Hey kids, you can’t “settle around” your lawyers!

So, this really happened to me and my client. Recently. My client got sued. My client quickly (and I think beneficially) decided to settle. I told the Plaintiff’s lawyer that my client was willing to pay X to settle. Before the Plaintiff’s lawyer responded, the Plaintiff told my client that if my client were willing to pay him (directly – and not make the payment to his lawyer) a little less than X (I will call this amount “X-Minus”), that the Plaintiff would agree to settle. I told my client that he had better be careful, that a LAWSUIT was pending and if he was not careful, he might pay the Plaintiff the X-Minus – and still have a lawsuit pending against the company! I double checked and sure enough, there is a law that says that a voluntary dismissal cannot be made without the written consent of the ATTORNEY FOR THE PARTY applying therefore! Yup – the law can be found at California Code of Civil Procedure Section 581(j). The reason for this law you might ask? The apparent purpose of this law is precisely to prevent parties from “settling around” their lawyers who may have a lien for fees and costs on the settlement proceeds. Well, I think that was exactly what the Plaintiff was trying to do. What a mess it would be. Imagine, the Plaintiff would have my client’s money, the lawsuit would NOT be dismissed, and the Plaintiff’s lawyer would be wondering what type of scoundrels we all are (his client, me, and my client). Well, the good news is my client told the Plaintiff, “sorry, but we are going to do this by the book and through your lawyer.” Yes, my client paid X rather than X-Minus, put the lawsuit is now over, the dismissal filed, and the situation resolved. This is better than an ongoing lawsuit, angry Plaintiff’s lawyer, I am sure angry judge, and no doubt an angry client for me. No thank you.