UPON THE REQUEST OF A MEMBER OF THE SOUTH CAROLINA BAR, THE ETHICS ADVISORY COMMITTEE HAS RENDERED THIS OPINION ON THE ETHICAL PROPRIETY OF THE INQUIRER’S CONTEMPLATED CONDUCT. THIS COMMITTEE HAS NO DISCIPLINARY AUTHORITY. LAWYER DISCIPLINE IS ADMINISTERED SOLELY BY THE SOUTH CAROLINA SUPREME COURT THROUGH ITS COMMISSION ON LAWYER CONDUCT.
Ethics Advisory Opinion 99-13
Facts
Client retained Attorney to represent him in a personal injury case and signed a retainer agreement. Early in the matter, Client requested that Spouse be made a party plaintiff. Client subsequently reviewed and approved a complaint which included a prayer for damages for Spouse’s loss of consortium. The complaint was filed, and an action is now pending in Circuit Court. During the two years that the action has been pending, Attorney has had frequent conversations with both Client and Spouse.
An offer of settlement is on the table, and Client is demanding that Attorney remove Spouse from the action.
Questions
1. Does Client have the right to demand removal of Spouse as a party?
2. Should Attorney file a motion to have the Spouse removed as a party or Spouse’s claim severed?
3. Does this situation present a conflict for Attorney and clients?
Summary
It appears that a client-attorney relationship exists between Attorney and Spouse. Accordingly, Client does not have the right to have Spouse removed as a party, nor should Attorney take any action regarding Spouse’s claim without Spouse’s consent. The situation may ripen into an actual conflict of interest, but with the assistance of Attorney may be resolved without a conflict developing. For example, Client and Spouse may agree to accept the settlement, with the division of the settlement between the claims of Client and Spouse decided by the Circuit Court or through alternative dispute resolution.
Opinion
While the committee does not issue opinions on questions of law, it appears that a client-attorney relationship was formed between Attorney and Spouse when Attorney filed a claim on Spouse’s behalf for loss of consortium. See In re Warder, 316 S.C. 249, 449 S.E.2d 489 (1994); In re Morgan, 288 S.C. 401, 343 S.E.2d 29 (1986) (when lawyer takes legal action on behalf of a person, an attorney-client relationship is formed if the attorney fails to inform the person that no such relationship is intended).
Assuming Attorney has a client-attorney relationship with both Client and Spouse, Attorney cannot ethically dismiss or move to sever Spouse’s claim without Spouse’s consent. Attorney should inform both Client and Spouse that because Attorney represents both parties, Attorney cannot seek to have Spouse’s claim removed or served without Spouse’s consent. Attorney should also inform Client and Spouse that Attorney cannot proceed with the settlement unless both Client and Spouse consent. See S.C. Rule of Prof. Cond. 1.8(g). It would be prudent for Attorney to provide this information in writing.
At this point it is unclear whether a conflict of interest will develop between Client and Spouse that would require withdrawal by Attorney. It may not be in either Client’s or Spouse’s interest to have Spouse’s claim dismissed or severed. It is likely that the defendant will want to settle the entire case, so dismissal of Spouse’s claim, even with Spouse’s consent, may lead to withdrawal of the settlement offer. Attorney may be able to suggest a method for handling both claims that would not involve a conflict of interest. For example, Client and Spouse could agree to settle their claims for a lump sum payment that is unallocated between the two claims. Such a lump sum settlement is ethically permissible with the consent of both clients after consultation. See S.C. Rule of Prof. Cond. 1.8(g). Attorney could then file a motion with the Circuit Court seeking a judicial determination of the allocation of the settlement between Client’s and Spouse’s claims. In the alternative, Attorney could suggest mediation or arbitration to allocate the funds between the clients, holding the funds in trust until ADR is complete. It would even be ethically permissible for the attorney to act as an intermediary between the two clients, seeking to resolve any dispute about the allocation of the settlement in a fair manner. See S.C. Rule of Prof. Cond. 2.2. Thus, while the situation may ripen into an actual conflict of interest that would require Attorney’s withdrawal, Attorney can offer the clients a number of suggestions that would lead to resolution of the matter without a conflict developing. See also Ethics Advisory Opinion 95-02.