Two Attorney Wrongs Don’t Make a Right In Settlement Negotiations – Ethics Violations?

Two Attorney Wrongs Don’t Make a Right In Settlement Negotiations – Ethics Violations?

When negotiating a settlement, does failure to disclose the death of the plaintiff constitute a legal ethics violation?  When plaintiff’s counsel fails to disclose the death of his client, is defense counsel obligated to report this legal ethics violation to the Attorney Registration and Disciplinary Commission (ARDC)? When defense counsel fails to report this ethics violation, is he now subject to discipline? The Appellate Court of Illinois answers “yes” to all three questions! Robison v. Orthotic & Prosthetic Lab, Inc., 2015 IL App (5th) 140079.

In 2008, Randy Robison filed a product liability action against Orthotic & Prosthetic Lab, Inc., alleging its defective prosthesis had caused him severe injuries.  Anthony Gilbreth, of Crowder & Scoggins, Ltd. represented Robison. James Smith, of Greensfelder, Hemker & Gale, P.C. represented Orthotic. In September 2013, settlement negotiations commenced. On September 19, 2013, Smith made a final settlement offer to Gilbreth. On September 24, 2013, Gilbreth e-mailed the following acceptance: “My client has instructed me to accept [amount redacted] in full and final settlement of this matter. Please provide an appropriate release and I will present it to my client for review and approval.”

On November 7, 2013, Smith drafted and sent a settlement agreement and general release to Gilbreth. On November 15, 2013, Gilbreth drafted and tendered an amended version of the proposed release to Mr. Smith. In an e-mail explaining the change, Gilbreth stated that his client, Randy Robison, had passed away, and his son, Matthew Robison, had been appointed as the personal representative of the estate in August 2013. As a result, Gilbreth was seeking consent to substitute the son, Matthew, as the plaintiff. The November 15, 2013, e-mail was the first time that Smith and defendant learned of plaintiff’s death. Smith received this e-mail about two months after the settlement negotiations had, in theory, ended.

Smith e-mailed Gilbreth, on November 18, 2013, asking if his failure to disclose his client’s death was an “unfortunate oversight” or if he had intentionally withheld this material fact during settlement negotiations. Gilbreth responded that the firm’s legal research had indicated he had no affirmative duty to disclose his client’s death, and he had believed disclosing the death would not be in his client’s best interest. Therefore he argued that the rules of professional responsibility dictated against his disclosing the client’s death. The following day, Smith informed Gilbreth that the settlement agreement was invalid because a material fact had been withheld, and his client opposed the substitution of the plaintiff.

As a result of the e-mail exchange, Gilbreth filed both a motion to substitute the son as plaintiff and a motion to enforce the product liability settlement. After a hearing on both motions, the circuit court granted both the motion to substitute Matthew Robison as the plaintiff and the motion to enforce settlement. The defendant appealed.

In its opinion, the appellate court stated, “In every suit, there must always be a plaintiff, a defendant, and a court. An attorney’s employment and his authority are revoked by the death of his client, and an attorney cannot proceed where he does not represent a party to the action.” Additionally, “Generally, the attorney-client relationship is terminated by the death of the client, and thereafter, the authority of the attorney to represent the interests of a deceased client must come from the personal representatives of the decedent.”

The court stated that when Randy Robison, died on January 20, 2013, the product liability lawsuit had no plaintiff of record. Since a lawyer cannot act on behalf of a dead client, Gilbreth had acted without any authority. However, the cause of action survived the original plaintiff’s death, and, in this case the son could substitute as plaintiff for his father.

Moreover, from Randy Robison’s death on January 20, 2013, to when the circuit court granted the motion to substitute Matthew as plaintiff on January 21, 2014, there were 365 calendar days during which the case had no plaintiff. Therefore, for 365 days, Gilbreth represented no persons involved in this cause of action. More importantly, during the September 2013, settlement negotiations Gilbreth represented no party to the product liability lawsuit. Gilbreth argued on appeal that he had represented his client’s best interest by not disclosing the client’s death, in that he had prevented an adverse effect on the settlement value of the case. He asserted that his course of conduct was within the rules of professional responsibility. Unfortunately for Gilbreth, the court found him wholly wrong. The court stated, “We strongly disagree. We find that the arguments expressed by Gilbreth are specious and incredible, and we are concerned about his professional judgment in this case.”

The court further explained that the plaintiff’s death was a material fact, because plaintiff’s continuing pain and suffering was no longer a factor in the settlement value of the case. Gilbreth had wrongfully and intentionally concealed this fact from defense counsel. Additionally, Smith argued that Gilbreth knew of his client’s death well before the settlement negotiations. On July 9, 2013, Kathie Blackman Dudley, a colleague of Gilbreth and a fellow attorney in the firm, had filed a petition for letters of administration, requesting that Matthew Robison become the personal representative of Randy Robison’s estate. As a result of his client’s death before settlement, there was no plaintiff of record to accept the settlement, and Gilbreth had no authority to negotiate or accept any settlement. Despite knowledge of the plaintiff’s death on or before July 9, 2013, and the motion to substitute the son as plaintiff being granted on January 21, 2014, Gilbreth had erroneously led defense counsel to believe he represented the plaintiff and had authority to settle the lawsuit. Consequently, the appellate court held that the circuit court had erred in granting the motion to enforce settlement. Judgment vacated and case remanded.

The appellate court next turned its attention to the scenario between Gilbreth and Smith regarding a breach of the Illinois Rules of Professional Conduct. See In re Himmel, 125 Ill. 2d 531 (1988).

Under Illinois Rule 8.4(c), “It is professional misconduct for a lawyer to… engage in conduct involving dishonesty, fraud, deceit, or misrepresentation.” The court concluded that based on Gilbreth’s misrepresentations and material omissions, his actions “constitute[d] serious violations of Rule 8.4.”

Under Rule Illinois 8.3(a), “A lawyer who knows that another lawyer has committed a violation of… Rule 8.4(c) shall inform the appropriate professional authority.” The court concluded that Smith’s knowledge of Gilbreth’s failure to reveal the client’s death necessitated that Smith report Gilbreth to the ARDC. Thus Smith’s “failure to report… constitute[d] a potential violation of Rule 8.3.”

In light of both the Illinois Rules of Professional Conduct and the attorneys’ actions in this case, the appellate court ordered that its opinion be transmitted to the Attorney Registration and Disciplinary Commission to determine if further disciplinary action was in order.

Brandon M. Djonlich
J.D., June 2015, The John Marshall Law School
Francis D. and Corinne S. Morrissey Scholar