Limits of Attorney's Authority to Settle on Client's Behalf

Oral settlement agreements of litigated matters are binding so long as there is clear offer and acceptance and a meeting of the minds as to the terms of the agreement. Blutcher v. EHS Trinity Hospital, 746 N.E.2d 863 (1st Dist. 2001).

In reviewing a disputed settlement of a case, the Court described the limits of an attorney's authority to settle on behalf of a client. The attorney must receive his or her client's express authorization to settle. Where settlement is out of court, the client is not bound without proof of the lawyer's express authority. If the settlement is stated on the record in open court or incorporated into the judgment, authority to settle is presumed unless rebutted by affirmative evidence that the lawyer's authority was lacking.

Based on the record in the case, settlement negotiations between counsel out of court did not evidence that the lawyer had express authority to the settlement terms. The plaintiff disavowed knowledge of the settlement, stating in his affidavit that he was completely unaware of ongoing settlement negotiations or the terms of the agreement that was reached by his lawyer. The plaintiff in this medical malpractice case filed a petition to vacate dismissal of the settling party, on the grounds that his attorney settled the claim against one of the defendants without his knowledge, had the release documents forged, and kept the $200,000 settlement proceeds. The court vacated the dismissal and reinstated the claim against the settling defendant on the grounds that the plaintiff had not authorized his attorney to settle the case. The settling defendant failed to offer sufficient evidence by way of counter-affidavits to rebut the plaintiff's affidavit that he did not authorize the settlement and had no knowledge of the negotiations or settlement payment.