## Facts

- In 1998, a judge of the U.S. District Court for the District of Connecticut referred an unnamed attorney (Respondent) to the court’s Grievance Committee based on Respondent’s use of a written contingent fee agreement that included a settlement-authority clause.
- The clause stated that the client delegated to Respondent complete discretion regarding settlement offers, authorized Respondent to reject any settlement offer “for any reason whatsoever,” and waived any requirement that Respondent communicate settlement offers to the client.
- Connecticut had adopted the Rules of Professional Conduct in 1986, replacing the prior Code of Professional Responsibility.
- Respondent asked that the grievance be dismissed, arguing that Respondent had relied on earlier informal ethics guidance predating the 1986 Rules and contending that the challenged provision conflicted only with comments, not the Rules themselves.
- Before the referral, Respondent had stopped using the settlement-control provision after learning that later bar guidance (including Connecticut Bar Association Informal Opinion 97-31) withdrew earlier advice suggesting a lawyer could reserve the right to reject a settlement acceptable to the client if the fee was unsatisfactory to the lawyer.
- The record showed no client harm from the clause’s inclusion: Respondent had not actually withheld settlement offers from the client and, in at least one instance, communicated an offer that the client rejected.
- The Grievance Committee concluded that the agreement violated the Rules of Professional Conduct but recommended dismissal without discipline given the circumstances, including Respondent’s corrective steps and lack of injury.
- The district court reviewed the Committee’s recommendations and determined whether any discipline should be imposed.

## Issues

1. Whether a contingent fee agreement that gives the lawyer sole discretion to reject settlement offers and relieves the lawyer of communicating offers to the client violates the Connecticut Rules of Professional Conduct.
2. If the agreement violated the Rules, whether discipline should be imposed or the grievance should be dismissed without discipline.

## Decision

- The court agreed with the Grievance Committee that the settlement-control and noncommunication provisions violated the Rules of Professional Conduct, including the rule allocating settlement decisions to the client and requiring communication sufficient for informed client decisionmaking.
- The court dismissed the grievance proceeding without imposing disciplinary sanctions, concluding that discipline would not serve the aims of attorney discipline under the circumstances presented.
- The court ordered that its decision be made public without identifying Respondent, to give clear notice to the bar that such provisions are improper.

## Legal Principles

- The client retains final authority to decide whether to accept a settlement; a lawyer may not obtain contractual power to reject settlements in the lawyer’s sole discretion.
- A lawyer’s duty to keep a client reasonably informed includes communicating settlement offers so the client can make informed choices; a fee agreement cannot validly waive that obligation.
- In attorney discipline matters, the purpose of discipline is protection of the public and the courts and deterrence of future misconduct, not punishment for its own sake.
- When assessing whether to impose discipline, a court may consider the absence of actual harm, whether the misconduct was corrected, and whether there is an ongoing risk to clients.
- Even when a rule violation is found, dismissal without discipline may be appropriate where the conduct has stopped, the record shows no misuse of the improper provision, and a public decision can provide notice to other attorneys.

## Conclusion

A contingent fee agreement that gives counsel unilateral power to reject settlement offers and excuses counsel from communicating those offers violates the Connecticut Rules of Professional Conduct, but the District of Connecticut dismissed the grievance without discipline because the attorney had discontinued the practice, no settlement offers were actually withheld, and publishing an anonymized decision was sufficient to warn the bar and protect future clients.


In re Grievance Proceeding, 171 F. Supp. 2d 81 (2001)