Professional Responsibility Blog: Illinois Appelate court on whether there is a duty to disclose death of client during settlement negotiations:
by Prof Alberto Bernabe
"About ten days ago, the Illinois appellate court issued a good opinion that deals with several issues we cover in class. The first one is whether an attorney has a duty to disclose the death of his client when the attorney is negotiating a settlement in litigation. The case is called Robinson v. Orthotic & Prosthetic Lab, Inc and it is available here.
In this case, the plaintiff, Randy Robison, filed a product liability action against the defendant, Orthotic & Prosthetic Lab, Inc. in 2008. In January, 2013, while the case was still ongoing, the plaintiff died but the plaintiff’s lawyers did not alert the court or the attorneys for the defendant. In September 2013, the attorneys for both sides began settlement negotiations and reached an agreement on September 24. To finalize it, the attorney for the plaintiff sent an e-mail to the attorney for the defendant in which he stated “My client has instructed me to accept . . . in full and final settlement of this matter. Please provide an appropriate release and I will present it to my client for review and approval.”
The plaintiff's lawyer did not notify the defendant's lawyer of the plaintiff's death until after the defendant had submitted the settlement agreement, and he did so when he sent an amended version of the proposed release in which he asked the defendant's lawyer to agree to substituting the plaintiff's son as plaintiff in the case. The defendant's lawyer refused and asked how come he had not been informed of the plaintiff's death, to which the plaintiff's lawyer replied that he had researched the issue and determined that he had no affirmative duty to disclose the information because it was against his clients' interests and he had a duty to protect his clients' interests within the bounds of the rules of professional responsibility.
The defendant refused to follow through on the settlement agreement claiming it was not valid, and the plaintiff moved to enforce the settlement. Eventually, the lower court eventually granted the motion and the defendant appealed. In a short and well written opinion, the Court of Appeals reversed holding that the agreement was not valid and suggesting that the conduct of the attorney for the plaintiff in not disclosing the death of the client was unethical. Interestingly, it also suggested that the conduct of the defendant's lawyer was unethical in not reporting the conduct of the plaintiff's lawyer.
Here are the most important paragraphs of the opinion:
... The defendant further argued that the settlement was invalid because the death of the plaintiff was a material fact that had been concealed from the defendant prior to and during settlement negotiations. ... .... Settlement negotiations commenced in September 2013, and an agreement was ostensibly reached on September 24, 2013. The defendant, however, had no knowledge about the plaintiff's death or the appointment of a personal representative throughout the period of settlement negotiations. [These facts were not disclosed until] weeks after the settlement was reached and months after the plaintiff's death. [The plaintiff's lawyer acknowledged that] the disclosure of the plaintiff's death would have adversely impacted the settlement value of the case. He stated that he believed that the decision to withhold the information was in his clients' best interest and was in keeping with the rules of professional responsibility. We strongly disagree. We find that the arguments expressed by [the plaintiff's lawyer] are specious and incredible, and we are concerned about his professional judgment in this case. In failing to disclose the fact of the plaintiff's death, [the plaintiffs lawyer] intentionally concealed a material fact that would have reduced the overall value of the claim for damages. In addition, and equally troubling, [he] led the defendant to believe that he had authority to negotiate a settlement of the litigation on behalf of the party plaintiff, when the action was without a plaintiff as the plaintiff had died and a representative had not been substituted. Given [these] intentional misrepresentations and material omissions prior to and during the settlement negotiations, we conclude that the settlement agreement is invalid and unenforceable, and that the trial court erred in granting the motion to enforce it.
In my opinion, this is the correct approach to the issue, but it needs to be explained a bit further....."
'via Blog this'