Amicus Curiae Brief — Evans v. Jeff D.

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Office -Supreme Court, US.

FILED

JUL 18 1985

ALEXANDER L.STEVAS,

CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1985

JOHN V. EVANS, ROSE BOWMAN,

GEORGE BACHIK, and WILLIAM GRUZINSKI,

Petitioners,

JEFF D., PAULA E., JOHN M., and Dusty R., minors,

by and through their next friend, CHARLES JOHNSON,

III, individually and on behalf of the class they repre-

sent and MARK CLARY, iniervenor,

Respondents.

On Writ of Certiorari to the United States Court of Appeals

for the Ninth Circuit

BRIEF OF THE COUNCIL OF STATE GOVERNMENTS,

THE NATIONAL CONFERENCE OF STATE

LEGISLATURES, THE NATIONAL LEAGUE OF CITIES,

THE NATIONAL ASSOCIATION OF COUNTIES,

THE U.S. CONFERENCE OF MAYORS, AND THE

INTERNATIONAL CITY MANAGEMENT ASSOCIATION

AS AMICI CURIAE IN SUPPORT OF PETITIONERS

J. PHILLIP JORDAN BENNA RUTH SOLCMON

VENABLE, BAETJER, HOWARD Chief Counsel

& CIVILETTI THE STATE AND LOCAL

Suite 1200 LEGAL CENTER

1301 Pennsylvania Avenue, N.W. 444 North Capitol St., N.W.

Washington, D.C. 20004 Suite 349

(202) 783-4300 Washington, D.C. 20001

Of Counsel (202) 638-1445

Counsel of Record for the

Amici Curiae

BEST AVAILABLE COPY

QUESTION PRESENTED

Whether settlement negotiations on the merits of a

civil rights action can include simultaneous negotiation

of attorney’s fees.

TABLE OF CONTENTS

QUESTION PRESENTED

TABLE OF AUTHORITIES

INTEREST OF THE AMICI

STATEMENT OF THE CASE

SUMMARY OF ARGUMENT

ARGUMENT

I. SIMULTANEOUS NEGOTIATION OF AT-

TORNEY’S FEES WITH THE MERITS IS

THE MOST EFFECTIVE MEANS OF

ACHIEVING PROMPT AND JUST SETTLE-

MENT OF CIVIL RIGHTS LITIGATION

Il. THIS COURT’S CASES RECOGNIZE THE

IMPORTANCE OF SETTLEMENTS THAT

INCLUDE ALL ASPECTS OF LIABILITY

II. SIMULTANEOUS NEGOTIATIONS

THER THE GOALS THAT THE

SHIFTING PROVISIONS OF THE Cl

RIGHTS LAWS INTENDED TO PROMOTE

A. Congress Did Not Intend to Make Attorney’s

I d

Fees Nonnegotiable

B. Simultaneous Negotiations Promote the Pur-

poses and Policies of the Civil Rights Laws

1. Vigorous Enforcement of the Civil Rights

Laws

2. Ease of Judicial Administratio1

Page

TABLE OF CONTENTS—Continued

Page

IV. DEFENSE COUNSEL’S ETHICAL OBLIGA-

TIONS TO THEIR CLIENTS AND TO THE

ADMINISTRATION OF JUSTICE ARE BEST

MET BY ENSURING THAT SETTLEMENTS

RESOLVE THE AMOUNT OF FEES AS

WELL AS THE ISSUE OF DAMAGES 14

A. Simultaneous Negotiations Further’ the

Client’s Interests and the Administration of

the Adversary System ... a ‘aad 14

B. Bifureated Negotiations Are Inefficient and

Do Not Eliminate the Potential for Conflicts

of Interest .. , 17

C. Current Law Provides Ready Solutions to

Any Potential Ethical Conflict .... 19

CONCLUSION 20

TABLE OF AUTHORITIES

CASES Page

Blum v. Stenson, -—— U.S. ——, 104 S.Ct. 1541

(1984) Vor e as x

Carson v. American Brands, Inc., 450 U.S. 79

i 9

F.2d 127 (10th Cir. 1980) 7

Chrapliwy v. Uniroyal, Inc., 509 F. Supp. 442 (N.D.

Ind. 1981), aff'd in part and rev’d in part, 670

F.2d 760 (7th Cir. 1982), reh’g and reh’g en

bane denied (April 13, 1982), cert. denied, 461

U.S. 956 (1983), on remand, 583 F. Supp. 40

(N.D. Ind. 1983) 13-14

Gram v. Bank of Louisiana, 691 F.2d 728 (5th Cir.

1982) wae indesuieliaaians 7

Grunin v. International House of Pancakes, 513

F.2d 114 (8th Cir.), cert. denied, 423 U.S. 864

| Re SPER ON a 11

Hensley v. Eckerhart, 461 U.S. 424 (1983) 6, 8,9, 13

Lazar v. Pierce, 757 F.2d 435 (1st Cir. 1985) 7, 12,16

Maher v. Gagne, 448 U.S. 122 (1980) ...... ao 5

Marek v. Chesny, No. 83-1437 (U.S. June 27,

1985) 5, 6, 7,9, 12

Moore v. National Association of Securities Dealers,

Inc., 762 F.2d 1093 (D.C. Cir. 1985) passim

Parker v. Califano, 411 F. Supp. 1059 (D.D.C.

1976), aff'd, 561 F.2d 320 (D.C. Cir. 1977), on

remand, 443 F. Supp. 789 (D.D.C. 1978) 14

White v. New Hampshire Department of Employ-

ment Security, 455 U.S. 445 (1982) 8, 9,14

STATUTES

Civil Rights Attorney’s Fees Awards Act of 1976,

42 U.S.C. § 1988 passim

Title VII, 42 U.S.C. § 2000e-5 (k) passim

RULES

Rule 16, Fed. R. Civ. P. 19

Rule 23, Fed. R. Civ. P. 19

Rule 68, Fed. R. Civ. P 7

TABLE OF AUTHORITIES—Continued

OTHER AUTHORITIES Page

Comment, Settlement Offers Conditioned Upon

Waiver of Attorneys’ Fees: Policy, Legal, and

Ethical Considerations, 131 U. Pa. L. Rev. 793

| REEESENCRR AEP eee eon See ee 15, 17, 18

H.R. Rep. No. 1558, 94th Cong., 2d Sess. (1976) ....5, 10, 11

G. Hazard, Ethics in the Practice of Law (1978). 17

A. Miller, Attorneys’ Fees in Class Actions (1980) 18

Model Code of Professional Responsibility (1981) .. 13, 14,

15, 17, 19

Model Rules of Professional Conduct (1983) ..14, 15, 17, i9

J. Moore, J. Lucas, H. Fink, D. Weckstein & J.

Wicker, Moore’s Federal Practice (2d ed. 1985) 18

Opinion No. 147, The District of Columbia Bar

Legal Ethics Committee, reprinted in 113 The

Daily Washington Law Reporter 389 (1985). 15

Opinion No. 80-94, Committee on Professional and

Judicial Ethics of the Bar Association of the

City of New York, Settlement Offers in Public

Interest Litigation Conditional on Waiver of

Statutory Fees, reprinted in 36 Record of B.A.C.

N.Y. 507 (1981) Sa ore ; 15

Report of the Subcommittee of Lawyer Members

of the Committee on Attorney Fees appointed by

the Chief Judges of the United States District

Court and the United States Court of Appeais

for the District of Columbia, reprinted in Bar

Report, Aug./Sept. 1984, p. 4 , 16

Rhode, Class Conflicts in Class Actions, 34 Stan.

L. Rev. 1183 (1982) aietaaii 15

S. Rep. No. 1011, 94th Cong., 2d Sess. (1976),

reprinted in 5 U.S. Code Cong. & Ad. News 5908

(1976) - | | 10, 11

IN THE

Supreme Court of the United States

OCTOBER TERM, 1985

No. 84-1288

JOHN V. EVANS, ROSE BOWMAN,

GEORGE BACHIK, and WILLIAM GRUZINSKI,

Petitioners,

JEFF D., PAULA E., JOHN M., and Dusty R., minors,

by and through their next friend, CHARLES JOHNSON,

III, individually and on behalf of the class they repre-

sent and MARK CLARY, intervenor,

Respondents.

On Writ of Certiorari to the United States Court of Appeals

for the Ninth Circuit

BRIEF OF THE COUNCIL OF STATE GOVERNMENTS,

THE NATIONAL CONFERENCE OF STATE

LEGISLATURES, THE NATIONAL LEAGUE OF CITIES,

THE NATIONAL ASSOCIATION OF COUNTIES,

THE U.S. CONFERENCE OF MAYORS, AND THE

INTERNATIONAL CITY MANAGEMENT ASSOCIATION

AS AMICI CURIAE IN SUPPORT OF PETITIONERS

INTEREST OF THE AMICI!

Amici are organizations whose members include state,

county, and municipal governments and officials located

throughout the United States. Amici and their members

have a vital interest in legal issues that affect the powers

1 Pursuant to Rule 36 of the Rules of this Court, the parties have

consented to the filing of this brief. Their letters of consent have

been filed with the Clerk of the Court.

ee —

and responsibilities of such governments. This case pre-

sents an issue of great importance concerning the ability

of these governments and their officials to make settle-

ment offers to plaintiffs in civil rights litigation.

The court below ruled that simultaneous negotiation

of attorney’s fees and the merits should only be per-

mitted “on a showing of unusual circumstances.” Pet.

App. 24a. Under such a rule, state and local govern-

ments and officials, as defendants in civil rights litiga-

tion, simply could not, in the vast majority of cases,

determine the full extent of their liability through settle-

ment negotiations. As a result, many cases that are cur-

rently settled out of court could no longer be resolved

voluntarily, and both litigants and courts would be put

to the unnecessary expense and demands of trials that

should be avoided.

Because of the importance of this ruling to state and

local governments and officials, amici submit this brief to

assist the Court in its resolution of the case.

STATEMENT OF THE CASE

Petitioners, as defendants in a class action filed by re-

spondents under 42 U.S.C. § 1983, engaged in extensive

negotiations to reach a settlement. Petitioners condi-

tioned the settlement on a waiver of respondents’ at-

torney’s fees. The final settlement agreement provided

that “plaintiffs and defendants should each bear their

own costs and attorney’s fees thus far incurred, if so

approved by the court.”’ Pet. App. 19a. The district court

approved the settlement.

The court of appeals reversed. The court held that

respondents had improperly been required to waive the

attorney’s fees ordinarily available to civil rights plain-

tiffs, and then went on to rule that, in the absence of

unusual circumstances, attorney’s fees have no place in

settlement negotiations. The court remanded the case

to the district court for a determination of reasonable

attorney’s fees for respondents. Pet. App. 25a.

SUMMARY OF ARGUMENT

1. All of the major civil rights statutes allow the dis-

trict court, in its discretion, to award attorney’s fees to

the prevailing party. A plaintiff who achieves substantial

relief through settlement negotiations may be a (.evail-

ing party. Only through simultaneous negotiation of both

the merits of plaintiff’s claim and the plaintiff's attor-

ney’s fees can a defendant know the full implications of

a settlement agreement into which it may consider enter-

ing. The alternative to simultanecus negotiation is a

bifurcated procedure in which the question of fees is

put aside for later negotiation or litigation after the

merits are resolved. Because such a procedure leaves

the defendant unsure about the total potential financial

liability incurred under the settlement. the bifurcated

procedure discourages settlement.

2. This Court’s recent cases have stressed the impor-

tance of settlement of claims, including those for attor-

ney’s fees. These cases fully resolve the legai, policy, and

ethical questions potentially arising from simultaneous

negotiations of the merits and the attorney’s fees.

3. Limiting the negotiability of attorney’s fees would

frustrate Congress’ intent to improve enforcement of the

civil rights laws. Nothing in the legislative history of

the many civil rights statutes that authorize fee-shifting

indicates that Congress intended to provide prevailing

plaintiffs with an inalienable right to attorney’s fees.

Indeed, while some other fee-shifting statutes requir

that fees be awarded to the prevailing party, the civil

rights fee-shifting statutes typically provide only for dis-

cretionary awards of fees. In addition, Congress made

clear that the authorization of awards of attorney’s fees

was part of its overall effort to further the goals of civil

rights legislation. Precluding simu!taneous negotiations,

however, would reduce the frequency of settlements and

could diminish the amount of substantive relief aiforded

to plaintiffs in settlements, as well as increase the cost

and burden of enforcement and administration of the

civil rights laws.

4. By including fees with all other elements of a claim

during settlement negotiations, defense counsel meet their

ethical obligations both to their clients and to the admin-

istration of justice. Attorneys owe a positive duty to

their clients to reduce the clients’ liability and risk of

liability. By securing prompt resolution of the question

of attorney’s fees, simultaneous negotiations also serve

the attorney’s complementary duty of promoting the

administration of justice. Settlements are encouraged,

and the defendant is able to offer more substantive relief

when its concern about potential fee liability is allayed.

The ideal of autonomy on which the adversary system is

based is also best achieved by assuring that clients have

full knowledge of all terms of a proposed settlement.

5. The alternative to simultaneous negotiations is bi-

furcated negotiations. In addition to their obvious in-

efficiencies, bifurcated negotiations depend at least in

part on the hidden discussion of those issues that are

openly discussed in simultaneous negotiations. Thus,

technically bifurcated negotiations fail to achieve even

the minimal objective of avoiding simultaneous negotia-

tion in fact. Moreover, bifurcated negotiation puts the

court in a poorer position to review the fee award and

provide meaningful relief to the plaintiff because the

court does not have the facts of the case before it when

it reviews the fee agreement.

6. Effective measures available to prevent or correct

any prejudice to the plaintiff that might result from

a conflict of interest include discussions and agreements

between the attorney and the client; guidance from the

court; and, if necessary, remedial action by the court.

Moreover, to the extent that the problem is an ethical,

and not a legal, one, its prevention and remediation lie

in disciplinary measures by the bar, not a legal ruling

by this Court.

ARGUMENT

I. SIMULTANEOUS NEGOTIATION OF ATTORNEY’S

FEES WITH THE MERITS IS THE MOST EFFEC-

TIVE MEANS OF ACHIEVING PROMPT AND JUST

SETTLEMENT OF CIVIL RIGHTS LITIGATION

The narrow question presented to the court of appeals

for review in this case was the propriety of defendant’s

insistence on a waiver of plaintiffs’ attorney’s fees as a

condition of settlements. Amici take no position with re-

spect to this issue. The court of appeals, however, went

beyond that issue to formulate a broad rule precluding

simultaneous negotiation of the amount of attorney’s fees

with discussion of settlement on the merits. It is this

general rule that amici ask this Court to repudiate, be-

cause it serves neither the interests of the plaintiff nor

those of the defendant in fixing reasonable attorney’s

fees; undercuts the intention of Congress and good ju-

dicial administration by discouraging settlements; and

does not resolve the ethical problems faced by plaintiffs’

attorneys in fee negotiations.

All major civil rights statutes allow the district court,

in its discretion, to award attorney’s fees to the “‘prevail-

ing party.” See, e.g., 42 U.S.C. § 1988 (Civil Rights At-

torney’s Fees Awards Act of 1976; hereinafter “the Fees

Act’); 42 U.S.C. § 2000e-5(k) (Title VII). In Maher v.

Gagne, 448 U.S. 122 (1980), this Court held that a plain-

tiff who obtains relief through settlement rather than

litigation is eligible to recover attorney’s fees. The value

of this policy to plaintiffs is that they need not be re-

luctant to settle a case simply to ensure recovery of at-

torney’s fees. “Congress made clear its concern that civil

rights plaintiffs not be penalized for ‘helping to lessen

docket congestion’ by settling their cases out of court.”

Marek v. Chesney, No. 83-1437, slip op. at 8 (U.S. June

27, 1985), citing H.R. Rep. No. 1558, 94th Cong., 2d

sess. 7 (1976).

The policy of allowing plaintiffs to recover attorney’s

fees even if they settle their claims must be reconciled

with defendants’ need to know the full extent of liability

at settlement. In a system of simultaneous negotiation of

the merits and attorney’s fees, all items of the relief

sought are on the table at the same time.’

The alternative to simultaneous negotiation is a bi-

furcated procedure in which the question of attorney’s

fees is not discussed until after agreement has been

reached on all other elements of the claim. At that

point, attorney’s fees could be negotiated by the parties

or, more likely, awarded by the court. This Court has noted

that “‘[t]here is no precise rule or formula for making

these determinations [of attorney’s fees].” Hensley v.

Eckerhart, 461 U.S. 424, 486 (1983). Thus, without

simultaneous negotiations a defendant will be unsure of

its total liability even after it has agreed to settle all

other items of a plaintiff’s claim.

Amici’s members, frequent defendants in civil rights

litigation, have a strong interest in fair and timely set-

tlement of all legitimate claims brought under the civil

rights laws. Amici believe that the settlement mechanism

enables both plaintiffs and state and local government

defendants to achieve the outcome that is most efficient

in terms of time and money. As the Court recently

stated: “‘i]n short, settlement rather than litigation

will serve the interests of plaintiffs as well as defend-

ants.” Marek, supra, slip op. at 8. Amici believe that

the simultaneous negotiation of the merits of a case and

the appropriate attorney’s fee, the route precluded by the

*The attorney’s fee component of a settlement resulting from

simultaneous negotiations can take many forms. Plaintiff may

accept a lump-sum settlement, agree to a “cap” on the amount of

attorney’s fees, or forgo attorney’s fees. Amici do not believe that

valid legal distinctions can be drawn among these various forms,

nor can they be firmly separated in practice. Accordingly, our

argument applies to any form of fee component except where noted.

‘

Ninth Circuit, is the best way to promote such settle-

ments. The monetary exposure that remains after the

merits portion of a bifurcated negotiation procedure is

unacceptable because it will make defendants reluctant

to settle. Only a system that produces certainty and

eliminates further risk of liability will promote settle-

ments, the method of resolving litigation that is pre-

ferred by courts, by Congress, and by amici. As we dis-

cuss below, this Court’s cases, the legislative history of

the Fees Act, and the relevant ethical considerations all

favor simultaneous negotiation of the merits and attor-

ney’s fees in civil rights cases.

Il. THIS COURT’S CASES RECOGNIZE THE IMPOR-

TANCE OF SETTLEMENTS THAT INCLUDE ALL

ASPECTS OF LIABILITY

The decision of the court of appeals is irreconcilable

with this Court’s approach to the settlement of attorney’s

fee awards. Amici suggest that several recent opinions

resolve the legal, policy, and ethical considerations sur-

rounding simultaneous negotiations.

Marek v. Chesny did not specifically concern the simul-

taneous negotiation of damages and attorney’s fees, but

the opinion makes clear that this is the procedure that

the Court envisioned.* Marek held that, under Fed. R.

Civ. P. 68, a defendant is not liable for attorney’s fees

incurred by a plaintiff subsequent to an offer of settle-

ment by the defendant. In holding that an offer of judg-

ment need not separately indicate proposals for damages

3 Even without the benefit of this Court’s opinion in Marek, sev-

eral courts of appeals have held, as amici urge, that simultaneous

negotiation of the merits and fees is permissible. See Moore v.

National Association of Securities Dealers, Inec., 762 F.2d 1093

(D.C. Cir. 1985); Lazar v. Pierce, 757 F.2d 435 (1st Cir. 1985)

Gram v. Bank of Louisiana, 691 F.2d 728, 730 (5th Cir. 1982

(dictum) ; Chicano Police Officer’s Ass'n v. Stover, 624 F.2d 127, 132

(10th Cir. 1980).

and for costs, the Court chose the “construction of the

Rule [that] best furthers the objective of the Rule, which

is to encourage settlements.” Slip op. at 4. As the Court

explained:

If defendants are not allowed to make lump sum

offers that would, if accepted, represent their total

liability, they would understandably be reluctant to

make settlement offers. As the Court of Appeals

observed, “many a defendant would be unwilling to

make a binding settlement offer on terms that left it

exposed to liability for attorney’s fees in whatever

amount the court might fix on motion of the plain-

tiff.”

Ibid. (citation omitted ) .*

Similarly, in Hensley v. Eckerhart, 461 U.S. 424

(1983), the Court considered a challenge to an attorney’s

fee awarded following litigation over conditions at a state

hospital.” The Court noted that “[a] request for attor-

ney’s fees should not result in a second major litigation.

Ideally, of course, litigants will settle the amount of a

fee.” Jd. at 437.° Although the Court in Hensley did

not discuss the procedure for settlement of attorney’s

fees, it is clear that such a settlement will be facilitated

when it is considered at the same time as the merits of

* See also White v. New Hampshire Dept. of Empl. Sec., 455 U.S.

445, 454 n.15 (1982): “In considering whether to enter a negotiated

settlement, a defendant may have good reason to demand to know his

total liability from both damages and fees.”

5 Hensley held that if the district court awards fees, “the extent

of a plaintiff’s success is a crucial factor in determining the amount”

of those fees. 461 U.S. at 440.

8 See also Blum v. Stenson, USS. , 104 S.Ct. 1541, 1550

n.19 (1984) (“Parties to civil rights litigation in particular should

make a conscientious effort where a fee award is to be made, to

resolve any differences.’’).

the case. First, defendants who settle the merits of a

case have an interest in settling the amount of any at-

torney’s fee in order to know the full extent of their

liability in the case. As the Court noted in Marek, de-

fendants are understandably reluctant to settle without

such knowledge. Second, defendants who settle the merits

of a case without resolution of the fee award risk “major

litigation” over the fee award. Even if it is the first and

not the “second major litigation” of a case, defendants

will be similarly reluctant to settle in such circumstances.

The best way to promote the policy articulated in Hensley

is simultaneous settlement of both the merits of a case

and the fee award.’

In White v. New Hampshire Department of Employ-

ment Security, 455 U.S. 445 (1982), the Court discussed

the contention that “prejudgment fee negotiations could

raise an inherent conflict of interest between the attorney

and client.” Jd. at 453-54 n.15.° The Court decisively

rejected the rule adopted by the court below in this

case: the sweeping proposal that “to avoid this conflict

of interest any fee negotiations should routinely be de-

ferred until after the entry of a merits judgment.” 7d.

at 454 n.15. The Court stated: “Although such [pre-

judgment fee negotiations] situations may raise difficult

ethical issues for a plaintiff’s attorney, we are reluctant

7 See Carson v. American Brands, Inc., 450 U.S. 79, 87 (1981

“Settlement agreements may .. . be predicated on an express or

implied condition that the parties would, by their agreement, be

able to avoid the costs and uncertainty of litigation.”

8In White, the Court held that a post-judgment request for attor-

ney’s fees is not a “motion to alter or amend the judgment” subject

to the requirement in Fed. R. Civ. P. 59(e) that such motions must

be served not later than ten days after the entry of judgment. The

Court noted that a request for attorney’s fees “raises legal issues

collateral to the main cause of action.” 455 U.S. at 451.

to hold that no resolution is ever available to ethical

counsel.”’

Accordingly, amici suggest that this Court has already

considered the legal, policy, and ethical issues presented,

and that its conclusions require reversal of the ruling

below.

Ii. SIMULTANEOUS NEGOTIATIONS FURTHER THE

GOALS THAT THE FEE-SHIFTING PROVISIONS

OF THE CIVIL RIGHTS LAWS INTENDED TO

PROMOTE

A. Congress Did Not Intend to Make Attorney’s Fees

Nonnegotiable

Congress has indicated that a prevailing plaintiff in

civil rights litigation “should ordinarily recover an at-

torney’s fee unless special circumstances would render

an award unjust.” S. Rep. No. 1011, 94th Cong., 2d

Sess. 4, reprinted in 5 U.S. Code Cong. & Ad. News 5908,

5912 (1976) (hereinafter “Senate Report”).

The legislative history of the civil rights fee-shifting

statute does not specifically discuss the practice of simul-

taneous negotiations. At the time that the Fees Act was

passed, however, Congress was well aware of over fifty

provisions for attorney’s fees in a wide variety of statutes.

See H.R. Rep. No. 1558, 94th Cong., 2d Sess. 2 (1976)

hereinafter “House Report’). Prior to that time, no

court had ever held that any of these other fee-shifting

statutes precluded simultaneous consideration of the

merits and attorney’s fees during settlement negotia-

tions. The Senate Report makes quite clear that the Fees

Act “creates no startling new remedy” and should be

“governed by the same standards which prevail” in other

statutes which utilize “the traditionally effective remedy

of fee-shifting.”” Senate Report at 6. Against this back-

ground, no limitation on the negotiability of attorney’s

fees may be inferred from congressional silence on this

subject in the legislative history of the Fees Act.

In addition, the House Report notes, at p. 4, that Con-

gress has differentiated among four types of fee-shifting

statutes: (1) mandatory awards only for a prevailing

plaintiff; (2) mandatory awards for any prevailing party;

(3) discretionary awards for a prevailing plaintiff; and

(4) discretionary awards for any prevailing party. The

civil rights fee statutes are in the last category. The Re

port makes clear that this choice was purposeful: ‘“Con-

gress has passed many statutes requiring that fees be

awarded to a prevailing party. Again the committee

adopted a more moderate approach here... .” Jd. at 7

(emphasis in original). Even statutes that provide for

mandatory awards of attorney’s fees have never been

interpreted to restrict the negotiability of fees. See, e.g.,

Grunin v. International House of Pancakes, 513 F.2d

114 (8th Cir.), cert. denied, 423 U.S. 864 (1975) (settle

ment of a claim under the Clayton Act, which requires

payment of attorneys’ fees to the prevailing plaintiff, in-

cluded provision se*ting amount of fees). A fortiori, dis-

cretionary fee awards should be open to discussion at

settlement negotiations on the merits.

B. Simultaneous Negotiations Promote the Purposes

and Policies of the Civil Rights Laws

Fee-shifting provisions seek to ensure “vigorous en-

forcement of medern civil rights legislation, while at the

same time limiting the growth of the enforcement bu-

reaucracy.” Senate Report at 4. Simultaneous nego-

tiations promote these purposes and policies. Enforce-

ment is fostered through the prompt, full settlement of

legitimate claims: and the courts are spared the burden

of trials that would become necessary if simultaneous

negotiations were prohibited.

1. Vigorous Enforcement of the Civil Rights Laws

This Court has recently noted that “[t]here is nothing

incompatible” between the objectives of “encourag[ing]

settlements” and “encourag|ing] plaintiffs to bring meri-

torious civil rights suits.” Marek v. Chesney, No. 83-

1437, slip op. at 9 (U.S. June 27, 1985). Similarly, one

court of appeals recently pointed out, in the context of a

Title VII case, that the concept of the “private attorney

general” must be balanced against the equally important

policy of encouraging settlement of civil rights cases.

That court, remarking on the similarity of the attorney’s

fees provision of Title VII to the Fees Act, relied on the

legislative history and judicial interpretation of that Act

to hold that simultaneous negotiation of merits, fees, and

costs should not be prohibited completely. See Moore v.

National Association of Securities Dealers, Inc., 762 F.2d

1093, 1094, 1097 n.7, 1099, 1104, 1106 (D.C. Cir. 1985).°

Simultaneous negotiations, in fact, may lead to mone-

tary settlements that are more generous to the plaintiff,

because a defendant certain about the total liability

will not feel the need to reduce the settlement offer on

the merits to provide a cushion for later payment of

attorney’s fees. In addition, where a fee award is part

of a lump-sum settlement resulting from simultaneous

negotiations, a reduction in the fee request by plaintiff's

attorney could result in additional compensation to the

plaintiff. By contrast, a post-settlement reduction by the

court in the fees requested by plaintiff’s counsel can ac-

crue only to the benefit of the defendant.

There is no reason to fear that allowing simultaneous

negotiations will act as a disincentive to plaintiffs’ at-

* The court also held that in certain circumstances the plaintiff

may voluntarily waive claims to statutory fees and costs. Accord

Lazar v. Pierce, 757 F.2d 435, 438 (1st Cir. 1985) (“Of course plain-

tiff’s counsel may elect to waive [fees|.”). A concurring opinion

noted that “if constitutional rights can consciously be waived by a

defendant in a criminal case, it would be an excess in paternalism to

conclude that parties to a civil dispute cannot do likewise.” Jd. at

439 (Torruella, J., concurring) (footnote omitted).

torneys in civil rights cases. First, as the court of ap-

peals noted in Moore, the mere practice of simultaneous

negotiation does not determine whether a fee will be

awarded or the amount of the fee; those issues are deter-

mined by the strength of the plaintiff’s case. See Moore,

762 F.2d at 1105, 1110. Plaintiffs’ attorneys generally

evaluate these factors prior to filing suit. See, e.g., Model

Code of Professional Responsibility, DR 2-109 (‘herein-

after “ABA Code’). Second, even if a negotiated fee

were less than a court might award in certain cases,

plaintiffs’ attorneys who settle rather than litigate are

able to conserve their time and thus a lower attorney’s

fee may adequately compensate them for their services.

2. Ease of Judicial Administration

In the absence of simultaneous negotiation and settle-

ment of the merits and attorney’s fees, the courts

would be forced to resolve at trial the merits of civil

rights claims which defendants cannot settle because they

cannot agree on attorney’s fees. In addition, the amount

of fees would then have to be determined by the court.

Under a settlement encompassing both the merits and

attorney’s fees, the court would, of course, retain ulti-

mate. supervisory authority over the fee award. The

burden on the court, however, would be significantly less

if the parties have first negotiated the amount of the

fee than if the court must itself preside over a mini-

trial on the question of fees. Cf. Hensley v. Evkerhart,

461 U.S. at 437 (“|A] request for attorneys’ fees should

not result in a second major litigation.”’). In many cases,

moreover, the burden and costs of the litigation over fees

far exceed those of a resolution of the merits. See, e.g.,

Chrapliwy v. Uniroyal, Inc., 509 F. Supp. 442 (N.D. Ind.

1981), aff'd in part and rev'd in part, 670 F.2d 760

(7th Cir. 1982), reh’g and reh’g en banc denied ({ April

13, 1982), cert. denied, 461 U.S. 956 (1983), on remand,

583 F. Supp. 40 (N.D. Ind. 1983); Parker v. Califano,

411 F. Supp. 1059 (D.D.C. 1976), aff'd, 561 F.2d 320

(D.C. Cir. 1977), on remand, 443 F. Supp. 789 (D.D.C.

1978). Thus, to the extent that simultaneous negotia-

tions can avoid or simplify fee litigation, such negotia-

tions will further the congressional purposes and policies

of the civil rights laws, as disclosed in the legislative

history.

IV. DEFENSE COUNSEL’S ETHICAL OBLIGATIONS

TO THEIR CLIENTS AND TO THE ADMINISTRA-

TION OF JUSTICE ARE BEST MET BY ENSURING

THAT SETTLEMENTS RESOLVE THE AMOUNT

OF FEES AS WELL AS THE ISSUE OF DAMAGES

This Court has noted that simultaneous negotiation

“may raise difficult ethical issues for a plaintiff’s attor-

ney.” White v. New Hampshire Department of Employ-

ment Security, 455 U.S. at 454 n.15. Amici also rec-

ognize that such issues may ‘rise. But just as the Court

was “reluctant to hold that no ,esolution is ever available

to ethical counsel,” (ibid.), amici submit that simultaneous

negotiations are not only permissible but should be en-

couraged. Safeguards exist to prevent unfairness to the

plaintiff; the prohibition of simultaneous negotiations is

not necessary. Moreover, ethical considerations also

plague bifurcated negotiations. In fact, such -negotia-

tions may present additional ethical problems for plain-

tiff’s counsel. Thus, the better reasoned opinions from

both courts and bar associations agree that ethical coun-

sel may engage in simultaneous negotiations with care.

A. Simultaneous Negotiations Further the Client’s

Interests and the Administration of the Adversary

System ,

Neither the ABA Code nor the Model Rules of Profes-

sional Conduct (hereinafter “Model Rules”) addresses

whether simultaneous negotiations are permissible. Al-

though commentators have generally held opinions as

divergent as those of the circuit courts on this issue,

all seem to agree that the ABA Code and the Model Rules

do not support a condemnation of simultaneous negotia-

tions. See Comment, Settlement Offers Conditioned Upon

Waiver of Attorneys’ Fees: Policy, Leyal, and Ethical

Considerations, 131 U. Pa. L. Rev. 793, 812 (1983);

Rhode, Class Conflicts in Class Actions, 34 Stan. L. Rev.

1183, 1208 (1982).

State bar ethics committees have generally not prohib-

ited simultaneous negotiations. The District of Columbia

Bar Legal Ethics Committee, for instance, was

not prepared to find that offers of a single sum by

a defendant in settlement of [civil rights] litigation

is unethical. Society’s interest in encouraging dis-

position of these and other cases through compromise,

and a defendant’s legitimate interest in defining his

liability by settlement in lieu of trial, both require

that this type of offer should be encouraged, not hin-

dered.

Opinion No. 147, The District of Columbia Bar Legal

Ethics Committe, reprinted in 113 The Daily Washington

Law Reporter 389, 394 (1985).%° Similarly, a subcom-

1 The Legal Ethics Committee did conclude that the defendant

may not condition an offer of settlement upon an agreement by plain-

tiff’s counsel to waive or limit attorney’s fees. The Bar Association

of the City of New York apparently agrees. See Opinion No. 80-94,

Committee on Professional! & Judicial Ethics of the Bar Ass’n of the

City of New York, Settlement Offers in Public Interest Litigation

Conditional on Waiver of Statutory Fees, reprinted in 36 Record of

B.A.C.N.Y. 507 (1981).

The distinction between a waiver by the plaintiff and a demand

for waiver by the defendant also received consideration in Moore v.

National Association of Securities Dealers, Inc., 762 F.2d 1093

(D.C. Cir. 1985). There, the court held that simultaneous negotia-

tions should not be completely prohibited and that plaintiffs may

voluntarily waive attorney’s fees if they do so without a demand by

the defendant. The court did not decide whether defense counsel

could raise the issue by making a settlement offer that encompassed

both the merits and an attorney’s fee. See id. at 1105, nn.17, 18.

The dissent found the distinction be veen plaintiff-suggested waiver

mittee appointed by the chief judges in the District of

Columbia emphasized that defendants’ settlement offers

that include fee provisions are usually not motivated by

a desire to create attorney-client conflicts or to bulldoze

plaintiffs’ attorneys into accepting inadequate fees. Rather,

defense counsel act to further their clients’ interests in

defining their total exposure. Noting that “the legitimate

interest of the fee shifting provisions must be balanced

against the legitimate interest of the defendant .. . in

making an offer which will tix liability with considerable

certainty,” the subcommittee concluded that “the simul-

taneous settlement cf fee disputes does not necessarily

create an impermissible conflict of interest.” ™

As these materials suggest, defense counsel’s affirma-

tive duty to represent their clients’ interests zealously

may require counsel to raise the fee issue in settlement

negotiations.** This duty to their clients complements

and defendant-coerced waiver to be illusory. See id. at 1114

(Wright, J., dissenting). The dissent, therefore, would have pro-

hibited simultaneous negotiations altogether. Amici agree that the

process of negotiation may make it difficult at times to distinguish

offers from demands or to identify exactly where and when an offer

originated. But the solution is not to prohibit all simultaneous

negotiations, but to allow them subject to appropriate review by the

court of the settlement reached.

11 Report of the Subcommittee of Lawyer Members of the Com-

mittee on Attorney Fees appointed by the Chief Judges of the

United States District Court and United States Court of Appeals

for the District of Columbia, reprinted in Bar Report, Aug./Sept.

1984, p. 4, at p. 6.

12 Judge Torruella, concurring in Lazar v. Pierce, 757 F.2d 435,

439 (1st Cir. 1985), recently concluded:

A settlement package of a civil rights action may consist of

one or more of the following items: (1) monetary damages,

(2) equitable relief, (3) costs, and (4) attorney’s fees. In

settling a case for his client, a defendant’s counsel does his client

a disservice if he settles a case as to one or more of these items,

but leaves open the possibility of further recovery or action on

any of the remaining ones. Within the bounds of ethics and

their obligation to further the administration of justice.

Even a critic of simultaneous negotiations conceded that

such negotiations “arguably promot{e] the administra-

tion of justice if the relief offered by the defendant to

the plaintiff terminates a violation of a civil rights stat-

ute.” Comment, Settlement Offers, supra, 131 U. Pa. L.

Rev. at 811.

Finally, much of the “real value of the adversary sys-

tem” lies in “its contribution to the idea! of individual

autonomy.” G. Hazard, Ethics in the Practice of Law

129 (1978). Both the ABA Code and the Model Rules

are careful to reserve to the client the authority to make

final decisions affecting the nature of a settlement. See,

e.g., ABA Code, EC 7-7, 7-8; Model Rules, Rule 1.2.

Yet, typically, civil rights pleintiffs have very little say

about the day-to-day progression of their action. A plain-

tiff cannot make an intelligent decision to accept or re-

ject a proffered settlement without knowledge of the

amount of attorney fees that may ultimately be nego-

tiated or awarde.. Encouraging simultaneous negotia-

tions will best serve the interests of the client, the ad-

ministration of justice, and the adversarial system.

B. Bifurcated Negotiations Are Inefficient and Do Not

Eliminate the Potential for Conflicts of Interest

Bifurcated negotiations are inefficient for two reasons.

First, although perceived as a way of preventing simul-

taneous negotiation of the merits and attorney’s fees, in

fact they may not do so. So-called bifurcated negotia-

tions of the merits in cases for which attorney’s fees

are authorized by statute do not occur in a vacuum; the

parties are fully aware that a claim for attorney’s fees

will follow. Because defendants must have some sense

of their total potential liability, the lurking issue of at-

fair play, an attorney owes a positive duty to his client to reduce

his liability and his exposure to recovery to the limits of the

attorney’s ability. This applies to all the items as to which

judicial relief can be sought.

torney’s fees may affect the negotiation of the merits

even if the fees are not explicitly discussed.

Thus, in a sense, all settlement negotiations are simul-

taneous negotiations. One court has noted that a bifur-

eated rule “would be difficult to enforce since it is not

always possible to determine when the parties violate the

rule and engage in informal discussions on fees.” Moore,

762 F.2d at 1101 n.13."* Prohibiting simultaneous nego-

tiations therefore is not an effective solution to the eth-

ical problems presented by such negotiations.

Second, bifurcated negotiations produce two agree-

ments, rather than one, for the court to review. In addi-

tion to placing additional demands on the court’s time,

such a procedure detracts from the quality of judicial

review of settlements. Because the court does not have

the entire settlement agreement before it, it has less op-

portunity to become aware of and to correct any preju-

dice to the plaintiff that might have resulted from a

conflict of interest between attorney and client."

13 [Interviews with district court judges in the Third Circuit,

which is widely supposed to require bifurcated negotiations, reveal

vhat “exchanges of information” are even encouraged. See Comment,

Settlement Offers Conditioned Upon Waiver of Attorneys’ Fees:

Policy, Legal, and Ethical Considerations, 131 U. Pa. L. Rev. 793,

804-805, n.90 (1983). As has been noted, “[i]t sometimes will be

difficult to distinguish this type of information exchange from an

informal agreement.” A. Miller, Attorneys’ Fees in Class Actions

223 (1980). Hence, “the net result [of requiring bifurcated negoti-

ations] might be to increase informal agreements among counsel

or to encourage withholding agreements on fees from the judge

until after the settlement is approved.” /d. at 222.

14 One commentator has noted with respect to the settlement of

class action litigation, that “[o]nly if the aggregate of all payments

to be made by defendant is disclosed in the proposed settlement can

the class members and the court make any intelligent judgment

about the fairness and reasonableness of a proposed settlement.”

1 J. Moore, J. Lucas, H. Fink, D. Weckstein & J. Wicker, Mocre’s

Federal Practice, pt. 2, § 1.46, p. 75 (2d ed. 1985).

Bifurcated negotiations in fact may produce their own

ethical problems. The attorney’s fees provisions author-

ize an award of attorney’s fees to the prevailing party.

Although courts typically award these fees directly to

the attorney, both the Model Rules and the ABA Code

prohibit an attorney from acquiring an interest in the

litigation. See ABA Code, DR 5-103(a); Model Rules,

Rule 1.8(j). Consideration of the attorney’s fees at the

same time as all other aspects of the settlement prevents

tie appearance that the fees are a distinct part of the

settlement in which only the attorney has an interest.

C. Current Law Provides Ready Solutions to Any Po-

tential Ethical Conflict

Counsel who perceive ethical problems have numerous

avenues for solutions. Many problems can be avoided by

an open and frank exchange between the plaintiff’s at-

torney and his or her client about potential conflicts.

Model Rules, Rule 1.4. Retainer agreements also are

useful in preventing misunderstandings. See generally

Moore, 762 F.2d at 1105 n.17. If such routine practices

are not sufficient in a particular case, counsel may seek

help from the court, which is authorized by the Federal

Rules of Civil Procedure to provide review and guidance.

See, e.g., Fed. R. Civ. P. 16 (pretrial conference for

diseussion of settlement) ; Rule 23(e) (settlement of class

action only with approval of the court). If plaintiff’s

counsel does improperly compromise his or her client’s

interest, the Rules empower the court to review a settle

ment reached following simultaneous negotiations and to

provide relief. In addition, the fee-shifting statutes

themselves provide the court with significant power, to

date largely unused, to review settlement agreements.

Under the fee statutes, the court may “in its discretion”

award a reasonable attorney’s fee. The court thus pos-

sesses discretionary power to review the terms of any

settlement reached after simultaneous negotiations, in-

cluding, in an appropriate case, the authority to require

specific evidence of consent by the plaintiff.

In any event, to the extent that the problems that

arise from simultaneous negotiations are ethical prob-

lems, the appropriate solution is in the ethical, not the

legal, arena. The bar, through the guidance of formal

opinions and the enforcement device of disciplinary pro-

ceedings, is the proper vehicle for solution of ethical

problems. This Court should not address what is essen-

tially an ethics issue by endorsing a legal interpretation

of the fee-shifting statutes that will discourage settle-

ments and impede effective enforcement of the civil

rights laws.

CONCLUSION

For the foregoing reasons, this Court should reverse

and remand this case to the Ninth Circuit for recon-

sideration in light of the principle that parties in civil

rights cases may engage in simultaneous negotiations to

settle both the merits and the attorney’s fees.

Respectfully submitted,

J. PHILLIP JORDAN BENNA RUTH SOLOMON