Concept
The Settlement Rule
Settling a malpractice claim with an unrepresented client or former client
Settling Malpractice Claims
The Settlement Rule
A lawyer's mistake can leave a client holding a claim against the lawyer. Model Rule 1.8(h)(2) governs how the lawyer may resolve that claim. It forbids the lawyer to "settle a claim or potential claim for such liability with an unrepresented client or former client unless that person is advised in writing of the desirability of seeking and is given a reasonable opportunity to seek the advice of independent legal counsel in connection therewith."1
Read closely, the provision conditions settlement; it does not ban it. The condition applies only when the person on the other side is unrepresented, and it has two parts: a writing that tells that person independent counsel is desirable, and a reasonable opportunity to go and consult that counsel. A secondary source describes the rule the same way. A lawyer may not settle an existing claim with an unrepresented client or former client without advising that person in writing of the desirability of independent counsel and allowing a reasonable opportunity to obtain it.2 The warning is framed as advice to obtain separate legal representation, and it must come before the settlement, not after.3
Rule 1.8(h) opens with the words "A lawyer shall not,"4 and its subject is the lawyer's own liability to a client for malpractice. The phrase "such liability" in (h)(2) points back to the item before it, which bars an agreement that prospectively limits that liability unless the client is represented by independent counsel in making it.5 A secondary source treats the two as companions, introducing (h)(2) as the similar rule for settling a malpractice claim with an unrepresented client or former client.6 The items differ mainly in timing. Paragraph (h)(1) governs a bargain struck before any problem exists; (h)(2) governs a claim that already exists or may soon arise. When a question describes a lawyer paying a client or former client to release a claim over the lawyer's own error, (h)(2) is the rule to reach for.
The safeguard exists because the lawyer's interest and the client's can pull apart once the lawyer's error is in play. The lawyer might want to settle quickly to hide the mistake or to minimize the damages available to the client in a later malpractice case. The lawyer might just as easily want to fight on to vindicate the original advice, while the client is best served by the quickest and least expensive resolution.7 Either motive makes the lawyer a poor source of detached advice about what the claim is worth. A client with a new lawyer has someone to supply that detachment; an unrepresented client has no one. That divergence is why the rule sits among the conflict-of-interest provisions, and it explains why the remedy is modest. Settlement stays available, and the lawyer adds a writing that makes the warning concrete and a reasonable opportunity that lets the person act on it.
Two features of the text matter for the sections that follow. The rule reaches a potential claim as well as an asserted one, so no demand need have been made. It also reaches former clients as well as current ones. The next sections take each element in turn.
Two opposite errors dominate exam questions on this rule. The first treats the safeguard as a ban: a student sees "malpractice" and "settlement" and calls the settlement a violation, when a lawyer who provides the writing and the opportunity may lawfully settle. The second treats the writing as always required, which ignores the trigger, because a person who already has independent counsel does not need the lawyer's warning.