“APPROVED AS TO FORM” DOES AN ATTORNEY BECOME PERSONALLY BOUND?

Posted: December 3, 2019 |

Settlement Agreements have long ended with a routine notation by which attorneys for the respective parties sign under the words "approved as to form" or "approved as to form and content." In signing the settlement agreement with this phrase, an attorney usually does not expect to be personally bound by the provisions of the settlement agreement. But is it possible that he or she will be bound by such signing? The California Supreme Court recently answered, “Yes” in Monster Energy Co. v. Schechter, 7 Cal.5th 781 (2019).  

In that case, the settlement agreement contained several provisions purporting to impose confidentiality obligations on the parties and their attorneys. The plaintiffs’ attorney, Schecther, signed that agreement under the notation “approved as to form and content.” When the plaintiffs' counsel allegedly violated those obligations, the defendant sued Schechter and his firm for, among other things, breach of the agreement’s confidentiality obligations.  Schecter (now a defendant) then sought dismissal by filing a motion under California's Anti-SLAPP (strategic lawsuit against public participation) statute (CCP § 425.16). Schecter argued that the suit lacked minimal merit because he and his firm were not bound by the confidentiality provisions.

So what does the phrase “approved as to form and content” really mean? The California Supreme Court determined that "approved as to form and content" is an affirmation that "counsel has read the document, it embodies the parties’ agreement, and counsel perceives no impediment to his client signing it.”  (Citing Freedman v. Brutzkus, 182 Cal.App. 4th 1065, 1070 (2010)).  That much was unremarkable, but the court went further. The court stated "the legal question is whether counsel’s signature approving an agreement as to form and content for his clients’ signature precludes, as a matter of law, a finding that he also intended to be bound by the agreement." Citing references to the parties' attorneys in the confidentiality provisions of the settlement agreement, the court held that an attorney’s signature on a document, with a notation that it is approved as to form and content does not, as a matter of law, preclude a factual finding that the attorney intended to be bound by the document’s terms.

To be sure, the Supreme Court did not hold that an attorney becomes personally bound to the substantive terms of the settlement agreement automatically, every time an attorney approves a settlement agreement as to form and content. Where the agreement contains no provision purporting to impose an obligation on the attorney, the notation of approval may signify only approval, presumably. But where the agreement’s substantive provisions impose duties on counsel, his or her signature may reflect the parties’ intent that he or she be personally bound. That possibility raises an issue of fact for the trier of fact that cannot be disposed of on a pretrial motion.

The parties to a settlement agreement should consider carefully whether they intend their respective attorneys to be personally bound by any provisions in the settlement agreement, such as confidentiality, and be sure the settlement agreement accurately reflects that intention.

The attorneys at North & Nash, A Professional Law Corporation have vast experience in litigation and drafting of agreements.  Please contact us - and we’ll be happy to assist you.