a simultaneous offer of settlement of fees and the merits, where the effect is to drive a wedge between the plaintiff and counsel because the settlement may be very advantageous for the client and unfavorable for the attorney. In considering this issue, the subcommittee reviewed the detailed comments submitted by the Washington Council of Lawyers on this subject, but decided that its prior conclusion -- that the answer depends entirely on the circumstances -- was the correct view. In reaching its conclusion it recognized that the purpose of such settlement offers is not, in most cases, to create an attorney-client conflict, nor to punish or deter plaintiffs' attorneys from taking on fee shifting cases. Generally speaking, the reason that defendants make such offers is to limit their total exposure, which could not occur if a two-stage settlement process were mandatory.
Against this background, it was agreed that there were certain situations in which the refusal of defense counsel to proceed except on a package basis was improper. For instance, in a Freedom of Information Act case, where a journalist was the plaintiff and either had a reasonably good case, or had won in the district court and the government was considering appeal, it would be improper for government counsel to offer to release the documents, only if plaintiff's counsel agreed to waive all attorneys fees. That situation presents a grossly unfair choice to the plaintiff and his/her counsel, and permitting such offers to be made would seriously undermine the purpose of fee shifting provisions. Moreover, it would serve no end other than saving the government money which it would otherwise have to pay, yet any such saving is plainly at odds with the purpose for which the fee shifting statute was enacted.
There are cases at the other end of the spectrum, however, where it is proper for a defendant to make a lump sum settlement offer. For instance, in a Title VII case, in which the only issue is money, and the defendant believes that the plaintiff's case is very weak, it would be proper for counsel to make an offer of a lump sum settlement in a quite modest amount. That would be true even if they were a large theoretical exposure on damages and plaintiff's counsel had put in a significant number of hours. In the subcommittee's view, no purpose would be served by saying that no such offer could be made, since plaintiff and his/her counsel are always free to reject it.
The key in these situations is whether the defendant's offer is reasonable in light of all of the circumstances, including the chances of success on the merits and the risk of possible exposure in damages and attorneys fees. And in making such determinations, the legitimate interest of the fee shifting provisions must be balanced against the legitimate interest of the defendant, whether a governmental agency or private party, in making an offer which will fix liability with considerable certainty. This balancing approach applies regardless of whether the issue is phrased in terms of the right of the defendant to make a lump sum settlement offer, or the right to refuse to pay fees to the plaintiff's attorney while providing some measure of relief to the client. In both situations, the inquiry is the same and can be decided only on a case by case basis, assessing the reasonableness of the defendant's conduct.
Because of its conclusion that the matter cannot be decided on an across-the-board basis, the subcommittee concluded that it would be unwise to attempt to write a rule. It is for these reasons that the subcommittee rejected the views expressed in Prandini and other cases such as Lisa F. v. Snider, 561 F. Supp. 724 (N.D. Ind. 1983), and instead adopted the views expressed in White v. New Hampshire Dept of Employ Sec, 455 U.S. 446, 453 n. 15 (1982), that the simultaneous settlement of fee disputes does not necessarily create an impermissible conflict of interest.
Because the Washington Council of Lawyers submitted such extensive comments on this aspect of the draft report the subcommittee decided to explain why the Council's suggestions were not adopted. The Council's principal proposal was that we recommend a rule that would entitle the court to approve the merits part of a settlement and, despite the defendant's refusal to agree to pay attorneys fees, to award fees nonetheless. As an alternative, the Council suggested deferring any recommendation until Moore is decided.
Apart from the merits of the Council's proposal, it could not be adopted because it proposes a substantive rule of law (as indeed the heading on page 8 of its comments explicitly states). However, the subcommittee has no authority to make that kind of recommendation, nor would the District Court have the power to pass such a rule under its local rule-making authority. Thus, if such a standard is to be established, it will have to come from a litigated case, such as Moore, or from Congress. The subcommittee also does not believe that the pendency of Moore is a proper basis to defer issuing its guidelines, principally because it believes that interim guidance will be useful to lawyers before Moore is decided and that guidance can always be amended if the decision in Moore requires it.