Settlements and the Ethical Burden on Attorneys

A Video Explaining the Ethical Requirements on a Lawyer to Settle

Settlements of litigation, whether funded by insurance or not, raise ethical issues that all parties and their attorneys must deal with before the settlement is effected. The decision to settle belongs to the plaintiff. This is especially important in cases with multiple parties and multiple attorneys.

The Third US Circuit Court of Appeals revived a proposed class action suit against a group of attorneys from southern states brought by more than 2,600 former clients from northern states who say they were cheated out of their fair share of $400 million in asbestos personal injury settlements in the Mississippi state courts when the attorneys gave larger payouts to southern plaintiffs. The northern plaintiffs claimed that their share was reduced because the southern attorneys wanted to allocate a greater percentage of aggregate settlements to southerners in order to minimize the percentages paid to the northern plaintiffs’ local counsel.

The plaintiffs in Huber v. Taylor, 469 F.3d 67 (3d Cir. 10/31/2006) were steelworkers from Pennsylvania, Ohio, and Indiana who joined a massive Mississippi asbestos suit. The defendants were attorneys from Mississippi, North Carolina, and Texas.

The suit alleged that the northern plaintiffs were never made aware of a complex series of agreements between and among the attorneys that, they say, ultimately led to their receiving smaller payouts than southern plaintiffs. The northern plaintiffs had all retained attorneys in their home states — referred to in the case as “local counsel” — who had in turn struck deals with a Texas attorney who served as co-counsel. According to the suit, by cheating the northern plaintiffs of their fair share, the southern attorneys saved more than $10 million that would have been paid to the northern clients’ local counsel.

© 2021 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders.

He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business.

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He is available at http://www.zalma.com and zalma@zalma.com. Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award. Over the last 53 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

Go to training available at https://claimschool.com; articles at https://zalma.substack.com,  the podcast Zalma On Insurance at https://anchor.fm/barry-zalma;  Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at https://www.rumble.com/zalma ; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library/  The last two issues of ZIFL are available at https://zalma.com/zalmas-insurance-fraud-letter-2/  podcast now available at https://podcasts.apple.com/us/podcast/zalma-on-insurance/id1509583809?uo=4