Opinion ID: 854139
Heading Depth: 3
Heading Rank: 1

Heading: An attorney's implied authority

Text: Authority is the power of the agent to affect the legal relations of the principal by acts done in accordance with the principal's manifestations of consent to him. RESTATEMENT (SECOND) OF AGENCY § 7 (1958). Authority can be express or implied and may be conferred by words or other conduct, including acquiescence. Id. at cmt. c. Implied authority can arise from words used, from customs, or from the relations of the parties. Id. The agent is authorized if the agent is reasonable in drawing an inference from the principal's actions that the principal intended to confer authority. Id. at cmt. b. [1] It is well settled that an attorney, by virtue of the representation, becomes a powerful agent with a great deal of authority. Retention confers on an attorney the general implied authority to do on behalf of the client all acts in or out of court necessary or incidental to the prosecution or management of the suit or the accomplishment of the purpose for which the attorney was retained. United Farm Bureau Mut. Ins. Co. v. Groen, 486 N.E.2d 571, 573 (Ind.Ct.App.1985). See also Miedreich v. Rank, 40 Ind.App. 393, 397, 82 N.E. 117, 118 (1907) (attorney is more than a mere agent of the client; attorney is the sole manager of the business committed to his care). Decisions relating to trial tactics for examplewhen to object, what motions to file, which arguments to presentor how to negotiate are left to the attorney. See, e.g., Hoffman v. Hoffman, 115 Ind.App. 277, 57 N.E.2d 591 (1944) (attorneys could agree to change of venue without client's consent). [2] As a general proposition an attorney's implied authority does not extend to settling the very business that is committed to the attorney's care without the client's consent. The vast majority of United States jurisdictions hold that the retention of an attorney to pursue a claim does not, without more, give the attorney the implied authority to settle or compromise the claim. [3] The rationale for this rule is that an attorney's role as agent by definition does not entitle the attorney to relinquish the client's rights to the subject matter that the attorney was employed to pursue to the client's satisfaction. In Indiana, the rule that retention does not ipso facto enable an attorney to settle a claim has a solid if distant foundation. Several older cases either hold or indicate in dicta that an attorney who settles or compromises a claim without express authority from the client does not bind the client. Union Mut. Life Ins. Co. v. Buchanan, 100 Ind. 63, 76 (1885); Combs v. Combs, 56 Ind.App. 656, 660, 105 N.E. 944, 946 (1914); Jennings v. South Whitley Hoop Co., 50 Ind.App. 241, 249, 98 N.E. 194, 196 (1912); Miedreich v. Rank, 40 Ind.App. 393, 397, 82 N.E. 117, 118 (1907); Repp v. Wiles, 3 Ind.App. 167, 171, 29 N.E. 441, 442 (1891). As summed up in Combs, 56 Ind.App. at 660, 105 N.E. at 946: Where an attorney is acting under an employment to collect a claim or conduct a lawsuit, such employment does not give him authority to compromise such claim or suit [and bind the client] without the consent of the client, except in cases of emergency, where the interests of the client reasonably appear in jeopardy and delay for consultation would seriously imperil such interests. See also Miller v. Edmonston, 8 Blackf. 291 (1846) (attorney has no authority to compromise with a debtor or bind his principal by any arrangement for the satisfaction of a debt, short of an actual collection of the money); accord Wakeman v. Jones, 1 Ind. 517 (1849). Some of these cases explicitly focused on the distinction between the implied authority to conduct litigation and the authority to settle a claim. In Miedreich for example, the court described the scope of an attorney's authority as including all the proceedings in court to enforce the remedy, to bring the demand, cause of action, or subject-matter of the suit to trial, judgment and execution but also stated that this authority did not extend to an ability to compromise, settle, surrender, or impair the cause of action, or the subject-matter of litigation without the consent of [the] client. 40 Ind.App. at 397, 82 N.E. at 118 (internal quotation marks and citation omitted). After a long hibernation, in 1996 this general rule was again recognized by the Indiana Court of Appeals in Gravens v. Auto-Owners Ins. Co., 666 N.E.2d 964 (Ind.Ct.App.1996), trans. denied, 683 N.E.2d 586 (Ind.1997) (table). [4] As the Court of Appeals indicated, parties do not normally assume that an attorney in informal negotiations has authority to bind the client. [5] It is not too much to ask that other parties dealing with an attorney verify the authority to settle before they may expect the negotiation with the attorney to bind the client. Accordingly, the general rule in Indiana is that retention of an attorney does not without more carry implied authority to the attorney to settle. [6]