Evans v. Jeff D. Brief of the Committee on Legal Assiatance
Public Court Documents
January 1, 1985
Cite this item
-
Brief Collection, LDF Court Filings. Evans v. Jeff D. Brief of the Committee on Legal Assiatance, 1985. 8593183c-b19a-ee11-be36-6045bdeb8873. LDF Archives, Thurgood Marshall Institute. https://ldfrecollection.org/archives/archives-search/archives-item/8a993815-e94f-47ef-98e4-107c61bfe51f/evans-v-jeff-d-brief-of-the-committee-on-legal-assiatance. Accessed April 29, 2025.
Copied!
No. 84-1288
I n t h e
Bnpnmz (tort of tljr Imirfc Ifetrs
October T erm, 1985
John Y. E vans, R ose B owman, George Bachik
and W illiam Gruzinski,
Petitioners,
v.
Jeee D., P aula E., John M., and Dusty R., Minors, By
and Through Their Next Friend, Charles Johnson, III,
Individually and on Behalf of the Class They Represent
and Mark Clary, Intervenor,
Respondents.
ON WRIT OE CERTIORARI TO THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
BRIEF OF THE COMMITTEE ON LEGAL ASSISTANCE
OF THE ASSOCIATION OF THE BAR OF THE
CITY OF NEW YORK AS AMICUS CURIAE
ON BEHALF OF RESPONDENT
A llan L. Gropper
1155 Avenue of the Americas
New York, New York 10036
(212) 819-8403
Counsel for Amicus Curiae
Table of Contents
Page
Table of Authorities ..................................... iv
Interest of Amicus ........................................ 1
Statement of the Case: Hie Questions
Actually Presented ................................ 3
Summary of Argument...................................... 6
Argument............. 10
I. Hie Problem of Coerced Waiver
of Statutory Attorneys' Pees
is One Peculiar to Civil
Rights Practice, Arising From
the Nature of the Attor-
ney/Client Relationship
Typical of those Cases................... 10
A. Hie Nature of Civil Rights
Cases ..................................... 11
B. These Dynamics of Civil
Rights Practice Result
in Significantly
Different Ethical
Consequences ......................... 13
II. Given These Circumstances, A
Defendant's Lawyer Who Makes
an Offer of Settlement Condi
tioned on the Waiver of the
Required Statutory Pee
Violates Accepted Norms of
Professional Ethics 22
24
A. The Use of the Waiver
Tactic is Prejudicial
to the Administration
of Justice . . . . . . . . . . .
B. The Use of the Waiver
Tactic Undermines the
Integrity of the Legal
Profession . . . . . . . . . . . . . . . . . . 28
C. The Use of the Waiver
Tactic is Inconsistent
with the Lawyer's Duty
to Act within the
Bounds of the Law . . . . . . . . . . . 31
D. Hie Use of the Waiver
Tactic by Government
Counsel is Particularly
Inappropriate ........................ 40
III . A Bifurcated Approach to
Negotiations of the Merits
and Fees in Civil Rights
Cases is the Most Appropriate
and Effective Remedial Device
for Preventing the Ethical
Abuse of the Coercive Waiver
and its Variants .............. 43
A. Coercive Fee Waiver
Agreements Should be
Unenforceable ........................ 44
B. A Bifurcated Approach
to Settlement Is the
Most Effective Remedy . . . . . . . 46
C. The Ordinary Judicial
Tools Have So Far
Proven Insufficient . . . . . . . . . 54
- i i -
D. The Criticisms of the
Bifurcated Approach Are
Inaccurate........................... 58
CONCLUSION..................................................... 64
- i i i -
Table of Authorities
Cases: Pages
Adickes v. Kress & Co.,
398 U.S. 144 (1970) .................. 41
Blum v. Stenson, U.S. ,
79 L.Ed. 2d 891 (1984) .............. 36, 58
Cotton v. Hinton, 559 F.2d 1326
(5th Cir. 1977) ..................... 45
Hensley v. Eckerhart, 461 U.S. 424
(1 9 8 3 ) . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Lazar v. Pierce, 757 F.2d 435
(1st Cir. 1985) ...................... ..18, 19, 22, 30
Lipscomb v. Wise, 643 F.2d 319
(5th Cir. 1981) ......................... 10
Moore v. National Assoc, of Securi
ties Dealers, 765 F.2d 1093
(D.C. Cir. 1985) . . . . . . . . . . . 17, 23, 30, 48, 54
Newman v. Piggie Park Enterprises,
Inc., 390 U.S. 400 (1968) ......... 33, 34
New York Gaslight Club, Inc. v.
Carey, 447 U.S. 54 (1980) ........ 33
Owen v. City of Independence,
445 U.S. 622 (1980) .......... . 41
Prandini v. National Tea Co., 557
F.2d 1015 (3rd Cir. 1977) . . . . . . 54, 55, 63
Regalado v. Johnson, 79 F.R.D. 447
(N.D. 111. 1978) .......................... .. 10
United States v. ITT Continental
Baking Co., 420 U.S. 223 (1975). 44
iv
Weil v. Neary, 278 U.S. 160 (1929) .. 44
Woodstock Iron, Co. v. Richmond and
Danville Extension Co.,
129 U.S. 644 (1889) .................. 44
Statutes:
Civil Rights Attorneys' Fees Awards 5, 6, 10, 31,
Act of 1976, 42 U.S.C. § 1988 .. 37, 40, 42
H.R. Rep. No. 94-1558, 94th Cong., 11, 25, 33, 36
2d Sess. (Sept. 15, 1976) . . . . . 40, 42
S. Rep. No. 94-1011, 94th Cong., 11, 25, 33,
2d Sess. (June 29, 1976) .......... 34, 36
122 Cong. Rec. § 17052 (daily ed.
Sept. 29, 1976) ......................... 12
Equal Access to Justice Act,
28 U.S.C. § 2412(d) ................... 14
H.R. Rep. No. 1418, 96th Cong.,
2d Sess. (1980), reprinted in
1980 U.S. CODE CONG. &
AD. NEWS 5908 ............................. 14
Federal Rules of Civil Procedure 23(e) 5
Materials on Legal Ethics:
ABA Code of Professional Responsi
b ility ........................................ 7
Preamble and Preliminary Statement 32
Canon 1 ..................................... 23, 28
Canon 2 ..................................... 23, 24, 25
Canon 5 ...................................... 19
v
Canon 7 23, 31
Canon 9 24, 29
Ethical Considerations
1-1 24
i-t; 28, 32
24
?-?4 12
?-25<f-< 12, 24
C_1 17, 19
q«1 Q
—' • o e e « ® # » « 0 ® e e e » « « « ® ® 9 ® s o 41
7-4 32
7-7 18
7—Q 17
7-1 n» I W » » s * . ; j © © © i 9 « 8 0 ® 3 i « j » ® ® a © # e w 42
7-1 2 19
42
7-18 25
7-23 60
24, 25
9-1 21, 29
9 -6 . . . . . . . ........................... 1, 21, 29
VI
District o f Columbia Bar,
Legal Ethics Committee,
Opinion Ho, 147, reprinted in
113 Daily Washington Law
Reporter 389 (1985) . . . . . . . . . .
State Bar o f Georgia, Advisory
20, 23, 26, 39
Opinion No. 38, reprinted in 10
Georgia State Bar News 5 (1384) 22
Opinion No. 17 of Overseers o f the Bar (Maine)
(1981) . . . . . . . . . . . . . . . . . . . . . . . 16, 20, 22
Formal Opinion C-235 (May 1985),
reprinted in Michigan Bar
Journal 508 (June 1985} . . . . . .
Ccsnnitt.ee on Legal Ethics, Ihe
Association of the Bar of the
City o f New York . . . . . . . . . . . . .
20, 22
Opinion No. 80-94 . . . . . . . . . . . . 2, 26, 39
Opinion No. 82-80 . . . . . . . . . . 2, 37, 47, 58, 63
Vermont Bar Association, Opinion
No. 85-3 (1985) . . . . . . . . . . . . . . 20, 22, 30, 46
Other Authorities:
Calhoun, Attorney-Client Conflicts
o f Interest and the Concept of
Non-Negotiable Fee Awards Under
42 U.S.C. § 1988, 55 Colo. L. Rev.
341 (1984) . . . . . . . . . . . . . . . . . . . . .
Coffwent, Settlement Offers Conditioned
upon Waiver o f Attorney's Fees:
Policy, Legal, and Ethical
Considerations, 131 U.Pa.
L.Rev. 793 (1983) .......... .
- v i i i -
10, 18, 42
5656
Disciplinary Rules
1— 102(A) (5) .................................. 25
2— 106(B) (4) . ................................ 12
2-108(B) ............................ 27, 59
2-109(A) (2) .................................... 32
5-101 (A) ......................................... 16
7-102.............................................. 35
7—102(A) (1) & (2) .............. 32, 62
ABA Model Rules of Professional
Conduct (1983) 7
Preamble ............................. 25, 32, 42
Model Rules
1.2(a) ......................................... 18
1.4(a) ......................................... 18
1.5(a)(4) .................................... 12
1.7(b) ......................................... 16
1.14............................................. 19
3.3(a)(3) .................................... 60
5.6(b) ............................ 27, 59
6.1 .............................................. 24
8.4(a) .......................... 29
8.4(d) ..................................... 25
ARA Informal Opinion 1039
(1968) ................................ 27, 28
- v i i -
M. F. Derfner & A. D. Wolf, 2 COURT
AWARDED ATTORNEYS FEES 1| 21.03
n.36 (1984) ................................ 15
Fee Waiver Requests Unethical: Bar
Opinion, 68 A.B.A.J. 23 (Jan.
1982) ........................................... 17, 44
R. Fisher & W. Ury, GETTING
TO YES (1981) ............................ 50, 52
Kraus, Ethical and Legal Concerns in
Compelling the Waiver of Attor
ney's Fees by Civil Rights
Litigation in Exchange for
Favorable Settlement of Cases
Under the Civil Rights Attorneys'
Fees Awards Act of 1976, 29,
V ill. L.Rev. 597 (1984) ............ 41, 46, 57
Levin, Practical, Ethical and Legal
Considerations Involved in the
Settlement of Cases in which
Statutory Attorney's Fees Are
Authorized, 14 Clearinghouse Rev.
515, (Oct. 1980) ....................... 55
A. Miller, Attorney's Fees in Class
Actions 224 (1980)...................... 63
Restatement of Contracts 2d § 178 . . . 44, 45
Restatement of Contracts 2d § 184 . . . 45
IX
INTEREST OF AMICUS1
The A ss o c i a t i o n of the Bar o f the
City of New York was incorporated by act
of the New York Le g i s l a t u r e in 1871. It
was formed, in part, " for the purposes o f
. . . f a c i l i t a t i n g and improving the admi
n istrat ion of ju s t i c e , elevating the stan
dard o f i n t e g r i t y , honor and courtesy in
the l e g a l p r o f e s s i o n . . . . " Co ns t i tu t ion ,
Ar t i c le I I . I t is composed o f over 14,000
lawyers and judges practicing or r e s id in g
in the C i ty o f New York. This b r i e f is
f i l e d on behal f of the A s s oc i a t i on ' s Com
mittee on Legal Assistance.
The interest of the Committee in this
case i s three fo ld . F i r s t , i t seeks to en
courage access to lega l representation for
a l l persons . I t pursues th i s o b j e c t i v e
both by encouraging attorneys to undertake
rep re sen ta t i on of indigents pro bono pub-
Letters of consent to the filing of this brief have
been lodged with the Clerk of the Court.
2
1ico and by supporting the a v a i l a b i l i t y o f
s t a t u t o r y a t t o r n ey s ’ f ees in c i v i l r i ghts
cases. In the op in io n o f the Committee,
negot i a t ion t a c t i c s such as those ap
parent ly used in t h i s case th r ea t en sub
s t a n t i a l l y to undermine the a v a i l a b i l i t y
o f s t a t u t o r y f e e s in c i v i l r i g h t s cases
and, the re f o re , the a v a i l a b i l i t y o f coun
se l to indigent c i v i l r i gh ts claimants.
Second, a long with the Committee on
P r o f e s s i o n a l and J u d i c i a l E th i c s , the
Committee is in teres ted in maintaining the
high e th i ca l standards o f the p r o f e s s i o n .
I t s Opinion No. 80-34 (1981) concluded
that o f f e r s o f sett lement in c i v i l r i g h t s
cases condit ioned on a waiver o f s ta tutory
a t t o rneys ’ fees are p ro f e s s i ona l l y unethi
c a l . ( A copy i s a t tached as an appendix
to this b r i e f ) . As a c o r o l l a r y , the Asso
c i a t i o n a l s o opined t h a t , in these cases ,
a defendant ' s lawyer should not i n i t i a t e
simultaneous negot iat ions o f the merits o f
3
the l i t i g a t i o n and the issue of attorneys'
fees. Subsequently, i t issued Opinion No.
82-80, ind ica t ing that, during the course
of negotiations for settlement on the me
r i t s , i t i s p e rm is s i b l e to exchange rea
sonable information regarding a p o t e n t i a l
fee request so that the defendant can as
certain the extent of ultimate l i a b i l i t y .
Th i rd , along with the Committee on
Federal Courts, the Committee i s i n t e r e s
ted a l l developments that a f fect the ad
ministration of the federal cou rt s . This
case presents major i ssues of concern in
that area.
STATEMENT OF THE CASE!
THE QUESTIONS ACTUALLY PRESENTED
The many b r i e f s f i l e d by va r ious
amici on behalf o f the p e t i t i o n e r s t r e a t
the case as posing the quest ion o f the
propriety of simultaneous nego t i a t i ons of
the meri ts together with the f ees as a
4
s i n g l e , u n i v e r s a l q u e s t i o n . Whi le we
endorse f u l l y the reason ing o f the cour t
below in banning simultaneous negot iat ions
in c i v i l r i gh ts cases, that i s not , in our
view, the primary quest ion presented nor a
q u e s t i o n necessary to d e c i s i o n in t h i s
case. Rather, th is case is about the im
p r o p r i e t y o f a t a c t i c that e f f e e t i v e l y
coerces a waiver o f the s ta tutory f e e .
This is we l l i l l u s t r a t e d by the d i f
f e r e n t ways in which the d i s t r i c t court
and the co ur t o f appea ls conce i v ed the
case . In approv ing the f e e w a i v e r , the
d i s t r i c t court considered only the ques t i
on o f the e t h i c a l conduct o f p l a i n t i f f s *
counsel in negot ia t ing f ees in tandem with
the meri ts.
[T]he e t h i c a l c o n s i d e r a t i o n i s " I s
the a ttorney in the proc ess o f b a r
g a in in g out to d e p r e c i a t e h is c l i
e n t ' s claim or to proceed in a manner
that w i l l be u n fa i r to his c l i e n t ? "
And I th ink the e t h i c a l c o n s i d e r a
t i o n s run on ly to the issue and not
to what is f a i r to the a t t o r n e y , and
there fore I am o f the opinion that i t
doesn ' t v i o l a t e any e th i c a l consider
at ions fo r an attorney to g i v e up his
5
attorney fees in the interest o f ge t
ting a better bargain for his c l i ent .
R epo r te r ' s T r an sc r ip t o f Proceedings of
Apri l 28, 1983, ( "R .T . " ) at 7.
The Ninth C i r c u i t took a very d i f
ferent v iew. I t noted that p l a i n t i f f s
bargained f o r the d i s t r i c t court ' s appro
va l as "a cond i t i on on the waiver of
f e e s . . . . " Cert . App. 19a. Thus, i t viewed
the relevant ques t ion as one o f the p ro
p r i e t y under the s t a tu t e , 42 U .S .C . §
1988, and F.R.C.P. 23(e ) o f the d i s t r i c t
court ' s approval o f such a waiver when:
The attorney was asked to choose be
tween forgoing any compensation while
obtaining a f a v o ra b l e sett lement on
behal f of the c la ss , or decl ining the
b e n e f i t f o r the c l a s s in hope of
ev e n tu a l l y r ece i v in g a fee award.
P l a i n t i f f s ' a t torney here accepted
the b e n e f i t for the c lass and turned
to the court for his own protection.
Cer t . App. 23a. I t concluded that a co
erced waiver should not be accepted and
that the p l a i n t i f f s are ent i t led to a rea
sonable fee. Id. at 25a.
6
SUMMARY OF ARGUMENT
The p r i n c i p a l quest ion in this case
concerns the p r o p r i e t y o f a n ego t i a t i o n
tact ic designed to coerce a waiver o f s t a
tutory fees by p i t t ing p l a i n t i f f counsel ' s
duty to the c l i e n t a ga in s t h is or her
interest in a fee . I t is a problem pecu
l i a r to c i v i l r i g h t s p r a c t i c e , a r i s i n g
from the s p e c i a l c ircumstances that
typ ica l ly govern the attorney/cl ient r e l a
t i o n sh ip in such case s . Acco rd ing ly ,
a n a l y s i s premised on other models of r e
presentation — such as contingent fees in
to r t cases or a t t o r n e y / c l i e n t r e l a t i o n
ships under other fee s h i f t i n g s t a tu te s
such as the a n t i t r u s t laws or the Equal
Access to Justice Act — are not only un
he lp fu l , but a lso misleading.
In this narrow context , the ac t i ons
of defense counsel in conditioning s e t t l e
ment on waiver o f fees tend to make a dead
l e t t e r o f §1988 and v i o l a t e a p p l i c a b l e
7
norms o f p r o f e s s i o n a l e th ic s . F i r s t , i t
is p r e j u d i c i a l to the a dm in i s t r a t i on of
just ice because, contrary to both the con
gress ional intent and the requirements of
the canons, i t se rves to de te r counsel
from undertaking r ep re se n t a t i o n in these
cases . Second, because the purpose and
e f fe c t of the tac t ic i s to p lace opposing
counsel in a c o n f l i c t o f i n t e r e s t , i t
vio lates the lawyer ' s "solemn duty to up
hold the i n t e g r i t y and honor o f h is pro
f e s s i o n . . . . " Code o f Pro fess iona l Respon
s i b i l i t y EC 9 -6.2
The tact ic is unethical because i t is
not the product of a good f a i th i n t e r p r e
t a t i o n o f the law in the c l i e n t ' s favor,
but rather the exp lo i tat ion of a d isequi
l i b r ium in l i t i g a t i n g posture not related
2 Citations to the Code of Professional Responsibility
("the Code"), which are the governing ethical
standards for the New York bar, are directly to the
relevant disciplinary rule ( "DR"), ethical consider
ation ("EC"), or canon. Citations to the Model Rules
are to ABA Model Rules of Professional Conduct(1983).
8
to the r e l a t i v e merits of the case. I t is
not a bona f ide compromise because i t i g
nores ent i re ly the statutory obl igat ion to
pay f ees that a r i s e s from the o f f e r o f
r e l i e f on the merits that i t accompanies.
Thus, the use o f t h i s t a c t i c by de fense
counsel runs afoul of the duty to confine
zealous representation within the bounds
o f the law. I t a l s o v i o l a t e s the special
duty of government counsel to seek a just
and f a i r re su l t .
A court should not en fo rce a fee
waiver that is the resul t of th i s form of
e t h i c a l abuse. O r d i n a r i l y , i t should
merely exc i s e the fee waiver p rov i s i on
because the defendant i s not ent it led to
the b e n e f i t o f the ba rga in i t has thus
manipulated. But a f t e r - th e - f a c t remedies
are not s u f f i c i e n t in th i s context . Be
cause the very existence of the unethical
conduct may be masked by the appearance of
vo lunta ry waiver. a court may not always
9
be ab le to po l ice such v io l at ions through
ret rospect ive remedies alone.
Two a l t e r n a t i v e s e x i s t . The Court
may d i r e c t a c t i v e s u p e rv i s i o n by the
f e d e r a l d i s t r i c t courts o f set t lement
negotiations in these case s . Or, i t may
ban simultaneous negotiations o f fees and
the merits in these cases.
Of these two, we respect fu l l y submit
that the prohib it ion of simultaneous nego
t i a t i o n s i s the b e t t e r , more e f f i c i e n t
remedy. F i r s t , i t preserves scant jud ic ia l
resources ; because i t i s s e l f - en fo rc ing ,
i t requires less active involvement of the
d i s t r i c t c o u r t . Second, i t w i l l in fact
f a c i l i t a t e se t t l ements , both because i t
encourages more e f f i c i e n t negotiation - -
encouraging the part ies to negot ia te on a
p r in c i p l e d b a s i s and in good fa ith f i r s t
on the merits and then, separately, on the
p l a i n t i f f s ' ent i t lement to fees - - and
because i t better maintains the balance of
10
i ncen t i ve s that o r d i n a r i l y produces set
tlement. Third, i t better c on t ro l s other
e t h i c a l problems that ar i se during simul
taneous negotiations.
ARGUMENT
I . THE PROBLEM OF COERCED WAIVER OF
STATUTORY ATTORNEYS8 FEES IS ONE
PECULIAR TO CIVIL RIGHTS PRACTICE,
ARISING FROM THE NATURE OF THE ATTOR-
NEY/CLIENT RELATIONSHIP TYPICAL OF
THOSE CASES
In our v iew, this case does not turn
on the question of the propriety of simul
taneous negotiation on the merits and fees
in the gene ra l run o f cases nor on the
quest ion whether f ees under 42 U .S .C .
§ 1988 ( "the Act" ) are subject to s e t t l e
ment on r easonab le terms. Rather, the
question i s whether defendants in a c i v i l
r i g h t s case may coerce a waiver of statu
tory fees by knowingly creating a conf l ic t
of interest for p l a i n t i f f s ' •counsel , p i t
t ing the c l i e n t s ' i n t e r e s t in r e l i e f on
the merits against counsel ' s interest in a
fee. The a v a i l a b i l i t y of this tact ic is a
function o f a narrow set of circumstances
typical of c i v i l r ights cases but not not-
mally present in most other areas of prac
t i c e . We f i r s t explain how c i v i l r ights
d i f f e r s from most other areas of practice.
We then show why the eth ical issue i s one
that uniquely plagues the c i v i l r ights
area .
A. The Nature o f C iv i l Rights Cases
The bas ic fact , recognized by the
Congress that passed the Act, is that
c i v i l r ights claimants are typ ica l ly indi
gent and cannot af ford to pay lega l f e e s.3
Unl ike ordinary tort or commercial l i t i
g a t i on , c i v i l r ights cases rare ly produce
a fund s u f f i c i e n t l y large also to cover
the l a w y e r ' s f e e.4 Because of this , the S.
- 11 -
S. Rep. No. 94-1011, 94th Cong , 2d Sess., 2 (June
29, 1976); accord H. R. Rep. No. 94-1558, 94th Cong.,
2d Sess., 1, 3 (Sept. 15, 1976); Lipscomb v. Wise,
643 F.2d 319, 320 (5th Cir. 1981); Regalado v. John
son, 79 F.R.D. 447, 451 (N.D. 111. 1978).
H.R. Rep. Mo. 94-1558, supra n.3, at 9; S. Rep. No.
94-1011, supra n.3, atilt
12
t yp i ca l r e t a iner agreement between a c i v i l
r i gh ts claimant and p r i v a t e counsel does
not o b l i g a t e the c l i e n t to pay the f e e , or
even a s u b s t a n t i a l p o r t i o n o f i t . I t
could no t , e i the r as a matter o f p ra c t i ca -
5l i t y or e t h i c s . ' Thus, w h i l e r e t a i n e r
agreements o f ten require the c l i e n t to pay
a p o r t i o n o f the co s t s or to advance a
modest r e ta in e r , they usual ly r e c i t e that
the l a w y e r ' s f e e w i l l be covered by a
court award o f a t to rney ' s f e e s . Congress
was aware o f th is important d i f f e r e n ce in
p r a c t i c e between c i v i l r i g h t s cases and
other forms o f contingent f e es . 122 Cong.
Rec, § 17052 ( d a i l y e d . Sept . 29, 1976)
(Remarks o f Senator Kennedy as sponsor) .
In addi t ion, there is an e n t i r e (and
l a r g e ) c l a s s o f c i v i l r i gh ts counsel p re
cluded by law from con trac t ing fo r a f ee
See 2-106(B)(4) (prohibiting excessive fee; rea
sonableness o f fee linked to "amount involved and re
sult obtained"); accord Model Rule 1.5(a)(4); see
also EC 2-24, EC2~2*5~T9uty to represent indigents).
13
from the c l i e n t . This includes the fede
ral Legal Services Corporation, which pro
vided counsel in th i s case and is barred
by f e d e r a l s t a tu te from charging a f e e ,
and many p r i v a t e c i v i l r i g h t s o r g an i z a
t ions. In New York, for example, p r i v a t e
o r g an i z a t i o n s that prov ide l e g a l a s s i s
tance are chartered by the courts as legal
aid s o c i e t i e s . Although they may accept
court awarded f e e s , they are p roh ib i t ed
from co l lect ing a fee from the c l i ent . In
add i t ion , s ince many o f these o r g a n i z a
t ions hold tax exempt status under § 501
( c ) { 3 ) , they cannot and do not charge
f e e s .
B . These Dynamics o f C i v i l R igh t s
Practice Result Tn~sTgmTFicantly D if^
ferenF"EtlvI^aT~Cbnsequences
An o f f e r o f settlement on the merits
condit ioned on the waiver o f s t a tu to ry
fees i s a pract ice unique to c i v i l r ights
cases because the circumstances that make
i t e f f e c t i v e r a r e l y e x i s t in other fee
s h i f t i n g contexts such as under the Equal
6Access to J u s t i c e Act or the a n t i t r u s t
laws. For example, in an a n t i t r u s t case
brought by a c o r p o r a t i o n , the a t t o r n e y 6
- 14 -
6 'file Solicitor General’ s arguments concerning the
quandry imposed by the ruling below on the government
when it litiga tes cases covered by the Equal Access
to Justice Act, 28 U.S.C. § 2412(d), ( " EAJA") are
completely inapposite. See B rief for the United
States as Amicus Curiae at"T3~14. For a variety of
reasons, offers by the government to s e tt le the
merits of such litiga tion in exchange for a release
o f l ia b ility for fees under that Act rarely present
similar ethical concerns.
Under the EAJA, the government is only liable for
fees i f "the position of the United States was not
substantially ju stified ." 28 U.S.C. § 2412(d) (1) (B).
Thus, unlike cases governed by § 1988, the private
citizen litiga ting against the federal government is
not entitled to fees under the EAJA simply because he
or she prevails; it depends, instead, on the degree
to which the government's position was unreasonable,
file EAJA was passed not to encourage counsel to ac
cept cases against the government, but merely to com
pensate citizens unreasonably forced to court by the
government's unjustifed conduct. See H.R.Rep. No.
1418, 96th Cong., 2d Sess. (1980), reprinted in 1980
U.S. CODE CONG. & AD. NEWS 5908-14.'T5£E5nTEKese l i
tigants are economic enterprises that can afford
counsel. Accordingly, the retention of counsel in
nost cases within the coverage of the EAJA is exceed
ingly unlikely to be premised upon an agreement that
a ll fees wi l l be provided by a court award under the
EAJA. Thus, the disassociation between the lawyer's
and the c lien t's interests in recovering a fee that
makes the tactic coercive is entirely absent from the
government's litiga tion in EAJA cases.
15
w i l l have a reta iner agreement that spe l l s
out the f e e . I f the de fendant o f f e r s a
f l a t percentage o f the damage request in
settlement, impl ic i t in that o f f e r w i l l be
a request to waive statutory fees . But no
ethical dilemma is presented. The attorney
exp l a in s to the c l i e n t that the o f f e r
means the c l i ent w i l l receive the s e t t l e
ment f i g u r e less the amount of the agreed
f e e .
Even when there i s a t rad i t iona l con
tingent fee, expressed as a percentage of
the r ecovery , the interests of the lawyer
and the c l i ent do not diverge. They are in
f ac t p a r a l l e l : the l a r g e r the c l i e n t ' s
recovery, the la rger the fee. I f the c l i
ent and lawyer disagree on the adequacy of
the amount o f f e r e d , i t i s the c l i e n t ' s
d e c i s i o n whether the o f f e r i s su f f i c ien t
in l i g h t o f i t s bottom l i n e v a lu e . See
M.F. Derfner & A.D. Wolf, 2 COURT AWARDED
ATTORNEYS PEES K 21.03 n. 36 (1984).
16
Contras t a c i v i l r i g h t s case f o r
i n j u n c t i v e r e l i e f brought by a c l a s s o f
i n d i g e n t s . De fendants ' counsel o f f e r to
s e t t l e the merits condit ioned on a wa iv er
o f f e e s . I f p l a i n t i f f s accept the o f f e r ,
counsel , who may have invested s i g n i f i c a n t
t ime , w i l l r e c e i v e no f ee whatsoever. The
c l i e n t s , who w i l l bene f i t from the r e l i e f
on the mer i ts , are nevertheless unburdened
by any l i a b i l i t y f o r the l a w y e r s ' f e e s :
e i t h e r because they have no con t ra c tua l
f e e o b l i g a t i o n , as i s usual , o r in any
case because they are judgment p r o o f .
The o f f e r thus creates a c o n f l i c t o f
i n t e r e s t between lawyer and c l i e n t , which
would p rec lude the r e p r e s e n t a t i o n as an
i n i t i a l m a t t e r . ̂ See DR 5-101 ( A ) ; Model
This conflict o f interest "cannot be resolved by the
attorney resigning from the case. P la in t i f f s in
[these cases] must, o f necessity, be represented by
counsel and any attorney representing p la in t i f f s
under these circumstances fa lls victim to the same
statutorily created con flic t." Opinion No. 17 of
Overseers o f the Bar (Maine) at 2 (1981) ("Maine Bar
Op. No. 17").
17
Rule 1 .7 (b ) . When the terms of the s e t t l e
ment agreement are favorable, his duty
"always to act in a manner consistent with
the best in te re s t s of his c l i e n t . . . , " EC
7-9, comes in con f l i c t with his legitimate
interest in a fee. The lawyer is required
This conflict cannot be resolved by "preparing] for
the dilemma with a retainer agreement" as suggested
by the Fqual Fhplqyment Opportunity Advisory Council,
Brief as Micus Curiae at 6, and by Moore v. National
Assoc, of Securities Dealers, 765 F.2d 1093, 1105 n.
17 (D.C.Cir. 1985). A retainer agreement which pro
vides that the client will defer to counsel's pecuni
ary interest and refuse settlement would be unethical
and unenforceable. EC 5-1. Nor could the retainer
agreement require the client, though indigent, to
bear the fee — that would be unethical too. See dis
cussion supra. If the retainer provides that counsel
would give up the fee, it just achieves the same re
sult as the coercive waiver tactic.
The suggestion that the retainer agreement could vest
the statutory fee recovery in the client presents the
same problems and more. Such a retainer would have to
provide that counsel would be paid a reasonable fee
contingent on success. Presumedly, it would specify
hourly rates. But this is a nonsolution.
First, it would not work for organizational counsel
who cannot charge a fee. Second, it would not solve
the coercive waiver problem. If the judgment proof
client accepts the settlement, does counsel sue the
indigent client for the fee he or she cannot pay?
"Retainer agreements are useful devices for disclos
ing to clients the conflict of interest inherent in a
case in which an attorney expects to be paid under a
fee statute but,as a practical and legal matter, they
are unsatisfactory devices for eliminating the con-
18
to communicate the sett lement o f f e r to the
9c l i e n t , who has the f i n a l say whether to
accept i t . 10 The p r e d i c t a b l e r e s u l t is
that the c l i e n t w i l l be induced t o accept
the s e t t l e m e n t o f f e r to the lawyers ' de
triment ; whenever a wa i ver o f f e r i s made
in these cases, "counsel can fo resee them
s e l v e s su b j e c t to be ing euchred out o f
the i r f e e / Lazar v. P i e r c e , 757 F.2d 435,
438 (1st C i r . 1985).
The dilemma is in t e n s i f i e d in a case
l i k e J e f f D. when the c l i e n t c l a s s con
s i s t s o f incompetent minors.
Any mental or physical condi t ion o f a
c l i e n t that renders him incapable o f
making a cons ide red judgment on h is
f l i c t of interest." Calhoun, Attorney-Client Con-
fl ic ts o f Interest and the Qarx^pb^Fl^n-Ne^^IiSYe
Fee’ ’AwairSs- "Urrier "4i U.S.C. ~ § 1 §88",""’5«> Colo.L.Rev".
T-Tfr5?3--TS"T1"§S-4T:------- — ~
9 Model Rule 1.4(a); Comment to Rule 1.4 ("A lawyer who
receives from opposing counsel an o ffer o f settlement
in a c i v i l controversy should promptly inform the
client of its substance...."); see also EC 7-7.
EC 7-7 ( " i t is for the client to decide whether he
w ill accept a settlement o f f e r . . . . " ) ; Model Rule
1.2(a) ("A lawyer shall abide by a c lien t’ s decision
whether to accept an o ffer o f settlement....")
19
own behal f casts addit ional responsi
b i l i t i e s on his lawyer.
EC 7-12; see Model Rule 1.14; Comment to
Rule 1.4. In that circumstance, the lawyer
i s "compel led . . . to make decisions on
beha l f o f the c l i e n t . . . , " and must "act
with care to safeguard and advance the
interests of the c l i e n t . " EC 7-12. Faced
with a f avo rab l e o f f e r of prompt r e l i e f ,
the lawyer must "exercise independent pro
f e s s i o n a l judgment on behal f of the c l i
e n t , " Canon 5, " f r ee of compromising in
f luence and l o ya l t i e s ---- ," EC 5-1; forgo
his pecuniary s e l f - i n t e r e s t ; and accept
the o f f e r .
The suggestion from some quarters
that i t i s "not an ethical no-no" for
counsel " to ins is t on a reasonable fee"
even i f that is "detrimental to the
c l i e n t ' s success fu l settlement," Lazar ,
757 F.2d at 438, has no support in either
the standards of an ethical pro fess ion11 or
11 Every bar association that has considered the issue
20
common sense. Consider the case o f an
unemployed c l i e n t who was denied a job
becau.se o f race. The defendant o f f e r s him
a job and back pay, condit ioned on coun
s e l wa i v ing the f e e . Counsel could not in
good conscience block the sett lement and,
at the l e a s t , postpone r e l i e f because
the i r pecuniary in t e r e s t i s more important
than that o f the indigent c l i e n t .
In this case, the sa fe ty o f mental ly
i l l c h i l d r e n confined by the s ta te was in
j e opa rdy because they were housed with an
adul t popu la t ion that included chi ld mo
l e s t e r s . The sett lement o f f e r contained
has concluded that it would be unethical for counsel
to turn down an offer o f settlement in these circum
stances. See Formal Opinion C-235 (May 1985),
reprinted in Michigan Bar Journal 508, 553 (June
1985); Maine Bar Op. No. 17 at 4; Vermont Bar
Association Opinion No. 85-3 at 2-3 (1985); District
of Oolumbia Bar, Legal Ethics Committee, Opinion No.
147 at 5-6, reprinted in 113 Daily Washington Law
Reporter 389, 394 (1985); Op. No. 80-94 at 6a-7a
( 198Y)'. No bar association has ruled otherwise to
our knowledge. The D.C. Bar (pinion does conclude
that a ll future settlement offers that violate the
opinion need not be conveyed to the client, although
they should be.
21
deta i led provisions designed to eliminate
that problem. Cert. App. 3a-4a. Counsel
might have re jected the settlement o f f e r
because o f the fee waiver condition, f o r
cing the case to t r i a l . But suppose that,
in the inter im before r e l i e f was granted,
even one ch i l d was assaulted, molested or
raped. Would the lawyer have acted in a
manner consistent with his eth ical respon
s i b i l i t y to that cl ient? To proceed to
t r i a l under these circumstances because of
the l awyer ' s interest in a fee would
c lea r ly f a i l to "promote publ ic confidence
in our system and in the lega l pro fes
s ion. " EC 9-1; see also EC 9-6.
In these s i tuat ions , the ethical con
f l i c t s that face p l a i n t i f f s ' counsel are
ex t r ao rd ina ry . Because of that, the temp
t a t i on to employ the coercive fee waiver
i s s t rong . Indeed, various amici suggest
that i f fee waivers are approved they may
be requi red to use them. See, e . g . , Br ie f
22
fo r the States as Amici Curiae at 52-53. A
f a i r , ra t iona l l e g a l system d e se r v in g o f
the p u b l i c ' s respect and conf idence would
not a l low that to occur.
I I . GIVEN THESE CIRCUMSTANCES, A DEFEN
DANT'S LAWYER WHO MAKES AN OFFER OF
SETTLEMENT CONDITIONED ON THE WAIVER
OF THE REQUIRED STATUTORY FEE VIOLATES
ACCEPTED NORMS OF PROFESSIONAL ETHICS
This Assoc ia t ion was the f i r s t to ad
dress sq u a r e l y the i ssue o f c o e r c i v e
waiver . I f has s in ce been j o in e d by the
D. C. Bar. Both have concluded tha t the
1 o
t a c t i c i s u n e t h i c a l . See n.11 supra .
Even those cour t s that have approved
waivers in p a r t i c u l a r cases have noted
the q u e s t i o n a b l e nature o f d e f e n d a n t s 1
1 3conduct or o the rw i s e in t imated that
in addition to the bar opinions cited in n. 11 supra,
the Georgia Bar has approved lump sum offers in T itle
VII cases. State Bar o f Georgia, Advisory Opinion
No. 38, reprinted in 10 Georgia State Bar News 5
(1984). LiKe-Bie~^Tnions'-oFtEe W3TIgan7 Maine,
and Vermont bars, i t does not discuss the waiver
issue.
in Lazar v. Pierce, the First Circuit observed of the
waiver o ffer in that case: "We are . . . c r itica l of
the Housing Authority. I t seems apparent that i t was
playing on counsel's di f f icul t dilemma in exactly the
23
important e t h i c a l c o n s id e ra t i o n s are
1 4raised by such conduct.
This should not s u r p r i s e . Whatever
the c o ns ide ra t io ns that govern other as
pects of settlement negotiations in these
cases , the use by de fense counsel of the
coercive waiver t a c t i c v i o l a t e s accepted
norms of p r o f e s s i o n a l r e spons ib i l i t y . It
runs a f o u l of the duty " t o maintain . . .
the integr i ty of the lega l p r o f e s s i o n . . . , "
Canon 1; the "duty to make l e g a l counsel
a v a i l a b l e Canon 2; the duty to con
f ine zea lous r ep re s e n t a t i o n o f a c l i e n t
"w i th in the bounds of the law . . . ," Canon
7; and the duty to "avoid even the appear- * 14
manner plaintiff asserts. This was not a bona fide
compromise." 755 F.2d at 437. It continued: "While
there may have been no consciously unethical conduct,
to object to going to court, and to object to paying
any fee, does not . . . oonsnend itself." Id. at n. 1.
14 In Moore v. National Association of Securities
Dealers,-'"the court approve3~~an express waiver"irat
least where a demand for such has not been made by a
defendant." 762 F.2d at 1099. It further acknowled
ged "that such offers present sane difficulty for
plaintiffs' counsel." Id. at 1105 n. 17 (citing D.C.
Bar. Op. No. 147).
24
ance of p r o f e s s i o n a l i m p r o p r i e t y . . . . "
Canon 9.
A. The Use of the Waiver Tact ic Is
PreJuBnTcTa.I~~Fo tKe MiirnI¥tga±ion 6T
Justice
"A ba s i c tenet o f the p r o f e s s i o n a l
r e s p o n s i b i l i t y o f l awyers i s that every
person in our s o c i e t y should have ready
access to the independent s e r v i c e s o f a
l a w y e r . . . . " EC 1-1. There is a special
r espons ib i l i t y to provide or support lega l
assistance to the poor. EC 2-25; EC 8-3.
The provision of f ree l e g a l s e r v i c e s
to those unable to pay r easonab le
fees continues to be an ob l iga t ion of
each lawyer as wel l as the profession
g e n e r a l l y . . . . Every lawyer should
support a l l proper e f f o r t s to meet
this need for lega l services.
Model Rule 6 .1 , Comment to Rule 6.1;
accord Canon 2; EC 2-1 .
These ob i igat ions ar i se not merely as
a matter o f noblesse o b l i g e , but from the
requi rements o f the l e g a l system i t s e l f .
"The f a i r adm in i s t r a t i on o f j u s t i c e
r eq u i r e s the a v a i l a b i l i t y o f competent
25
l a w y e r s . . . . , " EC 8-3, because " [ t ] he lega l
system in i t s broadest sense funct ions
best when persons in need o f l e g a l . . .
ass i s t ance are represented by t h e i r own
c o u n s e l . " EC 7 - 1 8 . ^ Thus, the lawyer ’ s
ob l iga t ion under Canon 2 to as s i s t in mak
ing l e g a l counsel a v a i l a b l e merges with
the injunction of DR 1 — 102(A) (5 ) : "A l aw
yer sha l l not . . . [ e ] ngage in conduct that
is p r e j u d i c i a l to the adm in i s t r a t i on o f
j u s t i c e . " Accord Model Rule 8 .4 (d ) . But
th i s i s p r e c i s e l y the e f fec t of the wai
ver tact ic .
The purpose of the Act was to provide
l e g a l r ep re s e n t a t i o n to ind igent c i v i l
r i g h t s c la imants by the award o f fees
"adequate to a t t r a c t competent counse l . "
S. Rep. No. 94-1011 at 6? H.R. Rep. No.
^ The Preamble to the Model Rules explains that: "A
lawyer's responsibilities as a representative o f
clients, an o ffice r o f the legal system and a public
citizen are usually harmonious. Thus, when an
opposing party is well represented, a lawyer can be
a zealous advocate on behalf of a client and at the
same time assume that justice is being done."
26 -
94-1 558 at 9. Congress knew tha t :
Because a vast ma jo r i ty o f the v i c
tims of c i v i l r ights v io l at ions can
not a f f o r d l e g a l counse l , they are
unable to present their cases to the
courts. In au th o r i z in g an award of
r easonab le attorney ' s fees , [§ 1988]
is designed to give such persons e f
f e c t i v e access to the j u d i c i a l pro
cess . . . .
I d . at 1. But "the long term e f fe c t of
p e r s i s t e n t demands for the waiver of s t a
tutory fees is to prejudice a v i t a l aspect
o f the a dm in i s t r a t i o n o f just ice and un
dermine e f f o r t s to make counsel a v a i l a b l e
to those who cannot af ford i t . . . . " Op. No.
80-94 at 13a; accord D.C. Bar Op. No. 147
at 7. The knowledge that counsel can be
forced to forgo a fee by means of the wai
ver tact ic spreads quickly; i t deters law
yers from accepting representat ion o f i n -
1 6digent c i v i l r ights claimants.
The bar has long recognized that 16
16 See Kraus, Ethical and Legal. Concerns in Compelling
the Waiver 'oF^ttorrey1s~'Fies~^y~Civ1ir^igiits Liti
gants in Exchange for ^a\ror^Ie ^ttlement of (iases
UiSeFTHeTn^vTI"Rights'"AEtori^p^Fees Awar3s^.ct"o’F
1976, 59 V ill. L.Rev. $97, 674-93“
27 -
sett lement agreements which serve to re
s t r i c t access to le ga l representation v io
l a t e the r u l e s o f e t h i c s . In the l a t e
s i x t i e s , there was
an eve r - in c r ea s in g pract ice accompa
nying the settlements in [ a n t i t r u s t ]
cases o f taking from the p l a i n t i f f ' s
counsel covenants not to sue or to
a id in any su it against the se t t l ing
defendants.
ABA Informal Opinion 1039 at 1 (1968) .
Although there were "not . . . Canons
c l e a r l y cover ing the m at t e r , " i_d_. at 3,
the Committee neve r the less condemned the
practice because i t "a f f ec t s the r i g h t of
the c l i e n t to ob t a in the b e n e f i t o f the
services to which he i s e n t i t l ed from his
own l a w y e r . " I d . at 44. This rul ing has
been c o d i f i e d in both DR 2-108(B) and
Model Rule 5 .6 ( b ) .
The a v a i l a b i l i t y of a settlement pro
v i s i o n such as that p r o h i b i t e d by DR 2-
108(B) encouraged the defendants to se t
t l e . I t is nevertheless unethical because
i t interferes with the a b i l i t y of those in
28
need of l ega l assistance to reta in counsel
who are competent in the su b j e c t matter .
Informal Opinion 1039 at 4-5. The waiver
tac t ic i s more harmful . Not only does i t
a f f e c t the lawyer in the pa r t i cu la r case,
i t a lso deters a l l other lawyers from ac
cept ing c i v i l r i g h t s cases because they
can be forced to give up thei r fee. Use of
the t a c t i c p r e j u d i c e s the administration
of ju st ice because i t threatens to under
mine the very device Congress found neces
sary to prov ide l e g a l r ep re s e n t a t i o n in
c i v i l r ights cases .
B. The Use of the Waiver__Tactic
Underm £lii¥~'T"fi'e~"ntTgFrtY"~o~FjEH e~~LegaT
ProFe¥iTon "
Canon 1 p rov ides tha t : "A lawyer
should a ss i s t in maintaining the integr i ty
. . . o f the l e g a l p ro f e s s i o n . ” This duty
not only requires the lawyer to "maintain
high per sona l s tandards o f p r o f e s s i o n a l
conduct" h imse l f , but a l s o to "encourage
f e l low lawyers to do l i k e w i s e ." EC 1 -5 .
29
This duty stems, in part, from the pr in
c ip les of Canon 9, that " [ a ] lawyer should
promote p u b l i c conf idence in our system
and in the lega l pro fess ion . " EC 9-1; see
a l so EC 9-6 ( "Every lawyer owes a solemn
duty to uphold the integ r i ty and honor of
his p r o f e s s i o n . . . . " ) . The Model Rules
express the same concept in p la in and un
mistakab le terms. " I t i s p r o f e s s i o n a l
misconduct f o r a lawyer to . . . knowingly
a s s i s t or induce another to [ v i o l a t e or
attempt to v i o l a t e the r u l e s of p r o f e s
s iona l conduct] . . . . " Model Rule 8 .4 ( a )
(emphasis added).
Defendants ' counsel who make s e t t l e
ment o f f e r s designed to create a conf l ic t
of i n t e r e s t between opposing counsel and
the c l ient p l a i n t i f f act in a manner i n
cons i s ten t with thei r duty to the pro fes
s ion. At the worst , they induce p l a i n
t i f f s ' counsel to abandon their c l i en t s '
interest in favor of thei r personal , pecu
30
niary interest . But, the integ r i ty of the
p r o f e s s i o n may be undermined even when
e t h i c a l p l a i n t i f f s 5 counsel r es is t the
con f l i c t . Ensnared in the con f l i c t created
by the waiver tact ic , wel l meaning counsel
have o f ten acceded to the coercive demand
of waiver expecting subsequently to chal
lenge i t be fore the d i s t r i c t court. A l
though one state bar has approved such a
cha l le nge as e th ica l , Vermont Bar Associ
at ion Opinion No. 85-3, some courts have
condemned the "secret plan to rescind" as
" e x a c t l y the wrong way" to " in e f f e c t ,
bu i l d upon a misrepresentation ." Lazar ,
75 7 F . 2d at 4 38-39; see a lso Moore v, Na
t i o n a l Assoc iat ion of Securi t ies Dealers,
762 F. 2d 1093, 1 1 10 (D.C. Ci r . 1985). In
add i t i o n , courts have been "even more
c r i t i c a l o f " defense counsel for "playing
on c o u n s e l ' s d i f f i c u l t dilemma." Lazar,
757 F.2d at 437.
31
C. The Use of the Waiver Tactic Is Inconsistent with the "Lawyer* s Duty "to Act witHTn the Bounds of t h e Law
Defendants and their amici vigorously
disclaim any unethical conduct and instead
argue that the use of coercive waiver o f
f e r s i s j u s t i f i e d by t h e i r e t h i c a l duty
under Canon 7 to prov ide t h e i r c l i e n t s
with zea lous r e p r e s e n t a t i o n . They e r r ,
however, because Canon 7 r e q u i r e s that
zealous representa t ion must be contained
"within the bounds of the law. " Analysis
of the dynamics of the coe rc i ve waiver
t a c t i c and the bounds o f the law under
§ 1988 demonstrates that the waiver tact ic
is unacceptable and unethical .
We s t a r t from the same i n i t i a l
premise as the Code.
The continued existence of a free and
democratic s o c i e t y depends upon r e
cognition of the concept that just ice
i s based upon the r u l e o f l a w . . . .
Without i t , individual r ights become
sub jec t to unrest ra ined power, r e
spect for law i s des troyed , and ra
t ional self-government is impossible.
32
1 7Preamble and Prel iminary Statement at 1.
"To lawyers e s p e c i a l l y , r espec t f o r law
should be more than a p l a t i tude . " EC 1-5.
This means, of course , that p o s i t i o n s e~
spaused on behal f of c l i ents are not e th i
cal so l e ly because they are " f a v o r a b l e to
the c l i e n t . " EC 7-4. Rather, they must
a lso be "supported by the law or . . . sup
p o r t a b l e by a good f a i t h argument for an
extens ion , m o d i f i c a t i o n , or r e v e r s a l of
the law." Id. Accord DR 7-102(A ) (1 )& (2 ) ;
see also DR 2-109(A ) ( 2 ) .
Thus, to analyze the e th i c s of an
o f f e r o f set t lement condit ioned on a
waiver of fees , i t is necessary to explore
the basis of the d e f e n d a n t ' s nego t i a t ing 17
17 As expressed in the Preamble to the Model Rules: "A
lawyer is a representative of clients, an officer of
the legal system and a public citizen having special
responsibility for the qualiity of justice ....
"The Rules presuppose a larger legal context shaping
the lawyer's role. That context includes court rules
and statutes relating to matters of licensure, laws
defining specific obligations of lawyers and substan
tive and procedural law in general."
33
p o s i t i o n . One could not e th i c a l l y argue
to a court that fees should be denied to a
prevai l ing p l a i n t i f f because the defendant
disapproves o f that expense or b e l i e v e s
that the po l i cy of the Fees Act is wrong.
Under the Act, a p r e v a i l i n g p l a i n t i f f i s
enti t led to a "reasonable attorney ' s fee , "
which he or she "should o rd inar i ly recover
. . . un less s p e c i a l c i rcumstances would
render such an award unjust. " S. Rep. No.
94-1011 at 4; H.R. Rep. No. 94-1558 at 6
(quot ing Newman v. Piggie Park Enterpri
ses, I n c . , 390 U.S. 400, 402 ( 1 9 6 8 ) ) . 18
Congress provided for fees for three
reasons. The f i r s t was ret rospect ive : to
compensate the individual l i t i g a n t , see S.
Rep. No. 94-1011 at 2, imposing on c i v i l
r igh ts de fendants the o b l i g a t i o n to pay
The intimation that awards of counsel fees are wholly
discretionary, see Petitioners' Brief at 13, is
inaccurate. See New York Gaslight Club, Inc, v.
Carey, 447 U.S. 54, 6$ (11560) ( “the courtrs discre-
tion to deny a fee award to a prevailing plaintiff is
narrow.")
34
the transaction costs of the ir v io la t ions .
But i t a lso had two prospective purposes :
"to encourage individuals injured by r a c i
a l discr imination to seek j u d i c i a l r e l i e f
. . . , " Newman, 390 U.S. at 402, and to
p r o v id e a d i s i n c e n t i v e to future v i o l a -
. 19t o r s ,
Defendants are not e t h i c a l l y f ree to
seek to evade these o b l i g a t i o n s , a l though
that would serve th e i r pecuniary i n t e r e s t .
De fendan ts ' counse l may take any good
f a i t h p o s i t i o n r eg a rd ing what i s a " r ea
sonable a t t o r n e y ' s f e e " in a g i v e n case .
But, absent spec ia l circumstances, counsel
cannot argue that a p r e v a i l i n g p l a i n t i f f
should be deprived o f a reasonable fee and
s t i l l be "wi th in the bounds o f the law."
Nor may lawyers seek in s e t t l e m e n t
19 Congress determined that "the effects of such fee
awards are ancillary and incident to securing com
pliance with these laws, ard that fee awards are an
integral part of the remedies necessary to obtain
such compliance." S. Rep. No. 94-1011 at 5 (emphasis
added).
35
that which i s con t ra ry to law. DR 7-102.
When defendants ' counsel seek to coerce a
waiver o f f e e s , they are attempt ing to
ef fectuate prec ise ly the oppos i te o f what
Congress intended: to make the indigent
c i v i l r ights claimant bear his or her own
costs in the p a r t i c u l a r case and to make
c i v i l r i g h t s l i t i g a t i o n una t t r a c t i v e
gene ra l l y .
True, settlement normally encompasses
a compromise of the f u l l measure of r e l i e f
on the basis of the l ikel ihood of success.
But that does not s a lv age a sett lement
o f f e r o f l e s s than a reasonable fee, l et
alone an o f f e r o f no fee at a l l . Under
§ 1988, a settlement o f f e r of substantial
r e l i e f on the meri ts and no fee i s , in
terms, an o f f e r not premised on the
l i k e l i h o o d o f success . For Congress
e x p l i c i t l y cons idered when a s e t t l i n g
p l a i n t i f f is ent i t led to fees and adopted
a pu re ly func t iona l approach: P l a i n t i f f s
36
are e n t i t l e d to f ees i f " they v ind ica te
r ights through a consent judgment or with
out f o rma l ly obtaining r e l i e f . " S. Rep.
No. 94-1011 at 5; accord H.R. Rep. No.
94-1558 at 7. Indeed, even when "a de
fendant might vo luntar i ly cease the unlaw
f u l p r a c t i c e . . . , [ a ] court should s t i l l
award fees" i f the f i l i n g o f the la wsu i t
was the cata lyst for such "voluntary" com
p l i a n c e . H.R. Rep. No. 94-1 558 at 7 ;
accord S. Rep. No. 94-1011 at 5. Thus,
under the Act, the ob l igat ion to pay fees
ar ises not from success at t r i a l - -wh ich
i s est imated in settlement— but from the
accomplishment by p l a i n t i f f of the desired
2 0end. Under the A c t , a defendant that
o f f e r s f a v o r a b l e r e l i e f on the meri ts
20 This is, in part, a function of Congress's intention
that fees be governed by "prevailing market rates,"
Blum v. Stenson, ___U.S. ____ 79 L.Ed.2d 891, 900
(1984); the market would not deny counsel a fee
because success was achieved by agreement rather than
litigation.
37
2 1ob l igates i t s e l f to pay a reasonable fee.
A negotiation tact ic that evades that ob
l i g a t i o n i s not wi th in the bounds of the
law.
Contrast a case in which § 1988 would
not ob l igate the defendant to pay counsel
f e e s . A defendant, for example, may have
i d e n t i f i e d and moved to r e c t i f y a c i v i l
r i g h t s v i o l a t i o n be fo re the p l a i n t i f f s '
su it i s begun. Because the r e l i e f mea
sures antedate the su it — and, therefore,
p l a i n t i f f s were not the c a t a l y s t f or
r e l i e f - - a defendant could assert in good
fai th that i t is not required to pay f ees
under the Act . In th i s " n o n c a ta ly t i c "
case, a defendant could combine r e l i e f on
the meri ts with a waiver o f f e r and s t i l l
2 2be "w i th in the bound s o f the law"
2̂ As long as it does not condition fees on merits
re lie f, it can bargain over what is a reasonable fee.
To do so, it is entitled to disclosure of the plain
t i f fs ' fee request. N.Y.C. Op. No. 82-80.
22 There is no suggestion whatsoever that this case in
volved such circumstances. Rather, the acceptance by
the defendants of detailed injuctive re lie f only on
38
a l though, as we show in Pt. I l l , i t would
a lso be unnecessary as a prac t ica l matter.
A comparative a n a l y s i s o f the dyna
mics o f the waiver o f f e r in these very
d i f f e ren t c ircumstances is instructive .
In a " noncatalytic" su i t , the waiver o f f e r
is premised on a good fa i th interpretation
of the law and the f a c t s in the c l i e n t ' s
f a v o r . I t i s e f f e c t i v e because o f the
st rength o f d e f e n d a n t ' s l e g a l p o s i t i o n
a lone . And, one might add, i t achieves a
f a i r and expe d i t i o u s r e s o l u t i o n of the
dispute, providing p l a i n t i f f s with no less
than they are ent i t led to.
In the o rd ina ry case , however, the
waiver demand i s not premised on a good
f a i t h reading of the law. It i s e f fe c t ive
r ega rd l e s s o f the meri ts o f the case or
the l i k e l i h o o d o f success . And while it
provides p l a i n t i f f s with a compromise mea-
the eve of tria l rebuts any possibi l i ty that the
state had planned the changes prior to the lawsuit,
begun two years earlier.
39
sure o f r e l i e f with respect to one aspect
of the case (the m e r i t s ) , i t p rov ides no
r e l i e f whatsover with regard to the second
aspect of the case (the statutory e n t i t l e
ment to attorneys' f e es ) .
In the ordinary case, the waiver tac
t i c i s e f f e c t i v e not because p l a i n t i f f s
ca l c u l a t e the l i k e l i h o o d o f success and
determine to accept r e l i e f without fees;
i t i s e f f e c t ive s o l e l y because the de
fendants can explo it the eth ical quandary
that i t creates . I t i s "a demand . . . that
the p l a i n t i f f ' s lawyer cannot r e s i s t as a
matter of ethics and in which the p l a i n
t i f f has no i n t e r e s t and the r e fo r e w i l l
not r e s i s t . " D.C. Bar Op. No. 147 at 5-6;
N.Y.C. Bar Op. No. 80-94 at 7a. I t
r e s u l t s not in a f a i r and exped i t ious
se tt l ement , but r a the r in an undeserved
windfal l to the c i v i l r ights v i o l a t o r who
avoids the s t a tu to ry o b l i g a t i o n to pay
f e e s .
40
D. The Use o f the Waiver Tactic by
Government Counsel Is P a r t i c u l a r l y
Inapproprfate
In the hands of government, the wai
ver t act ic w i l l be p a r t i c u l a r l y e f f e c t i v e
in d e f e a t i n g the goa l o f providing legal
representation contemplated by Canon 2 and
the Act. And given thei r special respon
s i b i l i t i e s in our system, i t i s p a r t i c u
l a r l y inappropriate for the government and
i t s counsel to coerce a se tt lement that
evades the law and is unjust.
Because "governmental o f f i c i a l s are
f requently the defendants in cases brought
under the s t a t u t e s covered by" § 1988,
H.R. Rep. No. 94-1558 at 7, they are best
situated to discourage p l a in t i f f s® counsel
by repeated invoca t ions of the coercive
waiver tact ic .
Permitt ing c on d i t i on a l fee s e t t l e
ments favors p u b l i c e n t i t i e s and o -
ther h a b i t u a l abusers who are custo
mar i ly de fendants in c i v i l r i g h t s
cases. They can better fend o f f sub
sequent claims and continue unlawful
p r a c t i c e s by the use o f intentional
and concerted insistence on fee w a i
v e r s . The reputation of spec i f i c de-
41
fendants who u t i l i z e fee waiver tac
t ic s quickly sp reads , and the c i v i l
r i g h t s bar i s forced to switch r e
sources to other " t a rge t s . " Thus, the
most f l a g r a n t o f f e n d e r s are
rewarded.
Kraus, supra n . 16, 29 V i l l . L.Rev. at 644-
45 ( f oo tnotes omi t ted) . Yet , as the Court
has noted in a re la ted context :
How "un ique ly amiss" i t would be
therefore, i f the government i t s e l f
- - " the s o c i a l organ to which a l l in
our society look fo r the promotion of
l i b e r t y , j u s t i c e , f a i r and equal
treatment, and the sett ing o f worthy
norms and go a l s f or s o c i a l conduct"
— were permitted to disavow l i a b i
l i t y for the injury i t has begotten.
Owen v . C i t y o f Independence , 445 U.S.
622, 651 (1980) (quoting Adickes v. Kress
& Co . , 398 U.S. 144, 190 ( 1970) (Brennan,
J . , concurring) ) .
Government counsel ' s duty of loya lty
runs not to p a r t i c u l a r o f f i c i a l s but to
? 3the enti ty . Therefore, they cannot ignore
the impact of the i r actions on p l a i n t i f f s ,
23 See EC 5-18: "A lawyer employed or retained by a
corporation or similar entity owes his allegiance to
the en tity .. . . "
And beca-who are the e n t i t y ' s c i t izens . 24
use they r ep re sen t the government, they
have a heightened duty to see that the law
i s complied with. Thus, the Code cautions
tha t :
A government lawyer in a c i v i l action
. . . has the r e s p o n s i b i l i t y to seek
j u s t i c e and to deve lop a f u l l and
f a i r r eco rd , and he should not use
his pos it ion or the economic power of
the government to harass p a r t i e s or
to br ing about unjust settlements or
r e s u l t s .
25EC 7-14. The coercive waiver t act ic runs
afoul of this e t h i c a l command because i t
24 This irony was not lost upon the Congress that passed
§ 1988. It noted that: "Such governmental entities
and offic ia ls have substantial resources available to
them through funds in the common treasury, including
taxes paid by the plaintiffs themselves." H.R. Rep.
No. 94-1558 at 7.
25 The nongovernmental lawyer also has a duty of fair
dealing. BC 7-10 provides that: "The duty of a
lawyer to represent his client with zeal does not
militate against his concurrent obligation to treat
with consideration a ll persons involved with the
legal process and to avoid the infliction of needless
harm." Similarly, the Preamble to the Model Rules
(observes that: "As negotiator, a lawyer seeks a
result advantageous to the client but consistent with
requirements of honest dealing with others." The
point is only that the responsibility of government
counsel is greater.
43
e x p l o i t s the government's better economic
p o s i t i o n to dep r i ve opposing counsel o f
thei r statutory f e e .
I I I . A BIFURCATED APPROACH TO NEGOTIATIONS
OF THE MERITS AND FEES IN CIVIL
RIGHTS CASES IS THE MOST APPROPRIATE
AND EFFECTIVE REMEDIAL DEVICE FOR
PREVENTING THE ETHICAL ABUSE OF THE
COERCIVE WAIVER AND ITS VARIANTS
The eth ica l abuse occas ioned by the
coe rc ive waiver t a c t i c i s not a r a re or
iso lated occurrence. I t has been es t ima
ted " that there are requests for fee wai
vers in more than ha l f of the c i v i l r ights
cases l i t i g a t e d . " Fee Waiver Requests
Uneth ica l : Bar Op in io n , 68 A . B .A . J . 23
(Jan. 1982). As noted above, the p e t i
t ioners and the i r amici suggest they may
be compel led to use the tact ic by their
ethica l r espons ib i l i t y to the ir c l i ents . A
p ra c t i c e thus entrenched r e q u i r e s more
than rhetor ica l censure; the courts must
develop and en force appropriate measures
to prevent such eth ical abuses.
44
A, Coerc ive Fee Waiver Agreements
ShouT3^~Be~~Dnenforce5ETe~~~~
A " c o n t r a c t . . . in v i o l a t i o n o f publ ic
po l i c y and pro fess iona l e t h i c s . . . c a l l s for
j u d i c i a l condemnation. '1 Weil v. Neary, 278
U.S. 160, 174 (1929 ) . Faced wi th a f e e
waiver that is the r esu l t o f t h i s form o f
e thica l , abuse, a cour t should app ly the
t r a d i t i o n a l ru l e that c o n t r a c t s a ga in s t
2 6p u b l i c p o l i c y are u n en fo r c e a b l e . See,
e . g . , Woodstock I ron, Co. v. Richmond and
D a n v i l l e Extens ion C o . , 129 U.S. 644
(1889); Restatement o f Contracts 2d § 178.
This i s p a r t i c u l a r l y so when " the strength
o f that po l i c y [ i ] s manifested by l e g i s l a
t i o n . " I d . , subsection ( 3 ) ( a ) .
The u n e n f o r c e a b i l i t y o f the coerc ive
f ee waiver, however, should not in a case
l i k e t h i s r e s u l t in the i n v a l i d i t y o f the
balance o f the s e t t l e m e n t agreement . In
26 " [a ] consent decree or order is to be construed for
enforcement purposes basically as a contract . . . . "
United States v. ITT Continental Baking Co., 420 U.S.
m r s 3§ T i r 57s y :— ~—
45
refusing to enforce contractual terms that
are void as against publ ic p o l i c y , courts
genera l ly preserve the balance of the con
t rac t , and even of the term. Restatement
o f Contracts 2d §§ 1 78, 184. This i s par
t i c u l a r l y t rue when, as here , the party
seeking enforcement o f the balance acted
" in good fa ith and in accordance with rea
sonable standards of f a i r dea l ing . " I d . ,
§ 184(2 ) . When the substance of the se t
tlement on the meri ts i s , on i t s own, a
reasonab l e compromise, c f . Cotton v. Hin
t o n , 559 F . 2d 1326, 1330 (5th Ci r . 1977),
i t should be enforced because the fee wai
ver cannot be said to have been "an essen
t i a l part o f the agreed exchange . " Re
statement § 184 (1 ) . That the defendant
does not r ece i v e the f u l l benef it of i t s
bargain is of l i t t l e consequence when that
ba rga in was obta ined unethica l ly : "This
[ i ] s not a bona f i d e compromise." Lazar ,
757 F .2d at 437.
46
Bat unless the Court i s c lear on both
the unen fo rceab i l i ty and the s eve rab i l i ty
of fee wa ive rs , this form of ju d i c i a l r e
view w i l l be ine f f e c t i ve . The defendants,
as here, often counter such e f f o r t s with a
request to undo the negotiated settlement
on the ground that the fee waiver was the
cons ide ra t io n for the grant of r e l i e f on
the m e r i t s . This can be as e f fe c t iv e in
prevent ing p l a i n t i f f s ' counsel from chal
leng ing the waiver as that tact ic was co
e r c i v e in the f i r s t place: "each step
forward reintroduces prec ise ly the same
ethical dilemma that o r i g in a l l y forced the
acceptance o f the fee waiver . " Kraus, 29
V i l l . L .Rev . at 620-22; see Vermont Bar Op.
No. 85-3 (a t torney may chal lenge coerced
fee waiver as long as it does not jeopar
dize c l i e n t ' s recovery) .
B . A Bifurcated Approach to Settle
ment's the '~Mos t Erf ect 1 ve~~l3em'idy~~"~
We respect fu l ly submit that, for four
reasons , a f l a t ban on simultaneous or
47
conditional negotiations of the merits and
fees in this narrow c lass of cases i s the
27best remedy.
1. A f l a t ban on simultaneous nego
t i a t i o n de a l s d i r e c t l y with the waiver
problem by removing the context that makes
the t a c t i c e f f e c t i v e . I t g i v e s c l e a r
guidance to busy d i s t r i c t courts, e l imi
nating the uncertainties of a case-by-case
approach.
2. A b i f u r c a t e d approach to s e t t l e
ment better preserves scant j u d i c i a l r e
sources . Re l i ance on d i s t r i c t court
supe rv i s i on would only be su c ce s s fu l in
d i r e c t p rop o r t i on to the amount o f time
and e f f o r t expended by the d i s t r i c t court.
Actua l s u pe r v i s i o n o f negotiations could
be very time consuming. A f t e r - t h e - f a c t
review might r eq u i r e r econs t ruc t io n of 2
27 ibis would neither preclude defendants from obtain
ing reasonable information regarding prospective fee
requests, N.Y.C. Bar Op. No. 82-80, nor from negotia
ting separate fee settlements after agreement has
been reached on the merits.
48
the course o f negot ia t ions in an e f f o r t to
asce r ta in whether the defendants* negot ia
t i o n t a c t i c s were in f a c t c o e r c i v e . See
Moore , 762 F . 2d at 1114-15 (Wright, C . J . ,
2 8d i s s e n t i n g ) . The b i furcated negot ia t ion
approach, on the o the r hand, i s s e l f - e n
f o r c i n g . I t i s su c c e s s fu l because, by
removing the context that makes the c o e r
c ive waiver t a c t i c and i t s var iants e f f e c
t i v e , i t ends t h e i r use. I f the ban on
simultaneous or condi t iona l nego t ia t ion is
breached , a s imple a p p l i c a t i o n to the
court can bring prompt sanct ions.
The argument tha t b i f u r c a t i o n would
requi re two sett lement hearings i s mispla-
28 judge Wright's dissenting opinion catalogues the
progress o f the settlement negotiations in Moore and
shows that the "waiver" o ffer came from tfieT]pIain-
t i f f s because, by a pattern of responses and nonre
sponses to prior settlement offers, "NASD's counsel
had made absolutely clear that the merits proposal
was perfectly acceptable, but that NASD would not
agree to that merits proposal unless the question of
fees and costs were resolved[ a]nd . . . that only a
waiver .. . would satisfy NASD and permit the merits
settlement to go forward." Id. at 1115 (emphasis in
o rig in a l).
49
ced . Counsel may separately negotiate the
merits and fees , without condi t ioning one
on the o the r , and present both agreements
to the court at one hea r ing . Moreover,
the c o n f l i c t s of interest and the r e s u l t
ing opportunities for abuse that occur in
c i v i l r i g h t s cases are not l im i ted to
class actions. Thus, even i f the b i f u r
cated n ego t i a t i o n approach might occa
s iona l ly y i e ld more settlement hearings in
c l a s s a c t i on c a se s , the a l t e r n a t i v e s - -
in t ens iv e a f t e r - t h e - f a c t s c ru t iny or
s u pe rv i s i o n o f n ego t i a t i on - - would
require greater d i s t r i c t court re sources
in every case.
The b i f u r c a t e d approach encourages
the part i es to bargain in good f a i th on a
p r in c i p l e d b a s i s to reach a reasonab le
compromise on the merits of each aspect of
the case: f i r s t , on the question of r e l i e f
and, s e p a r a t e l y , on an app rop r ia te and
reasonab le fee . That form of "pr incipled
50
n ego t i a t i on produces wise agreements
amicably and e f f i c i e n t l y . " R. F ishe r and
W. U ry , GETTING TO YES 86 ( 1981 ) . In the
long term, i t w i l l conserve j u d i c i a l
resources.
3. The b i f u r c a t e d approach w i l l in
fact encourage s e t t l em ents , d e sp i t e the
s u p e r f i c i a l l y appealing assertions to the
cont ra ry . The cur rent a v a i l a b i l i t y of
" s a c r i f i c e " tact ics disserves the s e t t l e
ment process. In many of these cases, the
ult imate 1 i a b i l i t y f o r the p l a i n t i f f s '
attorneys' fees may be the s i n g l e l a r g e s t
incentive for compliance. This i s obvious
ly true, for example, when the monetary or
i n j u n c t i v e r e l i e f at stake is minor. But
i t w i l l a lso be true in cases in which the
i n jun c t iv e r e l i e f i s very c o s t l y . In
those cases, the lower t r a n s a c t i o n costs
of in-house l i t i g a t i o n are o f f s e t by the
l a rger savings that accrue from de lay ing
implementation. Thus, the a v a i l a b i l i t y of
'■ 51
" s a c r i f i c e " tact ics as a method of avoid
ing or reducing l i a b i l i t y f o r fees r e
moves the l a r g e s t economic incen t ive to
voluntary compliance without l i t i g a t i o n .
See Kraus, 29 V i l l . L.Rev. at 643-44.
Once l i t i g a t i o n has begun, the
a b i l i t y to avoid or reduce fee l i a b i l i t y
by l a t e r use of " s a c r i f i c e " tact ics is an
incentive to delay settlement to the l a s t
moment, as occurred in this case. In con
t ra s t , the bi furcated negotiat ion process
makes c l e a r that de fendants w i l l not be
able to avoid the payment o f accrued fees .
Thus, there i s a s t rong incentive either
to comply vo luntar i ly or to s e t t l e at an
early stage before the accrued fees become
very large.
The a v a i l a b i l i t y of " s a c r i f i c e " tac
t ic s disserves the sett lement process in
another way. P l a i n t i f f s ' counsel know that
they face the p o s s i b i l i t y of being manipu
l a t ed to compromise th e i r fee i f they
- 52
engage in s imultaneous n e g o t i a t i o n s .
Therefore, many counsel w i l l simply refuse
to n e g o t i a t e i f the defendants i n s i s t on
simultaneous negot ia t ions .
When negot ia t ions have a l ready begun,
the i n t e r j e c t i o n o f " s a c r i f i c e " t a c t i c s is
l i k e l y to d e r a i l the process. As the p e t i
t i oners point ou t , the community o f i n t e r
e s t s shared by the p a r t i e s i s o f t e n the
most e f f e c t i v e basis o f s e t t l em en t . B r i e f
f o r P e t i t i o n e r s at 27-28. The invocat ion
o f the coerc ive waiver t a c t i c or i t s v a r i
ants destroys the p l a i n t i f f s ’ f a i t h in the
other s i d e ' s bona f i d e s . I t thus not only
d e s t r o y s the community o f in t e r e s t s that
might l ead to s e t t l e m e n t , but a l s o de
c r eases the va lue o f any sett lement that
might be achieved. "A wise p l a i n t i f f knows
that ult imate success 'depends to a degree
on making the other side s u f f i c i e n t l y con
t en t with an agreement to want to l i v e up
to i t . ' " B r ie f f o r P e t i t i o n e r s at 28 (quo
53
t i n g F ishe r & Ury, supra, at 75) . Rut by
the same token,, a wise p l a i n t i f f knows
that the agreement he or she gets is only
as valuable as the good f a i th o f the other
s i d e in implementat ion; the invocat ion o f
the wa iver t a c t i c destroys any hope the
p l a i n t i f f might have that a sett lement is
worth achieving.
4. The b i furcated approach be t te r
contro ls other forms o f e th i c a l abuse. I t
i s more e f f e c t i v e in deal ing with the par
t i a l s a c r i f i c e and p a r t i a l sweetheart s i t
uations --which develop from the t r a d e - o f f
o f mer i t s r e l i e f f o r fees r e l i e f or v i c e
versa— that w i l l be hard to uncover in an
a f t e r - t h e - f a c t review o f the r e su l t . More
o v e r , even when simultaneous negot iat ions
r e s u l t in a p e r f e c t l y f a i r and e th ica l
s e t t l e m e n t , i t creates an appearance o f
im prop r i e t y . What the publ ic sees is a
bunch o f lawyers se t t ing the i r own fees
amongst themselves at the poss ible expense
54
of the c l i e n t , not the context o f the
overa l l r e su l t .
C. The O rd ina ry J u d i c i a l Tools Have
So f5F~Proven in su fflcT en t
Judicia l scrutiny of settlement agre
ements may be e f f e c t i v e in the " sw ee t
hear t '8 context - - when o v e r l y generous
attorneys* fees are exchanged f o r a com
promise o f the i n t e r e s t s o f the c l i e n t
c l a s s , see Prandin i v. National Tea Co . ,
557 F . 2d 1015, 1020-21 (3rd C i r . 1977)
- - because the e t h i c a l abuse i s more
r e a d i l y apparent from the terms o f the
settlement. But " s a c r i f i c e " agreements - -
l i k e coe rc ive waiver and i t s variants - -
r e s i s t e f f e c t ive scrutiny. When defendants
r eq u i r e p l a i n t i f f s ' counsel to accept a
lower fee in exchange f o r r e l i e f on the
meri t s , the r e s u l t may be ind ist inguish
able in h ind s igh t from a tough but good
f a i t h b a r ga in . S i m i l a r l y , c oe rc i v e fee
waivers come wrapped in the r h e t o r i c of
knowing and vo lunta ry waiver, s ee , e . g , ,
- 55
Moore, 762 F .2d at 1107, and are o f ten
mistaken for a voluntary barter of the fee
for r e l i e f on the merits (the " b a r ga in in g
chip" t h e o r y ) . Id . at 1105. That is how
the d i s t r i c t court erred in th i s case ,
R.T. 7, even though p l a i n t i f f s ' a t torneys
negotiated a provision requiring court ap
proval that should have a ler ted the court
to the fact that the waiver was not volun
tary.
Simply to remit th i s i ssue to the
lower federal courts would be to r eq u i r e
busy judges to assess complex negotiations
without necessary guidance . Thus, when
counsel have sought d i s t r i c t court in te r
vention during n ego t i a t i o n s the r e s u l t s
have often been unsatisfactory. Indeed, a
In one case, the parties negotiated a settlement
without discussing fees. Prior to its presentation
to the court for approval, however, the defendants
insisted that the settlement was conditional on a
fu l l waiver of fees. Relying on Prandini, plain
t i f f s ' counsel raised the matter with"the district
court. The court declined to rule; p la int i f f s '
counsel were forced to acquiesce to the waiver in
light of the client's interest in re l i e f on the
merits. Levin, Practical, Ethical and Legal Consi-
56
m ajo r i ty o f the r u l i n g s in these cases
are unreported, r e f l ec t ing that these pro
blems are not always considered with
3 0depth. ' The problem is compounded because
the absence o f reported d e c i s i o n s ,
together with the disincent ives to appeal,
derations Involved in the Settlement of Cases in
whlcK Statutory Attorney’s Fees Are Authorized, 14
Clearinghouse Rev. 515,519 (Oct. 1980).
In another case, counsel's motion to the court to
prohibit the defendants from insisting on a fee
waiver instead prompted the court to direct the
plaintiffs counsel to continue to negotiate and to
act in the client's best interest. The agreement
that resulted included a fee waiver. Counsel' s effort
to set aside the waiver provision was met with a
motion by the defendants to set aside the entire
agreement; the court approved the agreement and the
fee waiver. When the plaintiffs appealed, defendants
cross-appealed, again placing the re lie f on the
merits at risk. Because of this, the appeals were
voluntarily dismissed. Comment, Settlement Offers
Conditioned upon Waiver of Attorney's Fees; PoTIcy7
Legal, "and Ethical Considerations, 131 U.Pa.L.Rev.
793, 802 (1983).
30 For example, sane courts have tended wrongly to as
sume (See Pt. I supra) that fees in this context are
no different than any other. No doubt courts have
also been affected by the important role that settle
ments play in judicial administration. Understandab
ly, courts not fully familiar with the dynamics of
the settlement process may be reluctant to tinker
with any aspect of the "mix" that now produces set
tlements.
57
have e f f e c t i v e l y sh i e lded the p r a c t i c e
from adequate scrutiny; "the most b l a t a n t
examples o f c o n d i t i o n a l Pees Act waivers
almost never reach a p p e l l a t e c o u r t s . "
Kraus, 29 V i l l . L. Rev. at 620.
Thus, federa l d i s t r i c t court i n t e r
vent ion i s unl ikely to serve as an e f f e c
t ive remedy to t h i s p r a c t i c e . The lower
courts would require an a f f i rmat ive d i rec
t i v e s e n s i t i v e l y to po l ice such abuses .3 ̂
Because of the l i m i t a t i o n s o f r e t r o s p e c
t i v e rev iew, a c t i v e su pe rv i s i on o f the
conduct of negotiations that concern both
the merits and fees would be required.
The petitioners' assertion that district courts
already have adequate tools to police such miscon
duct, Brief for Petitioners at 34-35, misses the mark
because it fails to acknowledge the conditions noted
above that render these tools ineffective in fact.
Indeed, the petitioners would make district court
intervention even less likely and less effective by
erecting additional barriers: They would create a new
presumption of ethical conduct by defense counsel
that the already victimized plaintiffs ' counsel would
have to overcome. id. at 35-36.
58
D . The Criticisms of the Bifurcated
Approach Are Inaccurate
Contrary to the a s s e r t i o n s o f p e t i
t ione r s and t h e i r a m ic i , the b i f u r c a t e d
approach does not impinge on the eth ical
r e s po n s i b i l i t i e s o f de fense counse l . De
fendants have a l e g i t im a te i n t e r e s t in
knowing the extent of the ir l i a b i l i t y . But
that does not mean that overzealous coun
se l may coerce a waiver or p a r t i a l wa iver
of fees. Other avenues are open to ethical
defense counsel to further th e i r c l i e n t s '
interest in l imiting l i a b i l i t y . For exam
p l e , de fendants can reques t r easonab le
in format ion concerning hours and r a t e s .
See N.Y.C. Bar Op. No. 82-80. Then, apply
ing the s tandards enunciated in Blum v.
Stenson, 79 L . Ed.2d at 901-03, they can
f i g u r e th e i r ou t s id e l i a b i l i t y with rea
sonable accuracy. Or they can l imit their
l i a b i l i t y for fees by se t t l ing meritorious
su its promptly. They can aggress ive ly bar
ga in over a r easonab le f e e , seeking to
- 59
exclude compensation f o r unnecessary
e f f o r t . Or they can argue that the su i t
was in f a c t meri t less and, although nomi
na l ly se tt l ed , should not resul t in a sub
s t a n t i a l f e e . A l l o f these op t ions pre
serve v i go rous advocacy f o r both s i d e s ,
unl ike the coe rc ive waiver t a c t i c which
preempts the process.
That de fense counsel cannot achieve
the most advantageous r e s u l t f o r the i r
c l i e n t s ne i ther means that " s a c r i f i c e "
t a c t i c s are e t h i c a l , nor that a ban on
s imultaneous n ego t i a t i ons con f l i c t s with
ethical o b l i g a t i o n s . Many other e t h i c a l
r u l e s r e s t r i c t zea lous r e p r e s e n t a t i o n .
Obtaining from opposing counsel a covenant
not to sue the defendant in another action
as a condition o f set t lement both serves
the de f endant ' s best interest and induces
the defendant to s e t t l e . I t i s neverthe
l e s s u n e th ic a l . DR 2~1G8(B) ; Model Rule
60
5 . 6 ( b ) .
The defendant 's in a b i l i t y to f i x with
ce r t a in ty the amount o f t o t a l l i a b i l i t y
a l l at once w i l l on ly prevent settlement
in the rarest case. The same con s ide ra
t ions that now prompt p a r t i e s to s e t t l e
w i l l continue to f avo r sett lement over
l i t i g a t i o n in most case s . in s u i t s for
monetary r e l i e f , the defendant w i l l s t i l l
s e t t l e because settlement costs less than
the f u l l contingent l i a b i l i t y . In injunc
t i v e case s , the defendant w i l l s e t t l e
because a negotiated sett lement g i v e s i t
the maximum control over the terms of the
eventual decree. In e i t h e r case , s e t t l e
ment saves the defendant both i ts further
costs of l i t i g a t i o n and the 1arger l i a b i
l i t y for attorneys' fees that would other-
-•2 Another example is the rule requiring counsel to
disclose adverse authority directly on point. EC
7-23; Model Rule 3.3(a)(3). It directly disserves
the client's interest but is required by the lawyer's
ooligations both to the tribunal before which he or
she is practicing and to the law.
12
61
wise accrue.
B i fu r ca t ed n ego t i a t i on s might deter
settlement in cases in which the d e f en
dant could avoid a l l l i a b i l i t y for fees i f
the case proceeded to t r i a l . In that case,
the prospect of conferring preva i l ing par
ty s t a tus on the p l a i n t i f f by s e t t l i n g
without a concurrent waiver of fees would
seem to deter se tt l ement . One such c i r
cumstance i s the " n o n c a t a l y t i c " s u i t
desc r ib ed above. But in that case , the
defendant can simply se t t l e and oppose the
fee award by demonstrating that compliance
predated f i l i n g .
The t r u l y m e r i t l e s s s u i t i s another
such circumstance. But in that case , the
defendant has numerous a l t e r n a t i v e s . It
can se t t l e ear ly when the fee award w i l l
be small . Even when the lack of merit does
not appear u n t i l l a t e , i t can seek to
l im i t the fee recovery on the grounds of
the meager resu l ts obtained. See Hensley
62 -
v. E c k e rh a r t , 461 U .S. 424 ( 1983). And,
when the case is f r i vo lous , i t can sue for
i t s own attorneys' fees .
True, there may be some m e r i t l e s s
cases in which the defendant, unwi l l ing to
run the r i s k o f fee l i a b i l i t y , w i l l not
s e t t l e . But that may we l l be a b e n e f i t .
I t i s o f ten assumed that some p l a i n
t i f f s ' l awyers f i l e m e r i t l e s s s u i t s f or
the i r "nuisance va lue , " hoping that defen
dants w i l l s e t t l e j u s t to avoid the cost
. . 3 3o f l i t i g a t i o n . ' To the extent that
b i f u r c a t e d n ego t i a t i o n s make m e r i t l e s s
s u i t s l e s s l i k e l y to s e t t l e , they reduce
the incent i ve to f i l e such "nuisance
s u i t s . " That furthers both the sound ad
ministration of ju st ice and the long term
interests of defendants.
The advantages of the b i f u r c a t e d ap
proach to sett lement pioneered by the
33 Such suits are plainly unethical because not premised
on a good faith interpretation of the law. See DR
7-102(A) (1) & (2). ~ ~
63
Third Ci rcu it in Prandini are substant ia l .
I t i s not su rp r i s ing , therefore, that the
Pra nd in i approach has broad support. In
his r epor t to the Federal Judic ia l Center
on fees in c lass a c t i on ca se s , P ro f e s so r
Mil le r reported the resu l ts of a question
naire on the subject : 51.9% of the judges
responded that they agreed with the Pran
d in i approach; 65.6% of the a t torneys
agreed . A breakdown fo r the at torneys*
response shows b ipart i san support f o r the
r u l e : 65% of p l a i n t i f f s a t to rneys and
59.4% of defendants attorneys support the
ru le . A. M i l l e r , Attorney's Fees in Class
Act ions 224 ( 1 9 8 0 ) . ^ The A s s o c i a t i o n ' s
opinions, supporting the Prandini approach
in the c i v i l r i g h t s area where the con
s iderat ions are stronger, were the r e s u l t
of extens i ve d e l i b e r a t i o n by members of
34 Professor Miller also reported that the problems with
the Prandini approach are mitigated by providing the
defendant with information regarding the fee request,
i d . at 223, a practice that the Association has
approved of. Op. No. 82-80.
64
the bar with a v a r i e t y o f perspect i ve s . h
ru le wi th such a high deg ree o f support
from those in p r a c t i c e cannot be as
unworkable as p e t i t i o n e r s and t h e i r amici
contend.
In sum, the b i f u r c a t e d approach i s
the most e f f e c t i v e remedy fo r a p r a c t i c e
that impugns the i n t e g r i t y o f the l e g a l
system and subver t s the i n t e n t o f Cong
ress. I t both removes the opportunity fo r
impropriety and prevents the appearance of
im p r o p r i e t y in the se t t l ement process in
c i v i l r i g h t s c a s e s . I t i s w o r k a b l e ; i t
w i l l encourage f a i r and expedi t ious s e t
tlements more than i t w i l l de ter them. I t
should be af f i rmed by this Court.
CONCLUSION
For the f o r e g o i n g reasons , the
judgment o f the court o f appeals should be
a f f i rmed.
65
Respectful ly submitted ,
The Committee on Legal
Ass is t ance o f the Associa
tion of the Bar of The City
of New York
Al lan L. Cropper
1155 Avenue of the Americas
New York, New York 10036
(212) 819-8403
Counsel For Amicus Curiae
Opinion Number 80-94
Inquiry Reference No. 80-94:
Opinion on Settlement Of fers in
Publ ic Interest L i t iga t i on Con
d i t iona l on Waiver "of Statutory
Fees
Many statutes providing protection
f o r c i v i l r i g h t s and c i v i l l i b e r t i e s also
prov ide for an award by the court of
attorneys' fees to successful p l a i n t i f f s .1
The purpose of these attorneys' fee provi
s ions i s to encourage enforcement of the
r ights protected by the statute by persons
See, e.g., 20 U.S.C. § 1617 (Education Amendments of
T§72) (action charging state or local education
agency with discrimination); 42 U.S.C. § 19731(e)
(Voting Rights Act); 42 U.S.C. § 2000a-3 (Civil
Rights Act of 1967) (discrimination in public accom
modations) ; 42 U.S.C. § 20003-5 (Civil Rights Act of
1964) (discrimination in employment); 42 U.S.C. §
3612(c) (Pair Bousing Act of 1968) (discrimination in
the sale or rental of housing); 42 U.S.C. § 1988
(Civil Rights Attorneys' Fees Award Act of 1976).
Recently, Congress enacted the Equal Access to
Justice Act, which amends 5 U.S.C. § 504 and 28
U.S.C. § 2412 to permit counsel fee awards against
the United States in certain agency and judicial pro
ceedings.
2a
who would otherwise be unwil l ing or unable
to bear the cost of doing so. These s ta
tutes a lso have been interpreted to permit
an award of attorneys' fees upon a s e t t l e -
4- 2 ment.
We have received a number of informal
i n q u i r i e s by lawyers for publ ic interest
o r g a n i z a t i o n s , who frequently represent
p l a i n t i f f s in actions under these s ta
tu te s , asking whether i t is e th ica l for
defense lawyers in such actions ( t y p i c a l
ly , but not always, government counsel) to
make settlement o f f e r s in such suits con
d i t i o n a l on a waiver of statutory fees.
The inqu i r ing lawyers have pointed out
that such demands place publ ic interest
l awyers in an impossible con f l i c t between
th e i r in te re s t in fees to help finance
In Maher v. Gagne, 100 S. Ct. 2570 (1980), the Court
teI3TRaTcDunseI fees under 42 U.S.C. § 1988 may be
awarded even after settlement of a plaintiff 's claim
oc following a consent judgment. In either case, the
pla in t i f f may be a "prevailing party" within the
meaning of the statute.
3a
t h e i r program and the interests of their
c l i e n t s in the merits of the settlement,
which u l t imate ly forces p l a i n t i f f s '
counsel to submit to such demands for the
waiver of the fee.
At a publ ic forum on eth ical problems
in publ ic interest l i t i g a t i o n co-sponsored
by this Committee las t P a l l , pane l i s ts and
members o f the audience repeatedly noted
t h e i r concern with this pract ice , urging
that i t was not only an unfair bargaining
t a c t i c , but that i t would ult imately have
a d e l e t e r i o u s e f f e c t on c i v i l r ights s ta
t u t e s , the enforcement of which depend in
important part on the a v a i l a b i l i t y of s ta
tutory counsel fees.
In this opinion we explain why we
b e l i e v e that such conditional settlement
o f f e r s are unethical in actions ar i s ing
under c i v i l r ights and c i v i l l i b e r t i e s
st a tu tes .
4a
I
As a ru l e , this Committee does not
respond to inqui r ie s by lawyers about the
conduct of other counsel. Our function is
to prov ide guidance to inquiring lawyers
about t h e i r own proposed conduct. We do
not pass judgment on complaints about
o the r s ; that i s the province of the
Departmental D isc ip l inary Committee and
the courts which can a f ford due process
hear i ngs . Neverthe less , in this instance
the Committee has decided to give i ts
op in ion , not as a condemnation of past
p r a c t i c e , but as a guide to future con
duct .
The question concerning the ethics of
conditional settlement o f f e r s i s one which
bears not only on the conduct of defense
counsel who make such o f f e r s , but on the
conduct of p l a i n t i f f s ' counsel who must
decide how to respond to such o f f e r s . We
decided that we could not responsibly
counsel p l a i n t i f f s ' lawyers on their o b l i
5a
g a t i o n when confronted with such condi
t ional settlement o f f e r s without consider
ing the e th i c s of the conditional s e t t l e
ment o f f e r i t s e l f . We issue this opinion,
however, recognizing that there is no
c l e a r precedent by which defense counsel
could have guided themselves in the past.
I I
As a lready indicated, the demand for
a waiver o f statutory counsel fees as a
cond i t ion to settlement presents a severe
dilemma for p l a i n t i f f s ' counsel.
Frequently, p l a i n t i f f s ' counsel in
c i v i l r i g h t s l i t i g a t i o n are employed by a
p u b l i c i n t e r e s t organizat ion which does
not accept fees from the c l i ent as a
matter o f po l i c y and in any event, p l a in
t i f f s in such cases often have no
resources to pay a fee. In such cases,
waiver o f the attorneys fees w i l l a f fec t
only the lawyers and thei r organizations,
who depend ent i re l y on the statute for
- 6a
thei r fee; the c l i ent who i s not obl igated
or i s unable to pay f e e s , has no stake in
the s t a tu to ry fee and i s hence not con-
3cerned with i t s waiver. Yet p l a i n t i f f ' s
counsel owes undivided loya lty to the
c l i e n t and i s obl iged to exercise his
As the Fifth Circuit noted recently in Lipscomb
v. Wise? _______ F.2d ______ (April 22, 1981), a case
recognizing an attorney's right to appeal from a
denial of a fee in a civil rights case:
"In theory, attorneys for a litigant are not
personally affected by a judgment. Even in the
limited class of cases in which attorney's
fees may be awarded, the award is made to the
prevailing party, rot to counsel. However, as
a practical matter, the lawyer is frequently
the only person adversely affected when attor
ney's fees are denied. An indigent client has
no real financial interest in whether his
attorney is awarded fees. I f the client is
not indigent, the attorney may s t il l be the
party aggrieved in fact, i f the client's net
recovery is not affected by the amount allowed
for fees. When they are the real parties in
interests, attorneys are entitled to a day in
court.
* * *
"Attorneys who bring civil rights suits on
behalf of their cl ients my be secure in the
knowledge that they can pursue any legitimate
right they may have to attorney's fees in
federal courts."
7a
judgment in evaluating the settlement free
from the influence of his or his organiza
t i o n ' s i n t e re s t in a fee. DR-5-101(A).
Hence, i t would seem that p l a i n t i f f ' s
counsel confronted by such a demand must
i gnore h is or his organ izat ion ' s interest
in a fee and recommend waiver of the fee,
i f the substantive terms of the settlement
are d e s i r a b l e for the p l a i n t i f f . Defense
counsel thus are in a uniquely favorable
posit ion when they condition settlement on
the waiver of the statutory fee: they make
a demand fo r a benef i t which the p l a in
t i f f ' s lawyer cannot r e s i s t as a matter of
e th i c s and which the p l a i n t i f f w i l l not
r es is t due to lack of interest .
A majority of this Committee bel ieves
that i t i s unethical for defense counsel
to exploi t this s i tuat ion in cases ar i sing
under s t a tu te s aimed at protecting c i v i l
r i g h t s and c i v i l l i b e r t i e s .4 We do not
4 This view apparently is also shared by some govern-
8a
reach the question as i t may a r i se in any
other context.
Authorization of fee awards under
such s t a t u t e s i s c r i t i c a l to the adminis
t r a t i o n o f j u s t ic e ; indeed, i t appears
irent lawyers vho defend government entities in suits
under civil rights statutes. The Supreme Court has
recently agreed to review a decision of the First
Circuit interpreting F.R. Civ. P. 59(e) to require
that a fee application must be filed within 10 days
of the entry of a consent judgment terminating an
action brought urrier 28 U.S.C. § 1983. White v. New
Hampshire Department of Employment Security,
U.S.L.W. 38&3 (May 18, 138Ty ('No.' 86-5M7)7"granting
cert to 629 F.2d 697 (1st Cir. 1980). Counsel for
New Haripshire conceded that it was their understand
ing that they were ethically forbidden from holding
the settlement of the merits "hostage" to negotia
tion of a settlement on fees favorable to the state;
they assumed that they could not discuss fees until
after agreement was reached on the settlement of the
merits. White v« Hampshire Department of Ehploy-
ngnt Seoarity ̂ ajpra, petition for a Writ of Certio-
T a r i, p. 5, n. 2. We do not find it necessary to
reach the question of whether in every type of case
in which fees may be awarded to a plaintiff it is
ethically improper for counsel to discuss simulta
neously the settlement of the merits and the counsel
fee award. See Prandini v. National Tea Co.f 557
F.2d 1015, 102'"{3b "C?if7_T^Tf)~ar3~^jr^5a~:vTJnited
States, 623 F.2d 1338, 1352-1353 (9th Cir. 1$80). As
wHT~become apparent, this opinion turns on a con
junction of principles applicable primarily to l i t i
gation protecting civil rights or c iv il liberties.
See Regalado v. Johnson, 79 F.R.D. 447 (N.D. 111.
T578).
9a
c r i t i c a l to the perception of ju st ice and
i t s a c c e s s i b i l i t y to a l l members of
s o c i e t y . The statutory fee award is a
r ec o g n i t i o n that protections af forded
m in o r i t i e s subjected to invidious d i s c r i
mination or to persons abused by arb i t ra ry
governmental action are of ten meaningless
unless counsel can be secured to a s s i s t in
the enforcement of those r ights , and that,
t y p i c a l l y , victims of such conduct are
unable to a f fo rd counsel.
In Newman v. Piggie Park Enterprises,
Inc. , 390 U.S. 400, 402 ( 1968), the
Supreme Court sa id, in connection with an
a p p l i c a t i o n for attorney 's fees under the
Civ i l Rights Act of 1964:
I f success fu l p l a i n t i f f s were rou
t ine ly forced to bear thei r own
attorneys ' fees , few aggrieved
pa r t i e s would be in a pos it ion to
advance the pub lic interest by invok
ing the injunctive powers of the
federal courts. Congress therefore
enacted the provision for counsel
fees - - not simply to penalize l i t i
gants who de l i be ra te ly advance argu
ments they know to be untenable but,
10a
more broad ly , to encourage ind iv i
duals injured by rac ia l discr imina
t ion to seek ju d i c i a l r e l i e f under
T i t l e I I . [Footnote omitted. ]
Lower courts have given s imilar explana
t ions in cases brought under a var iety of
s t a tu t e s for monetary and injunctive
r e l i e f . S ee , e . g , , Torres v. Sachs, 530
F. 2d 10, 13-14 (2d Ci r . 1976) {42 U.S.C. §
1 973 ( e ) ) ; Nadaeau v. Helgemoe, 581 F. 2d
2 7 5, 280 (1st Ci r . 1978) ( 42 U.S.C. §
1 9 8 8) ; Dennis v. Chang,, 611 F. 2d 1 302,
1306-07 (9th Ci r . 1980) (same); Rodriguez
v. T a y l o r , 569 F.2d 1 231 , 1 245 ( 3rd Cir .
1977) (Age Discrimination in Employment
Act ) . See a lso 1976 U.S. Code Cong. & Ad.
News 5913, reprint ing S. Rep. No. 94-1022,
94th Cong., 2d Sess 5, stating the purpose
of the law that became 42 U.S.C. § 1988.
In s e v e ra l hear i ngs held over a
per iod o f years , the Committee has
found that fee awards are essential
i f the Federal statutes to which S.
2278 appl ies are to be fu l ly
en fo r c e d . We f ind that the e f fects
of such fee awards are anc i l l a ry and
11a
inc ident to securing compliance with
tFe~se Taws, and that fee awards are
an integra l part o f the remedies
necessary to obtain such compliance.
. . [ I t ] i s intended that the a t to r
neys' fees , l ike other items of
cost s , w i l l be col lected either
d i r e c t l y from the o f f i c i a l , in his
o f f i c i a l capacity, from funds of his
agency or under his control , or from
the State or loca l government
(whether or not the agency or govern
ment i s a named par ty ) . [Footnotes,
omitted; emphasis added.]
In the preamble to the Equal Access to
Justice Act of 1980, Congress found:
that c e r t a in ind ividua ls , partner
sh ip s , corporations, and labor and
other organizat ions may be deterred
from seeking review o f , or defending
a g a in s t , unreasonable governmental
action because of the expense
invo lved in securing the vindicat ion
of the r ights in c i v i l cases and in
administrative proceedings.
These statutes thus provide one form
of response to the need to balance the
s c a l e s of j u s t i c e and provide a means for
encourag ing those who could not otherwise
af ford to do so a r e a l i s t i c opportunity to
en force t h e i r r ights . Routine demands in
12a
the context of settlement that p l a i n t i f f ' s
counsel waive such statutory fees thus
could s e r i o u s l y undermine the e f f e c t i v e
ness of these provisions as a device for
making counsel ava i l ab l e to persons having
claims under these statutes.
DRl -102(A) (5) provides:
"A. A Lawyer sha l l not:
* * *
5. Engage in conduct that is
pre jud ic i a l to the adminis
t rat ion of j u s t i c e . "
Moreover, under the Code o f Profes
s i o n a l Respons ib i l i ty every lawyer is
urged to support e f f o r t s to make counsel
a v a i l a b l e to those unable to af ford i t .
EC 2-25 s t a t e s :
"The rendit ion of free lega l services
to those unable to pay reasonable
fees continues to be an ob l iga t ion of
each lawyer, but the e f f o r t s of
ind iv idua l lawyers are often not
enough to meet the need. Thus, i t
has been necessary for the profession
to i n s t i t u t e addit ional programs to
provide lega l services . Accordingly,
13a
l e g a l a id o f f i c e s , lawyer re fe r ra l
s e r v i c e s , and other related programs
have been developed, and others w i l l
be developed, by the profess ion.
Every lawyer should support a l l
proper eTFo7ts~Xo~lnee't"TH i s "neec]"'~'f or
I eg a 1 services' . ~ir '^("Emphasis sup
pl ied . ) ’
In the view of the majority of the
Committee, the long term e f f e c t of pe r s i s
tent demands for the waiver of statutory
fees i s to prejudice a v i t a l aspect of the
admin is t r a t ion of just ice and undermine
e f f o r t s to make counsel ava i l ab l e to those
who cannot a f ford i t , contrary to the
ob l igat ions and aspi rat ions of the Code of
Professional Responsib i l i ty . We f ind this
conc lus ion pa r t i cu l a r l y compelling in
l i g h t o f the spec ia l ob l igat ions of
government counsel, who in the usual
c i v i l r i g h t s case are counsel for defen
dant , to deal f a i r l y and not take undue
advantage o f his posit ion to bring about
unjust settlements or re su l ts . EC 7-14.
Although th i s opinion is not l imited to
14a
government counsel, we be l ieve the con
s i d e r a t i o n s of EC 7-14 add addit ional
f o rce to our conclusion where government
counsel i s involved.
Ill
In reaching this conclusion we have
considered c a re fu l l y the views of a sub
s t a n t i a l minority o f the Committee which,
although sympathetic to the concerns
expressed in this opinion, bel ieves
s t ro n g l y that in prohibi t ing a spec i f ic
type o f sett lement demand aimed at l im i t
ing a p a r t y ' s monetary exposure the Com
mittee has invaded the ju r i sd ic t ion of the
courts and the l e g i s l a tu re .
The minority considers that rel iance
on the purpose of these statutes is inap
p r o p r i a t e because i t is for Congress or
the courts to determine whether pa rt i cu l ar
conduct ought to be prohibited as d e t r i
mental to the statutory goa ls . The Com
mittee ma jo r i ty , however, bel ieves that
15a
concerns f o r statutory goals re l a t ing to
the adminis t rat ion of ju st ice have been
t r ad i t i on a l l y considered eth ica l concerns.
Thus, in addit ion to the express concerns
of DR1-102(A)( 5 ) , the Code of Professional
R e s p o n s i b i l i t y concerns i t s e l f with a
v a r i e t y o f conduct which undermines or
obstructs the use of the jud i c i a l process.
See , e . g , , DR-7-102, DR-7-105, DR-7-
106 (C) ( 7) , DR-7-107, DR-7-108, DR-7-109.
C e r t a in l y , as a general proposition
enforcement of statutory goals is not
with in the province of ethics committees.
However, where, as here, ac t i v i t y of the
kind at i ssue p l a in ly inter fe res with a
s p e c i f i c and c le a r ly art icu lated l e g i s l a
t i v e goa l to f a c i l i t a t e use of the j ud i
c i a l process to enforce fundamental
r i g h t s , we be l ieve such conduct raises
ethical concerns.
A second concern of the minority is
that the op in ion could inter f ere with the
16a
sett lement process and hence intrudes on
an area o f spec ia l concern to the courts.
The minor i ty urges that some defendants,
p a r t i c u l a r l y in an action seeking injunc
t i v e r e l i e f only, might be w i l l i ng to
s e t t l e the merits provided they could
eliminate or at least l imit thei r monetary
exposure on an award of counsel fees , but
that they would be unwil l ing to s e t t l e the
merits i f they faced uncertain monetary
exposure f o r counsel fees . The minority
a l so urges that the eth ical rule the Com
mittee announces a f fec t s not only defense
l awyer s , but the defendants themselves —
who are deprived of an opportunity to have
th e i r counsel seek a certain type of
sett lement which would l imit the defen
dants' exposure.
But that resul t i s not unique under
the Code o f Pro fess iona l Responsibi l i ty
and is therefore insuf f ic ient to rebut the
reasons underlying this opinion. For
17a -
ins tance , the e f f e c t of DR 2-108 (B) i s to
bar sett lements in which the p l a i n t i f f ' s
counsel agrees not to bring on behal f of
other p l a i n t i f f s actions s imilar to the
one being s e t t l e d . Such agreements also
would be d e s i r a b l e to defendants who seek
to l imit thei r future exposure, and i t may
well be that the Rule inhib i ts settlements
where the defendant fears future suits on
the same claim by other p l a i n t i f f s .
N eve r th e le s s , such settlements are barred
because they would induce a con f l i c t
between p l a i n t i f f ' s counsel ' s interest in
his own practice and the c l i e n t ' s interest
in an adequate settlement. See a lso ABA
In formal Opinion 1039 (1968), which
reached this conclusion pr ior to the adop
t ion of DR 2-108(B).
The s i tuation here is analogous in
that demands for waiver of the statutory
fee generate a con f l i c t between the
l a w y e r ' s interest in the fee and the
18a
c l i e n t ' s i n t e re s t in the adequacy of the
sett lement on the mer i ts . ̂ Moreover, the
pr inc ip le we announce does not prevent the
p a r t i e s from negotiating the fee a f ter
agreement has been reached on the s e t t l e
ment o f the merits of the p l a i n t i f f ' s
c la im. The resu l t here would only pre-
The analogy may not be a perfect f it i f the de jure
right to the fee is the client's rather tHan the
lawyer's. In that case, unlike the agreement to
l imit the lawyer's representation of other plain
tiffs, it could be said that the demand for waiver of
the statutory fee does not pit the lawyer's interest
against the cl ient 's interest. The question of
whether the right to the fee is the client's or the
lawyer's is one of law which we cannot decide. See
Lipscomb v. Wise, F.2d (5th Cir. April "2,
T m t fi5wevir7 tHe^istinctlon is at best theore
tical because in the typical case only the lawyer has
a practical interest in the statutory fee. Ibid. The
Federal District Court noted in Regalado v/Johnson,
79 F.R.D. 447 (N.D. 111. 1978):
"Everyone familiar with civil rights litiga
tion knows that a plaintiff in such suits
rarely pays attorney's fees or the costs of
litigation. For these reasons, a motion for
fees and costs in such a case, although made
in the name of the plaintiff, is really one
by the attorney. This interest in the fee
makes it improper for the lawyer in a civil
rights suits to inject the question of attor
ney's fees into the balance of settlement dis
cussions." 79 F.R.D. at 451.
19a
elude the de fendant ' s lawyer from holding
the sett lement of the merits hostage to a
waiver of the statutory fee.
In sum, we be l ieve that i t is unethi
cal for defense counsel to propose s e t t l e
ments conditioned on the waiver of fees
author ized by statutes designed to
encourage the enforcement of c i v i l r ights
and c i v i l l i b e r t i e s . As an obvious coro l
lary and for the same reasons, we consider
i t unethical for defense counsel to
attempt to negotiate the fee award under
such s t a tu te s simultaneously with the
negot i a t i on of the settlement of the
merits. I t would appear to fol low that i f
a de fense counsel cannot demand a waiver
of an e n t i r e fee, he a lso should not be
permitted to use the merits of the s e t t l e
ment as a le ve r to extract e f f e c t i v e l y a
waiver o f part of the fee. This opinion,
however, should not be considered an
express ion of our views with regard to
- 20a
demands f o r waiver of statutory fees , or
simultaneous negotiations of fees and the
merits, in any contexts other than the one
involved here.
Hamilton Graphics, Inc.—200 Hudson Street, New York, N.Y.—(212) 966-4177