Ohio Speaks Out on Settlement Proposals Requiring Plaintiff’s Lawyers to Indemnify Opposing Parties

The Board of Commissioers on Grievances and Discipline of The Supreme Court of Ohio has released an opinion of the issue of whether, during settlement of a matter, it is ethical for a lawyer to propose, demand, and or agree to personally satisfy any and all claims by third persons as to settlement funds. 

Here is the Syllabus of the Opinion 2011-1: 

It is improper for a plaintiff’s lawyer to personally agree, as a condition of settlement, to indemnify the opposing party from any and all claims by third persons to the settlement funds. Such agreements are not authorized by Prof. Cond. Rule 1.15(d) and violate Prof. Cond. Rules 1.8(e) and 1.7(a)(2). Further, it is improper for a lawyer to propose or require, as a condition of settlement, that a plaintiff’s lawyer make a personal agreement to indemnify the opposing party from any and all claims by third persons to the settlement funds. Such conduct violates Prof. Cond. Rule 8.4(a). The Board recommends that this advisory opinion be prospective in application.

The Opinion cites a recent opinion out of Tennessee:

In Tennessee, an ethics committee noted that “[r]equiring a plaintiff’s lawyer to enter agreements posed in the inquiry, particularly requiring that the attorney indemnify and/or hold harmless any party being released or subrogation interest holder from medical expenses or liens, creates a conflict between the interests of the plaintiff’s attorney and those of their client.”  Tennessee SupCt, Board of Professional Responsibility, Op. 2010-F-154 (2010). The committee advised that “an attorney cannot ethically agree to such agreements and/or clauses.”  The committee cited Rules 1.7(b), 2.1, 1.2 and 1.8(e). Id.

Similar opinions from other states are also cited.

This is a real problem for the plaintiff’s bar and it nice to see it addressed by the various disciplinary boards.

Thanks to my wife Joy, a member of the Ohio (and Tennessee and Michigan and Kentucky) bars for directing my attention to this opinion.