Can An Attorney Bind A Client To A Settlement Agreement Even If The Client Did Not Agree?

The answer is -   yes, under the right set of facts.  In Connecticut, attorneys must abide by a client's decision to settle a case.  Additionally, an attorney has to consult with a client and secure consent to accept or make a settlement offer.  Seems straightfoward, right? 

However, what happens if an attorney reasonably believes he has consent, but the client later disagrees?  Or, what if the client does give consent, but later changes her mind?  Or, how about a situation where it appears to the opposing party that the client's attorney had authority to settle based on conduct of the client.  Does it matter whether there really was express authority given to the attorney to settle?

In a recently released decision,Ackerman v. Sobol Family Partnership, et al, the Connecticut Supreme Court addressed these very issues.  In the case, the Supreme Court upheld a trial court judgment in favor of a group of defendants that sought to enforce a settlement agreement.  The case involved a history of negotiations between well known attorneys for the two sides, including a failed mediation and a few months of verbal and written exchanges on settlement terms. 

The underlying case involved a dispute concerning "management and oversight of a family partnership and various family trusts."  Shortly before trial was scheduled to start, the defendants believed that a global settlement was reached for 1.1 million dollars based on an agreement with the plaintiffs' attorney.  The plaintiffs disagreed and claimed that their attorney did not have authority to bind the plaintiffs to the settlement.  The defendants then filed a motion to enforce the settlement agreement.  Judge Eveleigh held a hearing on the motion, made factual findings on the record, and ultimately entered judgment in the case based on the settlement agreement.  

On appeal, the Supreme Court gave deference to Judge Eveleigh's findings and upheld his decision to enforce the settlement agreement despite one of the plaintiffs stating her attorney had no authority to settle the case.    The Court's decision was based on the actual or apparent authority that the plaintiffs' attorney had to settle the case coupled with the defendants' reasonable belief that the attorney had the authority. 

The following factors, if present, can result in an attorney binding a client to an enforceable settlement agreement whether the client actually agreed or not:

  • Terms of the settlement are clear, certain, and unambiguous
  • Offer and acceptance of the terms
  • Attorney had actual or apparent authority to agree to the terms
  • If apparent authority, then opposing party must have good faith belief that attorney had authority

On the issue of apparent authority, the basic question is whether it reasonably appeared to the opposing party that the attorney had authority to settle regardless of whether there was express authority.  The relevant inquiry for the court is the conduct of the client, not the attorney.  In other words, the client can engage in conduct that permits others to believe the client's attorney had authority to settle.  For example, a court may find apparent authority existed if the client through her own actions held the attorney out as "possessing sufficient authority" or knowingly permitted the attorney to act with such authority.   If it was reasonable for the opposing party to believe there was authority to settle, a binding agreement can exist.  In these circumstances, as in the Sobol case, the court can enforce a settlement agreement even if the client later claims that there was no actual authority for the attorney to settle the case.  

The take away here is that a settlement agreement negotiated between attorneys can, under some circumstances,  bind a client to the agreement in court even if a client did not intend to agree or the client later changes her mind.  If a client wants to have final approval over every aspect of a settlement agreement, it should be clear to not only the client's attorney, but also communicated to the opposing party as well. 

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