unreasonable demands. Just as in any other representation, lawyers who agree to represent non-fee-paying clients are entitled to legally appropriate protections against clients monopolizing their time, efforts, and other limited resources in pursuit of unreasonable or unattainable goals. In public interest representations, the costs of client unreasonableness fall on lawyers' shoulders (as well as other potential clients in need of services). Solutions must be found that shift these costs away from lawyers (and, indirectly, other clients). Such solutions must reconcile the important interests on all sides of the problem. They should preserve the legal ethics principle that grants primacy to clients' rights to make settlement decisions. At the same time, they should protect lawyers' traditional rights to shape the duration, costs, and structure of the legal representations they provide.
Part II outlines three such possible approaches. They involve: (A) crafting limited scope or duration representation agreements more often in public interest representations, (B) designing representation agreements that reduce clients' obliviousness to the costs of lawyers' services by imposing some expenses on clients in protracted representation scenarios, and (C) adopting representation arrangements that transfer responsibility for funding and for the risks of irrational settlement decisions away from lawyers and to third-party payers.
WHAT LAWYERS MAY NOT DO
Before examining what lawyers ethically may do in the face of settlement...