We all know that an attorney does not have the right to settle a case without the consent of the client. California law provides that a client’s specific authorization to settle is required.Bice v. Stevens (1958) 70 Cal. App. 2d 222, 231-32. However, a client may bind himself to the arguably unauthorized acts of its attorney in settling a case by subsequently ratifying those acts. Blanton v. Womancare, Inc. (1985) 38 Cal. 3d 396, 404.
How those potentially conflicting rules might be applied occurred in a decision by a U.S. District Court in 2017. In Hess v. Hanneman, 2017 WL 6027015 (S.D. Cal. Dec. 4, 2017) the court was called upon to determine if the previous actions of a plaintiff who subsequently wanted to disavow a settlement reached by his lawyer were sufficient to find that the client had agreed to the settlement. After finding that the more stringent test of determining client authorization under California law applied (rather than federal common law — which favors the presumption of an attorney’s ability to bind a client), the court considered the underlying occurrences surrounding the settlement reached between the attorneys for the parties. Ultimately relying upon text messages between the client and his lawyer at the time of the settlement, the court determined that the client was aware settlement negotiations were occurring, had authorized a range of settlement, had been advised of the settlement terms and was presumed to know the case had settled when the trial date was vacated. On that basis the Court found that the client had agreed to the settlement negotiated by his counsel and a motion to enforce the settlement agreement was granted.
We should all strive to have our settlements clearly set forth in a written memorandum or a recitation on the record in court – in either instance adopted by the settling parties. But sometimes circumstances dictate entering into settlements that do not necessarily follow these preferred processes. If that occurs and the other side then tries to back out, consider whether you can establish that the resisting party on the other side either agreed to or ratified the agreement entered into by their lawyer — and thereby keep your settlement intact.