By Thomas P. McGarry and Thomas P. Sukowicz
Hinshaw & Culbertson
Often, when clients sue lawyers for malpractice, or when lawyers and clients get involved in litigation over fees, the clients report the lawyers to the Illinois Attorney Registration & Disciplinary Commission (ARDC). When lawyers discuss the settlement of the civil claims, they often want to settle all claims, including matters pending before the ARDC. Because the ARDC is not a party to any settlement between the lawyer and client, lawyers sometimes want to at least bind the client and request that the client either withdraw the allegations made to the ARDC or at least not cooperate with the ARDC. Because the ARDC can issue a subpoena to compel the former client's testimony, this agreement is virtually meaningless.
The lawyer who seeks or obtains this agreement, however, has an ethical issue simply by seeking or obtaining the agreement, regardless of whether such an agreement is enforceable. Rule 8.4(h) of the Rules of Professional Conduct prohibits a lawyer from entering into "an agreement with a client or former client limiting or purporting to limit the right of the client or former client to file or pursue any complaint before the Illinois Attorney Registration & Disciplinary Commission."
Even before there was any specific rule prohibiting such agreements, the Supreme Court held that conditioning the settlement of a civil action against the attorney upon the dismissal or favorable termination of a pending disciplinary proceeding was "inherently bad" in that it constituted an attempt to purchase a result in, or produce an effect on, a disciplinary action and tended to obstruct disciplinary proceedings. In re Jerome, 31 Ill.2d 284 (1964).
In Jerome, an attorney who represented a client in her divorce was sued for the return of a portion of the fee that was paid. The former client also filed a bar grievance against the attorney. The client obtained a judgment and the attorney appealed. While the appeal was pending, the parties agreed to settle the case. The attorney agreed to the settlement offer on the condition that the disciplinary action had to be dismissed or terminated favorably before settlement could be consummated. The client agreed and attempted to withdraw the complaint she filed with the bar.
Notwithstanding the agreement, the client reluctantly appeared and testified at the disciplinary hearing. The attorney was censured for asking the client to agree to the dismissal of the disciplinary action or its termination in favor of the attorney.
In a more recent case, In re Kirby, 07 CH 97, an attorney was accused of misconduct that included conversion of funds that he was holding on behalf of a client, who filed for bankruptcy protection. It was when the attorney refused to comply with the client's request to transfer the funds he was holding on her behalf to her account, that the client reported the attorney to the ARDC. While the investigation was pending, the attorney and client entered into a settlement agreement, which provided that the client would withdraw her complaint filed with the commission. The Chapter 13 trustee received the attorney's payment of the settlement funds and the bankruptcy court entered an order approving the settlement agreement. The attorney's counsel sent to the ARDC a letter signed by the client stating that she withdrew her complaint against the attorney.
In the disciplinary proceeding, the attorney contended that he should not be found guilty of violating Rule 1.8(h) because his attorney prepared the settlement agreement and the judge approved it.
The ARDC Hearing and Review boards rejected the argument and found the lawyer violated Rule 1.8(h).
The ARDC administrator also alleged that the attorney's agreement with the client violated Rule 8.4(a)(5), which prohibits lawyers from engaging in conduct prejudicial to the administration of justice. The attorney asserted that there was no prejudice to the administration of justice because his disciplinary matter proceeded despite the client's agreement to withdraw her complaint. The review board found that the letter "was clearly designed to affect the administrator's prosecution of the charges" against the attorney and, therefore, did prejudice the administration of justice, noting that attorneys in other cases who entered into agreements requiring clients to withdraw their ARDC complaints have been found to have violated Rule 8.4(a)(5) even though they were unsuccessful in stopping the disciplinary process.
One of the cases the board referred to was In re Makin, 01 CH 91, M.R. 18530 (Jan. 24, 2003), in which an attorney was suspended for conduct that included a violation of Rule 1.8(h). In that case, a fee dispute between the attorney and client was before The Chicago Bar Association Committee on Professional Fees. In a handwritten note to the committee, the attorney requested that the committee procure the client's signature on a release and that a letter be sent to the ARDC withdrawing the complaint.
The hearing board interpreted the message as the attorney's proposal that the ARDC complaint be withdrawn in exchange for or as a condition to his payment of $600 to the client, a violation of Rule 1.8(h).