Opinion #95. Pre-settlement Negotiation of Statutory Attorney's Fees Claims

Issued by the Professional Ethics Commission

Date Issued: March 13, 1989


In Opinion No. 17, issued on January 15, 1981, the Grievance Commission of the Overseers of the Bar[1] determined that it would be unethical for plaintiffs’ counsel to negotiate a settlement of plaintiffs’ statutory claim for attorney’s fees with the defendant prior to or simultaneous with settlement of the underlying action. On April 21, 1986, the United States Supreme Court decided the case of Evans v. Jeff D., 475 U.S. 717 (1986), in which it held that, with regard to the settlement of claims for attorney’s fees pursuant to section 1988 of the Federal Civil Rights Act, 42 U.S.C. § 1983, et seq., it was not illegal for settlement discussions to occur prior to or simultaneous with the resolution of the underlying claim. In reaching this conclusion, the Supreme Court cited, but did not adopt the reasoning of, Opinion No. 17. Id. at 728, n. 15; 737, n. 29. Under these circumstances, Bar Counsel now inquires of the Professional Ethics Commission whether Opinion No. 17 should be reconsidered.


In view of the Supreme Court’s action, the Professional Ethics Commission is of the view that settlement discussions of statutory attorney’s fees claims in advance of or simultaneous with settlement of the underlying action should no longer be regarded as unethical in Maine. It is true, of course, that the Supreme Court’s Opinion relates only to the legal question of whether such settlement discussions may occur under section 1988 of the Federal Civil Rights Act, and, as the dissent correctly points out, is unrelated to the question of whether such discussions would violate state or local ethical codes.[2] Id. at 765. Nonetheless, in view of the Supreme Court’s considered conclusion that a prohibition against the pre‑settlement negotiation of attorney’s fees claims might actually impede the purpose of a fee‑shifting statute by reducing the attractiveness of settlement, id. at 732‑38, and in view of the confusion‑of possible constitutional dimension‑which might result if this Commission were to adhere to the position that such discussions remain unethical, the Commission believes that Opinion No. 17 must now be disapproved.

In reaching the opposite conclusion from that of the Supreme Court in Opinion No. 17, the Grievance Commission was careful to point out that none of the provisions of the Maine Code of Professional Responsibility dealt directly with the question of pre‑settlement negotiation of statutory attorney’s fees claims. Grievance Comm’n of Bd. of Bar Overseers, Formal Op. 17, at 1, n. 1 (1982).[3] Thus, in resolving the question, the Commission looked to the decisions of the federal courts under federal fee‑shifting statutes. Prominent among these was Prandini v. National Tea Company, 557 F.2d 1015 (3rd Cir. 1977), which held that discussion of attorney’s fees should be postponed until after settlement of the underlying action. As the Supreme Court observed, however, since the decision in Prandini (and Mendoza v. United States, 623 F.2d 1338 (9th Cir. 1980)),[4] four other Circuits, including the First Circuit, Lazar v. Pierce, 757 F.2d 435 (1st Cir. 1985), had approved the pre‑settlement discussion of statutory attorney’s fees claims, at least in some circumstances. Evans v. Jeff D., supra at 726, n. 11. Thus, the Supreme Court’s decision represents a disapproval of the Prandini approach, as well as that of the other federal courts relied upon in Opinion No. 17.

The Commission is thus left in the position of having to determine whether, in the absence of a specific prohibition in the Code of Professional Responsibility, it should nonetheless adhere to the position of Opinion No. 17 that pre‑settlement negotiations of statutory attorney’s fees claims are unethical, now that the legal underpinnings of that Opinion have been definitively removed.[5] The Commission believes that such adherence would not be warranted for two reasons.

First, and most important, the Commission is persuaded that the Supreme Court is correct that discouraging advance discussion of statutory attorney’s fees claims would actually work against the policy underlying such statutes by reducing the possibility of settlement. The Commission recognizes, as did the Grievance Commission and the Supreme Court, that permitting such discussions to occur does confer on defendants the possibility of driving a wedge between the plaintiff and his lawyer by insisting that the lawyer receive little or no fee if the plaintiff is to obtain substantial or full relief in settlement. On the other hand, plaintiffs’ lawyer may also have an unfair advantage under the approach of Opinion No. 17 because defendants are frequently faced with cases where the accruing liability for attorney’s fees is far greater than the total cost of the relief sought, and thus may be induced to settle simply to keep those fees from accruing further if they are prohibited from negotiating on the subject. Thus, the Commission concurs that the maintenance of a general rule prohibiting such discussions is unwise. Rather, the Commission would prefer to leave the question of the reasonableness of the settlement behavior of either party in a case involving statutory attorney’s fees claims to the courts, for resolution on a case‑by‑case basis. See the discussion of the problem of handling vindictive or other unreasonable behavior by either party in such circumstances contained in Evans v. Jeff D., supra at 738‑42. Any attempt by the Commission to set out ground rules for such discussions in advance is very unlikely to be helpful, and much more likely to prove damaging to the interests of justice.

Second, as indicated above, the Commission is well aware that any attempt on its part to impose a rule of ethics contrary to the views of the Supreme Court in this area might raise constitutional questions. The issue is whether the Congress, through the enactment of the attorney’s fees portion of the Federal Civil Rights Act or other fee‑shifting statutes, has preempted state legislatures or ethical bodies from enacting prohibitions which interfere with those statutes. The Supreme Court expressly declined to rule on this point in Evans, because it found that the State of Idaho had not passed a statute or otherwise attempted to interfere with the operation of the attorney’s fees portion of the Federal Civil Rights Act. Id. at 739‑40. Nonetheless, were this Commission to maintain the kind of prohibition set forth in Opinion No. 17, a significant constitutional question would arise. Thus, in view of the fact that the Supreme Judicial Court has not seen fit to impose such a prohibition expressly in the Code of Professional Responsibility, the Commission, for this additional reason, is reluctant to read one into it.


[1] At the time of the promulgation of the Maine Bar Rules, November 1, 1978, the Grievance Commission was entrusted with the responsibility both of resolving disputes as to past behavior of lawyers and of rendering advice as to their future conduct. On February 15, 1985, this latter function was transferred to the newly established Professional Ethics Commission. The determinations of the Grievance Commission prior to 1985 are therefore precedent for Ethics Commission advisory opinions.

[2] Indeed, the dissent expressly encouraged state and local organizations to declare such conduct unethical. Id.

[3] The Opinion notes that the rules most closely related to the question, Rules 3.4(f) and 3.7(c) and (i), “dealing with the interest of a lawyer in or antagonistic to his client’s interest, are not strictly applicable because counsel in a class action never really has an 'interest' in the client’s cause of action.” Id.

[4] As well as Opinion No. 17, decided on January 15, 1981.

[5] Indeed, the Supreme Court characterized the Opinion as “bottomed ultimately on Section 1988,” id. at 728, n. 15, and therefore not an opinion on ethics at all.

Enduring Ethics Opinion