Can Attorneys be Bound by Provisions in their Client’s Settlement Agreements?

After reviewing a client’s settlement agreement, it is not uncommon for attorneys to sign beneath a notation “approved as to form” or “approved as to form and content.”  When an attorney provides such a signature, is he or she bound by the contents of the settlement agreement?  Possibly.  The California Supreme Court recently held that counsel’s signature approving a release as to content and form does not preclude a factual finding that counsel both recommended that his or her client sign the document and intended to be bound by its provisions.  Monster Energy Co. v. Schechter, Cal. S. Ct. Case No. S251892 (published July 11, 2019).

The settlement agreement in this case contained confidentiality provisions purported to impose duties of confidentiality on the parties and their counsel.  The parties signed the release and the attorneys signed under the notation that they approved the agreement as to form and content.  When the plaintiffs’ attorney, Bruce Schechter, allegedly violated the confidentiality provisions of the agreement, Monster Energy Company sued him.  Mr. Schechter sought dismissal under California Code of Civil Procedure section 425.16.

The California Supreme Court found that an attorney’s approval as to form and content affirms that counsel has read the agreement, the agreement embodies that parties’ agreement, and counsel sees no obstacle in having his or her client sign it.  However, the Court did not stop there.  Instead, it went one step further and posed the following legal question:  whether counsel’s signature approving an agreement as to form and content for his or her client’s signature precludes, as a matter of law, a finding that counsel also intended to be bound by the agreement.  The Court concluded that it did not.  The Court considered that the body of the settlement agreement contained several substantive provisions imposing duties on the attorneys.  Thus, a factfinder could conclude that Mr. Schechter agreed to be bound by the terms of the agreement when he signed.  The agreement had to be examined as a whole, including provisions that referenced counsel.

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