Evans v. Jeff D. Brief of the Committee on Legal Assiatance

Public Court Documents
January 1, 1985

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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.



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