Opinion 208
Question Presented
A regular client (referred to below as the plaintiff) of a law firm had products in storage on the unsheltered premises of a storage company. While thus in storage, the products sustained damage as a result of what the plaintiff asserts to be a negligent discharge of corrosive acids from an adjoining chemical plant (referred to below as the defendant chemical company). Claim was made by plaintiff against the defendant chemical company, and the claim was directed to its insurer (called defendant insurance company) for handling.
Following some preliminary discussions between the plaintiff and the defendant insurance company, the plaintiff wrote to the defendant insurance company a letter proposing a formula for settlement. When delay ensued in obtaining a definitive response to such letter, the plaintiff turned the matter over to its regular counsel, a law firm consisting of eleven members and associates. A member of such firm conducted further negotiations with the defendant insurance company.
No settlement having been consummated, a suit has been filed by the plaintiff against the defendant insurance company and the defendant chemical company. One count in the complaint seeks recovery against the defendant insurance company on a contract for the settlement of the claim. The other count, in the alternative, seeks recovery against the defendant chemical company for the damages alleged to have been negligently caused.
This action is being handled by members or associates of the law firm other than the lawyer who negotiated with the defendant insurance company.
In the count against the defendant insurance company, it is alleged that, after negotiations between the member of the firm who was then handling the matter and the defendant insurance company, it was agreed between such member, acting on behalf of the plaintiff, and a representative of the defendant insurance company that the claim would be settled on the basis of the formula proposed in the plaintiff's letter to the insurance company. It is further alleged that, under the terms of such agreement, the dollar amount to be paid in settlement would be determined after the damaged products had actually been sold, and that the basic item of damage would be the amount by which the sum for which the plaintiff had a contract to sell the products exceeded the actual amount realized from the sale thereof in their damaged condition.
The inquiry states that it is not definitely known whether there will be any material variation between the testimony of the representative of the insurance company and the allegations of the complaint, in so far as they relate to the negotiations of the contract of settlement. However, the answer includes a general denial and a plea of the statute of frauds.
If, then, the testimony of the representative of the insurance company does not corroborate the applicable allegations of the complaint in every material detail, it will be necessary for the lawyer who conducted the transaction to testify as a material witness, and his testimony would support the allegations of the complaint respecting the making of the settlement agreement. Assuming that this lawyer does appear as a witness but does not otherwise participate, may the other members of this lawyer's firm ethically try the case?
18 Baylor L. Rev. 295 (1966)
APPEARANCE OF AN ATTORNEY AS A WITNESS FOR A CLIENT
If an attorney accepts employment in a matter with no knowledge that he will be a material witness, and a situation arises, prior to trial, about facts as to which the attorney is a material witness and concerning which he may have to testify, it is not a violation of the Canons of Ethics for the attorney to continue with the employment which he has previously accepted.
Canon 16.
Such action would not be a violation of the Canons of Ethics.
In this instance, the attorney accepted employment in the case before there was any indication that he might have to be a witness. Even now, it is not certain that he will have to testify. If he does, it will be because of a dispute regarding settlement negotiations which he undertook as a part of his employment in the case. Of course, it is unfortunate when a situation arises where a dispute occurs about facts as to which an attorney is a material witness. The fact that such a dispute arises, however, after the attorney has accepted employment should not disqualify him thereafter from going ahead with the employment that he has previously accepted.
The letter of inquiry indicates that if the attorney has to testify, he will leave the trial to his partners even though he is not disqualified under Texas Canon No. 16. Such conduct has been suggested by ABA Opinion No. 220, which holds that an attorney who is disqualified under ABA Canon No. 19 can leave the trial to his partners. Such procedure is also recommended because it will probably aid in furthering good public relations of the Bar, even though under our Canon it is not required and the lawyer himself may try the case if the necessity for testifying occurs during trial (with "trial" being broadly interpreted. (9-0.)
Bluebook Citation
Tex. Comm. On Professional Ethics, Op. 208 (1960)