Lawyers Signing Contracts, Part 2

I love it when I write about something that doesn’t make sense, and caselaw comes along to show that not only does it not make sense, it can also lead to a messy, expensive fight.

Today’s topic is the practice of having lawyers sign settlement agreements under the notation APPROVED AS TO FORM AND CONTENT. I wrote about it in this 2008 post, and here’s what MSCD 5.70 says:

An unusual aspect of settlement agreements is that sometimes they contain, under the notation APPROVED AS TO FORM AND CONTENT, signature blocks for legal counsel to the parties. It seems odd to have attorneys formally approve a settlement agreement. It’s the parties who are agreeing to settle—they don’t need, and shouldn’t seek, attorney approval. If the aim is to show that the parties had the advice of attorneys, it would make more sense to have the parties state as much in the settlement agreement.

Now along comes this post by Stacey Lantagne on ContractsProf Blog. It’s about a recent opinion of the California Supreme Court, Monster Energy Co. v. Schechter. Here’s what Stacey says:

The parties signed the settlement agreement. Their lawyers also signed the settlement agreement, under the preprinted notation “APPROVED AS TO FORM AND CONTENT.” One of the lawyers then made public statements about the settlement and was sued for breach of contract. The lawyer argued that they were not personally bound by the confidentiality obligations and their signature meant only that they had approved that their client be bound.

The trial court disagreed with the lawyer’s argument. The court of appeals reversed, finding that the attorneys were not personally bound based on the presence of the notation. This California Supreme Court ruling reversed again, concluding that the notation did not preclude a finding that the attorneys were personally bound. The agreement itself included counsel in its confidentiality provisions, and a signature on a contract usually indicates consent to be bound by that contract.

What a mess! I recommend that if anyone suggests that you, a lawyer, sign a contract you in this manner, you tell them to go eff themselves. Instead, have the parties state that they were represented by counsel (as recommended in MSCD) and leave it at that. You want the lawyers to keep information confidential? Make that explicit.

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.