Twenty minutes before a hearing, counsel for the defendant offers £85,000 inclusive of costs on a claim your fee earner valued at £110,000 a month ago. Confident the client wanted the matter over before Christmas, the fee earner agrees the figure in the corridor, with nothing reserved, then rings the client from outside the building to tell her. She says she never agreed to accept anything below £100,000. Every figure in this piece is illustrative.
By that point there is, in most such cases, a binding compromise. A firm on the record as conducting litigation generally carries apparent authority to compromise the claim on terms within the proceedings, and the other side is entitled to rely on that authority unless it knew, or had notice, of a limit the client had placed on it. Counsel for the defendant knew of none. The court will usually hold the client to the £85,000, and the dispute that remains is between her and your firm, about what she told the fee earner, when, and what, if anything, she lost by it. She will say £15,000, and she will have to prove it, since £100,000 was her floor rather than a figure the defendant had offered.
Open the file and there is little to find. An email from eight months earlier says she would settle "if the number is sensible", and nothing since. The fee earner acted in good faith on an understanding nobody wrote down, and the firm now defends it against a client who remembers differently.
The SRA Standards and Regulations, in principle, expect a solicitor to act in each client's best interests, to act only on the client's instructions or those of someone the client has authorised, and to keep the client in a position to make informed decisions about the matter. A settlement agreed outside what the client authorised sits badly with each of those whatever the merits of the figure, and a client who learns of her settlement from a phone call in the car park has made no decision at all.
Written authority, taken before anyone negotiates
Take settlement authority in writing before any negotiation, mediation or hearing at which an offer is likely. A letter or email to the client sets out the proposed authority and the client confirms it in writing. State the figure, as the least the client will accept or the most the client will pay. State the terms beyond money that matter to this client, such as confidentiality, the timing of payment, any admission and the form of order. Say whether the figure includes costs. Give the authority an end date, so that it lapses and prompts a fresh conversation.
Clients change their minds, after an expert's report or at the door of court when the risk becomes real to them. Treat every change as you treated the original. Confirm it in writing, date it, put it on the file and mark the earlier authority superseded. A change agreed on the day of a hearing goes to the client by email before the fee earner returns to the negotiation, two lines if that is all time allows.
Check every offer against what the file holds. Before an offer goes out or an acceptance goes back, compare it with the current written authority, and where it falls outside take fresh instructions first. When the client cannot be reached in time, tell the other side in terms that any agreement is subject to the client's approval. Those words, said in time, stop a binding agreement arising until the client approves, because the other side now has notice of the limit. A supervisor can test the whole discipline with one question. Does this file hold written authority, in date, covering the next point at which the case might settle?
Where Henry reads for the authority
The difficulty is coverage. An illustrative firm with eighty live litigation files has eighty authorities to keep current, and the files that need it most are the ones changing week by week.
Henry, the Bracton assistant, works inside the case management system your firm already runs, LEAP, Clio, Proclaim or another, through the interface that system provides, and opens every live file each working night. He cannot hear what a client said in a corridor. He reads what your system holds, and the kind of file his overnight note exists to raise is the one listed for hearing with nothing on it that reads as settlement authority. Ask him whether a file holds written authority and he answers from the papers on that file, naming the paper he relied on. He drafts the letter asking for authority, or confirming a change, from your own precedents, and every draft waits for a qualified fee earner to sign off before it leaves the firm. The approved letter and the client's reply then sit on the file where the next check finds them.
To find out how many of your live litigation matters would go into their next negotiation with no written authority behind them, book a client account review.