Ethics and the Paralegal’s Involvement in Settlement Negotiations

Ellen Lockwood, CLAS

Ellen Lockwood, CLAS

Canons 1 and 3 of the Code of Ethics and Professional Responsibility of the Legal Assistants Division of the State Bar of Texas state as follows:

A legal assistant shall not engage in the practice of law as defined by statutes or court decisions, including but not limited to accepting cases or clients, setting fees, giving legal advice or appearing in a representative capacity in court or before an administrative or regulatory agency (unless otherwise authorized by statute, court or agency rules); the legal assistant shall assist in preventing the unauthorized practice of law.

A legal assistant shall exercise care in using independent professional judgment and in determining the extent to which a client may be assisted without the presence of any attorney, and shall not act in matters involving professional legal judgment.

I have recently heard of legal assistants negotiating settlement agreements.1 Usually the paralegal negotiates with opposing counsel and has strict instructions as to the parameters of an acceptable settlement agreement.

Although I have not located any case law or rules that address this matter, it appears that a paralegal in Texas would be in violation of Canons 1 and 3 of the Code of Ethics and Professional Responsibility. Although a paralegal may have been given strict parameters to follow in attempting to negotiate a settlement, this is definitely a matter involving professional legal judgment. If an unexpected offer or counteroffer comes up during negotiations, a paralegal could always state she must discuss the offer with her attorney and the client, but sometimes the ability to react immediately to such unanticipated offers is paramount. It is also possible that by the time a response is given to such an offer, the offering attorney may have thought better of it and withdraw or modify the offer, thus necessitating another wait while the paralegal confers with her attorney and client.

In a previous article I mentioned the following quotation:

Never advise a client or other person on any matter if the advice may alter the legal position or legal rights of the one to whom the advice is given.2

Although a legal assistant might not be giving legal advice while negotiating a settlement agreement, or representing a client before a court or agency, the decisions and actions of a legal assistant during a settlement negotiation could definitely “alter the legal position or legal rights” of the client.

Most experienced paralegals I know have come to believe the more experience and knowledge they gain, the more they realize how much they still don’t know. They also realize how even small details can alter the advice given to a client, and the approach the attorney takes with handling the matter, including how the attorney approaches opposing counsel.

In addition to the ethical reasons stated above, attorneys carry malpractice insurance, which most paralegals do not. Although a legal assistant is covered under her attorney’s malpractice policy, she is usually only covered to the extent that she is performing her duties under the supervision of an attorney, and for duties appropriately assigned to a legal assistant. The Texas Disciplinary Rules of Professional Conduct clearly state that a lawyer must not assist someone in committing UPL and take steps to avoid or moderate the consequences of his support staff.3

If you are a working as a paralegal under the direct supervision of an attorney, it appears you, and possibly your attorney, would be violating ethical and disciplinary rules and canons, and perhaps committing UPL. If your attorney encourages you to negotiate settlements, you should bring these considerations to his attention. As paralegals, we not only have to know and follow our own ethical canons, but the attorneys’ as well.

Ellen Lockwood, CLAS, is the Chair of the Professional Ethics Committee of the Legal Assistants Division, a position she has held since 1997. She is a member of the board of directors representing District 5, a former treasurer of the Division, and a past president of the Alamo Area Professional Legal Assistants in San Antonio.

1 Please note that I am not addressing settlement negotiations handled by an insurance claims adjuster.

2 West’s Paralegal Today, 2nd Edition, Miller and Urisko

3 See Rules 5.03 and 5.05 of the Texas Disciplinary Rules of Professional Conduct. 

Ellen Lockwood, CLAS, is the Chair of the Professional Ethics Committee of the Legal Assistants Division, a position she has held since 1997. She is Treasurer of LAD and a past president of the Alamo Area Professional Legal Assistants in San Antonio.