The domestic attorney’s obligations when the client wants to repudiate a not-yet-court-approved agreement that attorney helped negotiate

Posted Friday, January 22nd, 2021 by Gregory Forman
Filed under Attorney-Client Relations, Not South Carolina Specific, Of Interest to Family Court Litigants, Of Interest to Family Law Attorneys

The vast majority of family court cases resolve by agreement. Typically those agreements are made outside of court. Such agreements must be reviewed and approved by the family court before they become valid and enforceable court orders. Moseley v. Mosier, 279 S.C. 348, 306 S.E.2d 624 (1983). In every family law case which results in an agreement made outside of court, there is some time period between the agreement being formally executed and the agreement being made a final order of the family court. In a few cases the client will have remorse over the agreement and desire to repudiate it.

Such agreements can be approved by the family court despite one party’s attempt to repudiate it. The family court’s general obligation to review and approve agreements involves two distinct questions–whether the parties freely and voluntarily entered into the agreement, and whether the substance of the agreement is fair. As to whether an agreement was entered into freely and voluntarily, the family courts will refuse to approve agreements under essentially the same circumstances that would render any other type of contract unenforceable, such as fraud, duress, or mistake. Swentor v. Swentor, 336 S.C. 472, 520 S.E.2d 330 (Ct.App. 1999). On the “fairness” issue the court examines the agreement’s fairness under all the circumstances. If the court determines that a parties’ generosity arose from a desire to quickly get out of the marriage or to atone for past wrongs, the court shall weigh these factors heavily. An agreement shall not be voided as unfair merely because the agreement did not divide the property on the basis of the parties’ relative incomes and contributions to the marriage. All of the relevant factors must be weighed. Funderburk v. Funderburk, 286 S.C. 129, 332 S.E.2d 205 (1985).

Part of the determination of “fairness” is whether the agreement is within the bounds of reasonableness under the facts in that case. To be fair an agreement can differ from how the family court would have resolved the matter. The court presumes that parties who freely and voluntarily enter into an agreement which is procedurally fair, were in a better position than any judge to know whether it is substantively fair. Burnett v. Burnett, 290 S.C. 28, 31, 347 S.E.2d 908, 910 (Ct. App. 1986). In Burnett, the court found an agreement was substantively fair when the wife was advised of her right to consult with an attorney, modified the agreement before signing it, and either knew of or had access to the husband’s financial information before signing the agreement.

When a client wishes to repudiate a not-yet-court-approved agreement, the attorney who assisted the client in negotiating that agreement is in an awkward spot. The very act of attempted repudiation challenges the attorney’s competence.

Sometimes the agreement is the product of an actual mistake. About a decade age, I represented a client who reached an agreement in which we double counted a home equity line of credit. It is one reason I now separate an asset’s value from its indebtedness in my equitable distribution spreadsheets. In that case I attempted to renegotiate the agreement to make it more fair. While the opposing counsel offered slightly better terms, they were not sufficient to overcome the mistake. As I was going to become an essential witness on the fairness of the agreement, my client had to retain new counsel and I had to put my malpractice carrier on notice. When an agreement is a product of mistake, the best practice is to acknowledge the mistake, attempt to remedy it, and elevate the client’s interests over the attorney’s if the mistake cannot be remedied through further negotiation.

There are no reported cases in which a party attempted to repudiate a not-yet-approved agreement because the other side committed fraud. In that circumstance, the client’s goals would not conflict with the attorney’s duties. The mutual goal should be to convince the family court to not approve the agreement based upon the other party’s fraud and to demonstrate that fraud.

In theory, an attorney could lead a client into entering an agreement that does not contain any mistake or fraud yet remains substantively unfair. In practice I have yet to see that happen. Should that occur, one assumes the attorney should notify his malpractice provider and be prepared to testify that he advised the client into entering a substantively unfair agreement. What the attorney should not do is attempt to convince the client that the agreement is actually fair, as such deceit would violate a number of ethical rules.

Most often clients seek to repudiate the agreement because they didn’t understand the strategy behind the trade offs and compromises that led to the final agreement. Since many agreements are reached in mediation, there may not have been time to explain the reasoning that led the lawyer to recommend provisions of the agreement that the client doesn’t like. Taking time to explain the agreement’s rationale to the client, including the compromises that helped the client achieve important goals, often persuades the client to accept the agreement as executed as being in the client’s best interests.

Finally, there are clients who wish to repudiate an agreement because they found the process rushed or felt under duress when they executed the agreement. Here the attorney who helped the client negotiate the agreement is in an awkward position, as that attorney is an essential witness to the procedural fairness of the agreement. The attorney should give the client an honest evaluation of his or her perception on the duress issue and advise the client to obtain a second opinion on whether to attempt to repudiate that agreement. That attorney should cooperate with the second counsel to provide an honest evaluation of the client’s level of duress. If the client then decides to repudiate the agreement, that attorney needs to withdraw from representation and assume he or she will become a fact witness on the trial to approve the agreement. See SCRPC 3.7, which, with exceptions that do not apply in this situation, reads, “A lawyer shall not act as advocate at a trial in which the lawyer is likely to be a necessary witness.”

It is always uncomfortable to represent a client who seeks to repudiate an agreement one helped draft and negotiate. Where the attorney believes the agreement was both procedurally and substantively fair, the attorney can explain that to the client. However it is ultimately the client’s decision whether to seek approval of the agreement or seek repudiation. Where there are legitimate concerns about an agreement’s procedural or substantive fairness, the attorney should honestly address those concerns, try to renegotiate the agreement, if possible, to address those concerns, but withdraw from representation if those concerns cannot be remedied through further negotiation. Unless one is attempting to repudiate an agreement based on the other party’s fraud, an attorney should not represent a client at a trial to repudiate an agreement that the attorney negotiated.

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