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Luethke v. Suhr8/9/2002
cted with apparent authority and, under agency law, bound the client to the lawyer's action. None of these cases, however, involved a lawyer binding a client to a settlement agreement without that client's express authority. From the nature of the attorney-client relationship itself, a lawyer derives authority to manage the conduct of litigation on behalf of a client, including the authority to make certain procedural or tactical decisions. See, Code of Professional Responsibility, EC 7-7; Brennan v. School Dist. No. 21, 235 Neb. 948, 458 N.W.2d 227 (1990). That authority, however, is hardly absolute. Equally rooted in the law is the principle that without a grant of authority from the client, a lawyer cannot compromise or settle a claim (see Code of Professional Responsibility, EC 7-7), and settlements negotiated by lawyers without authority from their clients are generally not binding. A narrow exception to this rule occurs when a lawyer settles a claim in excess of actual authority, but in the presence of his or her client, generally in open court, and the client remains silent regarding the terms of the settlement. See, e.g., Hallock, supra. See, also, Navajo Tribe v. Hanosh Chevrolet-Buick, 106 N.M. 705, 749 P.2d 90 (1988); In re Gibson-Terry and Terry, 325 Ill. App. 3d 317, 758 N.E.2d 459, 259 Ill. Dec. 336 (2001); Nelson v Consumers Power Co, 198 Mich. App. 82, 497 N.W.2d 205 (1993). No such circumstance is present in the instant case.
[5,6] We hold, therefore, that although lawyers retain apparent authority to make procedural and tactical decisions through the existence of the attorney-client relationship, a lawyer cannot settle a client's claim without express authority from the client. In other words, where there has been nothing beyond a mere employment or retainer of the lawyer to represent the client in a cause and the lawyer has acquired no other authority to enter into a settlement (such as acquiescence in open court), if the lawyer seeks to enter a settlement, the opposing party should ascertain whether the lawyer has received actual authority from the client to take such action. A party who enters a settlement agreement without verifying the opposing counsel's actual authority to settle does so at his or her peril.
The appellants argue that preventing lawyers from binding clients to settlement agreements without express authority would create problems in agency law and, in general, disrupt the practice of law. We have, however, already determined that lawyers have apparent authority to manage the conduct of litigation on behalf of a client, including the authority to make many procedural or tactical decisions, without express client consent. See Brennan, supra. Deciding that lawyers need express authority in the limited situation of out-of-court settlements will not, as the appellants argue, eviscerate the apparent authority of attorneys and agency law principles. In fact, several district courts already have rules which specifically require that in order to be recognized or considered by the court, agreements between parties to a suit, other than those made in open court or otherwise recorded by a court reporter, must be reduced to writing and signed by the parties. See, e.g., Rules of Dist. Ct. of First Jud. Dist. 1-2 (rev. 1995); Rules of Dist. Ct. of Second Jud. Dist. 2-3 (rev. 1995); Rules of Dist. Ct. of Fifth Jud. Dist. 5-3B (rev. 2001); Rules of Dist. Ct. of Seventh Jud. Dist. 7-3 (rev. 1995).
Jurisdictions that require express client authority for a lawyer to settle generally maintain that in the event of a dispute over the lawyer's authority to settle, it is a factual question for the trial court to determine and will not be disturbed absent an abuse of disc
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