Informed Consent in Writing

Informed Consent in Writing

Rule 1.8(g) bars a lawyer who represents two or more clients from taking part in an aggregate settlement, or in an aggregated agreement on guilty or nolo contendere pleas, unless “each client gives informed consent, in a writing signed by the client.”¹ That phrase sets two conditions on one act. The consent must be informed, which is a requirement about what the client understood when agreeing. And it must be in a signed writing, which is a requirement about the form the agreement takes and who authenticates it. Either can fail while the other is met. A client who is fully briefed and agrees aloud has given informed consent without a signed writing, and a client who signs a form after hearing nothing about the terms has supplied a signature without informed consent. In both cases the lawyer lacks what the rule demands and may not take part in concluding the deal.

Both conditions attach to the lawyer's participation in making the settlement, so the consent must exist before the lawyer commits the clients to the deal. The first subsection takes up the informed half and its insistence that each client decide individually after learning the terms. The second takes up the signed writing and explains why the rule asks for the client's own signature rather than the lawyer's record of a conversation.

Each Client's Informed Consent

Rule 1.8(g) makes the lawyer's participation depend on a separate act by every client the deal affects. In Tax Authority, Inc. v. Jackson Hewitt, Inc., the New Jersey court read its version of the rule to rest on one premise: when a lawyer represents more than one client, each client has the right to accept or reject the settlement after the terms are known.² From that premise it drew a flat rule. Before a client may be bound by a settlement, he or she must know the terms and agree to them.³ Disclosure of the terms comes first, and the client's agreement comes second.

Disclosure has to come first because a client can choose only among alternatives the client can see. A client who approves a deal in the abstract has agreed to nothing in particular, and the terms of an aggregate package are exactly what each client's decision turns on. Informed consent, in the definition the New Jersey court quoted from its own Rule 1.0(e), is “the agreement by a person to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct.”⁴ The definition divides the work. The lawyer supplies the information and explanation, and the client supplies the agreement. A lawyer's own opinion that the deal is a good one therefore adds nothing to the second half, since only the client can agree to a settlement of the client's own claim.

An aggregate offer is an all-or-nothing proposition. All of the lawyer's clients must join or the offer is withdrawn, and a refusal by any single party rejects the whole, so the litigation continues as to every party, even those who favored the settlement.⁵ That structure explains why the requirement is individual. Each client's outcome depends on the others' choices, and the clients may face substantially different possibilities of settlement, one of the divergences Comment 23 to Rule 1.7 lists among the conflicts that can arise in multiple representation.⁶ A majority's approval therefore cannot stand in for a dissenter's. The lawyer may participate only with the informed consent of all clients, and the New Jersey court read its rule to forbid even an advance agreement among multiple clients to abide by a majority decision, a point taken up in a later section.⁷

The court in Hayes v. Eagle-Picher Industries, Inc. put the principle in terms of the plaintiffs' own choice. It found it “difficult to see how this could be binding on non-consenting plaintiffs as of the time of the proposed settlement and in the light of the terms agreed on,” and it reasoned that “plaintiffs would have the right to agree or refuse to agree once the terms of the settlement were made known to them.”⁸ The right belongs to each client, and the client exercises it with the terms in view.

A lawyer who handles the same offer correctly meets with each client after it arrives and states what the client needs in order to decide. That means the total payment, the part each client will bear or receive, the fact that the offer fails if any client declines, and what declining means for the case going forward. The rule's second sentence requires exactly this kind of disclosure, covering the existence and nature of all the claims or pleas involved and each person's participation in the settlement.⁹ Each client asks questions and then decides alone. Each decision follows disclosure of the actual terms and comes from the person whose claim or liability is being resolved. That satisfies the informed-consent condition for every client, and the form the consent must take is a separate condition, taken up next.

A lawyer who treats a client's silence, or the enthusiasm of the other clients, as consent has confused that client's agreement with something the client never gave. When one client refuses, the refusal rejects the whole offer, and the lawyer may not close the deal over it.

The Signed Writing

Rule 1.8(g) does not let a lawyer rely on a client's spoken approval of an aggregate deal. The lawyer may participate only if each client gives informed consent “in a writing signed by the client,” and the phrase that calls for a writing also says who must sign it.¹¹ The informed half of the condition concerns what the client understood before agreeing. The signed writing is the formal half, and it concerns what record exists afterward and who produced it. The text therefore sets two requirements for the form of the consent: a writing must exist, and the signature on it must be the client's own.

The signature protects the client's authority over the outcome. Each client has the right to accept or reject a settlement once the terms are known, and a writing signed by the client records that choice as the client's own act.¹² Without it, the only proof of consent would be the lawyer's account of a conversation, and a lawyer who wants the deal to close is poorly placed to be its only witness. A page the client signs moves the proof from the lawyer's memory to the client's hand. It also marks the moment of decision, because reading a page that sets out the deal and then signing it is a more deliberate act than saying yes at the end of a phone call.

The writing requirement also shows how Rule 1.8's specific conflict rules can differ from the general material-limitation rule. Rule 1.8 sometimes establishes consentability or disclosure requirements that go beyond those in the general rule. Rule 1.8(a), for example, requires extensive disclosure and the client's informed consent, in a writing signed by the client, before a lawyer enters a business transaction with a client. Such disclosure and documentation would probably be wise for any conflict, but Rule 1.8(a) specifically requires them.¹³ The aggregate settlement rule works the same way. It fixes both the form of the consent and the content of the lawyer's disclosure,¹⁴ so a lump-sum offer to several clients is not an ordinary conflict to be handled with whatever explanation and paperwork the lawyer thinks adequate.

What counts as a compliant writing follows from the rule's wording. The signature must be the client's, so neither a lawyer's signature nor another claimant's stands in for a client who has not signed, and the word “each” requires every client's own signature.¹⁵ The writing must also follow an informed process. A client who signs a form handed over without explanation has met the formal condition but not the substantive one, because a signature records agreement and cannot supply a disclosure that was never made. And the signature must come before the lawyer takes part in concluding the deal, since the restriction attaches to participation in making the settlement. A form signed afterward to paper over an agreement already struck comes too late.

A scenario in which the lawyer creates a record of the client's approval, such as a file memo, invites the conclusion that the writing requirement is met. The question to ask is whose record it is and whose signature it carries.

Handled correctly, the lawyer puts a form in front of each client after explaining the terms. The form identifies the claims in the deal, the total sum, and that client's share, and each client signs it before the lawyer tells the other side that the offer is accepted. Each signature is then the client's own confirmation, given after disclosure and before the lawyer commits anyone to the deal.