Competence & Malpractice · 6-12% of the exam
12.3.2Settling Existing Malpractice Claims (Rule 1.8(h)(2))
Why
By the time a claim exists, the lawyer knows what went wrong and the client often does not. That gap lets a lawyer buy a cheap release from someone who cannot yet value what they are giving up — and the one person best placed to explain the claim is the person being released from it.
Plain English
Where the client or former client with a pending or potential malpractice claim is unrepresented, you may not settle until you have advised that person in writing that seeking independent counsel is desirable, and given them a reasonable opportunity to actually seek it.
A lawyer who made a material error should promptly inform a current client of it before any settlement talk, though Rule 1.4 does not require telling a former client about an error discovered only after the representation ended. Where that disclosure was required, staying silent and then offering favorable terms is a separate Rule 1.4 violation.
Settling malpractice claims (Rule 1.8(h)(2))
Where the client or former client on the other side of a pending or potential malpractice claim is unrepresented, no settlement may be concluded until the lawyer has first — two points, and the second is time rather than paper:
- Warned that person, in writing, that seeking independent counsel on the settlement is advisable; and
- Extended a reasonable opportunity to actually obtain that independent counsel
Two points on disclosing an error, and the second is what silence adds on top:
- A lawyer should promptly inform a current client of a material error in the representation, and that disclosure comes before any settlement discussion; Rule 1.4 Comment [8] does not require informing a former client of an error the lawyer discovers only after the client-lawyer relationship has ended
- Where Rule 1.4 required that disclosure, a lawyer who stays silent about the error and then offers favorable terms commits a separate violation of Rule 1.4 (communication)
Example 1
Ex. 1
Carla retained an attorney to handle her commercial lease renewal. The attorney missed the deadline to exercise the renewal option. That default locked Carla into market-rate rent three times higher than her previous rate. Rather than telling Carla what had happened, the attorney sent a brief email describing the market as "challenging." He offered to cut his fee for the next quarter by $4,000 as a gesture of goodwill. The same email included a one-paragraph release of all claims tied to the lease matter. Carla was unaware the deadline had passed. She was unrepresented. She signed.
The release is unenforceable — again a case-law consequence, not one Rule 1.8(h) states — and the attorney has committed two violations. He failed to disclose the error to Carla, violating Rule 1.4. He also settled a potential malpractice claim without providing written notice that independent representation was desirable, violating Rule 1.8(h)(2). Carla's signature doesn't cure the missing written notice. Stand where Carla stood when she signed: a soft market, a $4,000 discount, and no mention of a missed deadline.
Trap
Questions · 1
Q 01ch12-e10
Question 1 of 1 · Rule 1.8(h)(2)
Attorney represented Client in a lease renewal and missed the deadline to exercise the renewal option, which left Client paying a far higher market rent. Attorney telephoned Client, explained what had gone wrong, and offered a credit against future fees. During the same call Attorney told Client that talking to another lawyer about the offer would be a sensible step. Client, who had no other lawyer, said none was needed and signed a release of all claims arising from the lease matter two days later. Attorney sent Client nothing in writing about seeking independent counsel. Is Attorney subject to discipline?
Keys 1 to 4 choose.