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tion of MRPC 1.8(g), alleging that the attorney violated his ethical duty when representing multiple clients by failing to make adequate disclosure of all fac- tors of the aggregate settlement before obtaining consent to settle. The Scarmadelas argued that the


attorney’s duty to disclose “the partici- pation of each person in the settlement” required that each client be informed of the amount of settlement proceeds each was to receive. They also challenged the trial court’s apportionment, and asserted that the attorney should not obtain a fee as to their portion of the settlement because of alleged violations of the MRPC. The appellate court noted that the


deficiency of disclosure was not the withholding of information regarding the settlement, which was for the maxi- mum amount of insurance available, but “rather from the failure to formulate in advance the apportionment [of the settlement proceeds] Scarmadella, 126 Md. App. at 88. The court observed that the lack


of formulation of apportionment in advance of accepting the settlement left the clients with an “obvious un- certainty concerning apportionment when making their decision to consent to the settlement proposal.” Id. The court noted “on the other hand, the very failure to formulate an apportionment preserved the representation from the major conflict of interest that occurs in aggregate settlement cases.” Scarmad- ella, 126 Md. App. at 88. The court held that in cases in which


the “maximum available settlement” is reached, the apportionment of the settle- ment is “exactly the locus of the conflict for the attorney,” because however much one party receives automatically means a detriment to the other party or par- ties. Id. (emphasis in original).6


“If the 6


It is unclear as to what the court meant by the term “maximum available settlement” in this context. Logically, the conflict arises whenever a final sum certain is accepted in resolution of a case, whether or not the settlement is for the maximum amount of insurance available.


Fall 2008 Trial Reporter 37


multiple representation in such circum- stances is to continue, the conflict may be resolved only by informed consent of all the parties to the apportionment of the settlement.” Scarmadella, 126 Md. App. at 88. In refusing to set aside the settlement,


the court stated: “Finally, we must emphasize the great seriousness with which we take the ethical requirements of Rule 1.8(g) in cases involving an aggregate settlement. In the pres- ent case, we find the disclosure, in its specific context, to be adequate to protect the rights of the appel- lants. In doing so, we place great weight on the fact that the parties agreed that the settlement amount represented the maximum poten- tial recovery and, thus, was in the best interest of everyone. We stress, however, that the fullest disclosure is the best disclosure, and note that other courts have used an attorney’s failure of appropriate disclosure as the grounds for setting aside the ap- portionment of a settlement; as the


grounds for setting aside an entire settlement; and as partial grounds for disbarment in a disciplinary proceeding.”


Scarmadella, 126 Md. App. at 90, (inter- nal citations omitted). It is clear that the primary factor in-


fluencing the appellate court’s opinion in Scarmadella was the fact that the settlement was for the limits of the de- fendants’ available insurance, which the court characterized as the “maximum potential recovery”, rendering the settle- ment “in the best interests of everyone.” In other words, the court assumed, a priori, that the policy limits offer should be accepted and the details of the appor- tionment between the parties worked out later, even though this left the clients with “obvious uncertainty” and created “exactly the locus of the conflict for the attorney.” Given that determination of a conflict


of interest is a question of fact, it is far from clear that the appellate court would


(Continued on page 39)


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