CSG Law Alert: Get Client Authority to Settle in Writing

A recent Appellate Division decision serves as a reminder to attorneys to ensure that they have received proper authorization from their clients to settle a matter.  In Jesus Gonzalez v. Electronic Integration Services, LLC t/a Panurgy OEM, Docket No. A-0251-18T3 (App. Div. May 30, 2019), the court considered an appeal of a trial court’s order enforcing a settlement made on the record.  Counsel – who had represented the defendant throughout the litigation – had appeared at a settlement conference without his client and ultimately placed a settlement on the record, which was later confirmed by the plaintiff.  However, the defendant later refused to sign the settlement agreement, claiming that counsel lacked authority to bind it to the settlement.  The trial court granted the plaintiff’s motion to enforce the agreement on the basis that counsel had apparent authority to bind the defendant, based on his representation of the defendant throughout the litigation.

The Appellate Division agreed, concluding that “[g]iven counsel’s continuous representation of [defendant] through the litigation, concluding with placing the settlement on the record after two consecutive days of settlement conferences, there was a clear demonstration to the judge and [plaintiff] that he had the authority to reach a settlement.”  This holding should remind attorneys that they should ensure that they have unequivocal authority to settle a matter on behalf of their clients, to avoid any potential of a later malpractice claim.

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