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Rules of Professional Conduct and Impact on Releases Related to Professional Services

Rules of Professional Conduct and Impact on Releases Related to Professional Services

The Michigan Court of Appeals issued an unpublished opinion bearing directly on the Model Rules of Professional Conduct, in force in Michigan, Nebraska, and many other states.

Introduction

In Ansari v. Gold, et al., 263920 (2-14-06), the trial court denied a motion for summary judgment predicated on the presence of a release signed by a client. The client's release, executed after judgment was entered in an underlying proceeding, and directed only at past performance, was attacked as unenforceable under Michigan Rule of Professional Conduct 1.8(h).

Although Ansari v. Gold, et al., 263920 (2-14-06), is not an opinion with value as precedent, the case is important for lawyers focused on the Rules of Professional Conduct.

The Release Language

The release language at issue in the case provided:

In consideration of our agreement to reduce our fees in the amount of $21,665.54 and our agreement to disburse to you a portion of the funds being held in our trust account, which could have been applied in full payment of our fees, you have agreed to acknowledge our continuing right to a lien against the amounts due you from Shapoor Ansari and to release the firm of Butzel Long and its individual attorneys from any claims you may have arising from any services performed by them.

Applicable Michigan Rule of Professional Conduct

The plaintiff alleged the release was invalid under Michigan Rule of Professional Conduct, which provides:

A lawyer shall not:

Make an agreement prospectively limiting the lawyer's liability to a client for malpractice unless permitted by law, and the client is independently represented in making the agreement; or
Settle a claim for such liability with an unrepresented client or former client without first advising that person in writing that independent representation is appropriate in connection therewith.

Michigan Court of Appeals' Opinion

The Court of Appeals concluded the trial court misplaced its reliance on Michigan Rule of Professional Conduct 1.8(h) because the Rule applies to agreements "prospectively limiting" a lawyer's liability to a client. In Ansari, the release was directed to past performance.

Citing Michigan Rule of Professional Conduct 1.0(b), which provides, in pertinent part, "the rules do not, however, give rise to a cause of action for ... damages caused by failure to comply with an obligation or prohibition imposed by a rule," the Michigan Court of Appeals confirmed a violation of the Michigan Rules of Professional Conduct does not alone give rise to a cause of action.

Finally, the Court noted even if Rule 1.8(h) were violated, because plaintiff failed to tender the settlement funds, and, in effect, wanted to keep the money tendered at the time the Release was signed while simultaneously attacking it, Michigan law, like the law of most jurisdictions, requires a tender before suit can be initiated, and, therefore, plaintiff's failure to tender barred her claims.

Conclusion

Although Ansari v. Gold, et al., is not an opinion when value is precedent, the case is important for lawyers and the legal implications of the Michigan Rules of Professional Conduct.

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