Hot Docs: Just because plaintiff forgot about attorney’s fees doesn’t make settlement void

January 31, 2013

Law moneyAs an attorney, communication with your clients is of monumental importance.

This goes beyond providing simple updates on your clients’ respective cases; the key is in providing details.

Whether it is for obtaining information from the initial client interview, preparing a client to be a witness in court, or describing the implications of signing a legal document, it’s always good to err on the side of providing too much information.

This may make you appear as the stereotypical “windbag lawyer,” but it’s better to be considered a windbag than for your inattention to detail to lead to litigation.

Take the case of Lopez v. Podgurski as a cautionary tale of the latter.

The case started as a personal injury action following a motor vehicle accident in August 2007.

The case was set for trial on October 25, 2011, but for several reasons (all stemming from one of the plaintiffs having surgery), it was postponed several times until the date finally rested on August 6, 2012.

On the day trial was supposed to be held, the court received a fax from, and signed by, plaintiff’s counsel which read, “This letter shall serve to confirm that the above referenced matter has been settled for the sum of $25,000 for Plaintiff [Gumercinda]Lopez and the sum of $5,000.00 for Plaintiff [Nidia] Poitan.”

The trial was cancelled, but later, Poitan, through her attorney, moved the court to restore the matter to the calendar pursuant to New York law.

Poitan’s reason for her motion was that “After [notifying the Court], Plaintiff and [Plaintiff’s attorney] had further discussions regarding the settlement, at which point it became clear that Plaintiff Poitan did not have a full understanding of the settlement offer.”

This “misunderstanding” was that Poitan believed that the offer of $5,000 was her net award, not the gross amount; Poitan did not account for the deductions for her attorney’s contingent fee on the $5,000 settlement, which amounted to about $1650.

The actual settlement amount of $3550, of which Poitan apparently only became aware after the court was informed of the parties’ settlement, was insufficient to her.

Hot Doc: Lopez v. Podgurski

Source: Thomson Reuters News & Insight – National Litigation

It doesn’t appear that Poitan had been thus far unaware of the contingent fee terms with her attorney, or that her attorney either implicitly or explicitly suggested that the $5,000 was net, rather than gross.

Regardless, the court directed both attorneys to appear on December 21, 2012 to discuss settlement of the motion.

Since no settlement was reached, the court ruled on the motion, denying it.

Though it seems a bit of a waste of judicial resources, the court gave full legal explanations for its decision, specifically addressing two rules of civil procedure.

The first deals with cases removed from the court calendar because of abandonment; since the case was never abandoned, the court found that this rule did not apply.

The second deals with when an agreement between opposing parties is legally binding.

This one was much more applicable to the situation, but the court still found against Poitan.

The rule held that an agreement must be made on the record or in writing to be enforceable, and Poitan argued that only the notification to the court was in writing, not the agreement itself.

However, the notification to the court was signed by Poitan’s attorney, which the court construed as binding the plaintiffs to the terms of the settlement; the court then denied the motion.

At the time, there very well may have been nothing that Poitan’s attorney could have done differently.

They were obviously short on time when the settlement was reached since it was the same day as the trial (which the judge refused to push back any further), and Poitan’s attorney could likely have safely assumed that Poitan was well aware that his contingent fees would have been deducted from any settlement amount.

Moreover, if Poitan was unsure about anything regarding the settlement amount, her attorney could have reasonably assumed that she would have asked about it.

In hindsight, though, this case may serve as a lesson to others: be as thorough as possible with information given to your clients, and make sure that everything is finalized before sending a confirmation of settlement to the court.

After all, despite the fact that we’re attorneys, most of us would just as soon like to avoid unnecessary court appearances.