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Advisory Opinion 30

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State Disciplinary Board
Advisory Opinion No. 30

November 17, 1982

Ethical Propriety of Agreement by Which Attorney's Fees are Paid by Opposing Party

Question: A is the plaintiff in a lawsuit against B which is pending in the Northern District of Georgia. B is the debtor in a proceeding in the United States Bankruptcy Court in the Northern District of Texas. In addition, there is pending in the same Bankruptcy Court in Texas an action in which B is the plaintiff and C, D, and E are defendants. E is also a full-time employee of A. B contends that C, D, and E are or may be liable to B for all or part of the claims being asserted against B by A in the Georgia litigation.

A and B have agreed upon a complete settlement of all matters in controversy between them in a settlement agreement which must be approved by the Bankruptcy Court.

The settlement agreement provides that the Georgia litigation will be dismissed with prejudice. B will ask the Bankruptcy Court to dismiss E as a defendant in that Court, without prejudice to further proceedings by B against C and D, and will give E a covenant not to sue. however, the parties recognize that there is a possibility that C and/or D will assert claims against E and/or A, seeking contribution from either or both of them, either in the pending action in the Bankruptcy Court or in some other action. In order to protect both E and A, B has agreed to indemnify and hold them harmless from "expenses and costs of defending such claims, including reasonable and necessary attorneys' fees," subject to obtaining a written opinion from the State Bar of Georgia that such agreement is ethical and is not a violation of the Canons of Ethics.

Opinion: It is the opinion of the State Disciplinary Board of the State Bar of Georgia that the foregoing agreement is ethical and is not a violation of the Canons of Ethics, provided that a full disclosure of all pertinent facts has been made to all parties who may be affected by such agreement, give their written consent to it; and, provided further, that the attorneys at all times exercise their independent professional judgment for their respective clients regardless of who is responsible for paying the fees of the attorneys.

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