Agreement giving lawyers 'sole discretion' to settle client's case violates ethics rules, appeals court says

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A California appeals court has voided a provision in a contingent-fee agreement that gave personal injury lawyers the “sole discretion” to settle a client’s case.

The Fourth Appellate District in the California Courts of Appeal ruled last week that the provision violates attorney ethics rules and is void to the extent that it allows an attorney the right to accept a settlement over the client’s objection.

Law360 has coverage.

The provision gave lawyers from Jolly Berry Law the authority to accept settlement offers for client Sayedeh Sahba Amjadi, as long as the lawyers thought in good faith that the settlement offer was reasonable and in the client’s best interest. Jolly Berry Law is a personal injury law firm located in Mission Viejo, California.

Amjadi had signed the contingent-fee agreement, but she objected when one of her lawyers, Kevin Jolly, accepted a $150,000 settlement offer on the morning of trial in her automobile crash case.

Jolly accepted the offer after the trial judge denied a motion filed by Amjadi’s attorneys to be relieved as counsel.

The motion cited a conflict of interest after Amjadi’s relationship with her lawyers had soured, partly because of a disagreement on whether to seek a continuance of the trial.

After Jolly agreed to the settlement, the trial judge accepted the deal and dismissed the case. Amjadi hired a new lawyer, who filed a motion to vacate the judgment.

The appeals court overturned the dismissal and referred Jolly and two other former lawyers for Amjadi to the state bar for potential discipline. An attorney can’t settle a case over a client’s objection, no matter what the retainer agreement says, the appeals court said.

The appeals court cited an ethics rule that says, “A lawyer shall abide by a client’s decision whether to settle a matter.” The court also said the provision in a contingent-fee agreement creates a conflict of interest when there is a disagreement on settlement.

Jolly didn’t immediately respond to an ABA Journal email seeking comment.

Law360 spoke with Amjadi’s new lawyer, Peter diDonato, who has also filed a malpractice suit for Amjadi against her former lawyers.

“The emotional distress was very significant, and I think this is a case that cries out for punitive damages,” diDonato told Law360.

He also said he hopes that the appeals court decision will spur the State Bar of California to seriously consider the ethics of retainer provisions giving lawyers the authority to settle personal injury cases without client consent.

“It’s unenforceable. It’s just total nonsense and shouldn’t be there,” he said.

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