APPROVED AS TO FORM – Why Attorneys Should Avoid Signing Settlement Agreements

This article discusses the potential risks for attorneys being personally bound by the terms of a settlement agreement when signing “approved as to form and content.” A California Supreme Court case clarified that an attorney’s signature may imply personal obligation if the agreement contains specific provisions directed at them.

By Brad Nakase, Attorney

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A settlement agreement that includes a signature section titled “Approved as to Form” for lawyers could potentially bind the attorney to the terms of the agreement. By signing in this capacity, the lawyer not only confirms that they have reviewed the agreement’s form and content but may also be interpreted as signaling their acceptance of the settlement’s terms. This signature could suggest that the attorney is committing themselves to the agreement, creating a responsibility for ensuring its execution and adherence, similar to that of a party to the settlement. In such cases, this type of signature may impose an obligation on the attorney to comply with the terms of the settlement.

Settlement agreements have traditionally concluded with a standard notation where the attorneys for each party sign under the words “approved as to form” or “approved as to form and content.” By signing with this phrase, an attorney typically does not expect to be personally obligated by the settlement’s terms. However, can such a signature actually bind the attorney? The California Supreme Court recently answered, “Yes,” in Monster Energy Co. v. Schechter, 7 Cal.5th 781 (2019).

“The legal question is whether counsel’s signature approving an agreement as to form and content for his clients’ signature precludes, as a matter of law, a finding that he also intended to be bound by the agreement.” Monster Energy Co. v. Schechter, 7 Cal. 5th 781, 792

Issue

The issue is whether an attorney who signs a settlement agreement with the notation “approved as to form and content” can be held bound by the confidentiality provisions of the settlement agreement, specifically when the agreement includes obligations for the attorney to maintain confidentiality.

Rule

A settlement agreement is a contract, and the legal principles of contract law apply. Mutual consent is required for a binding contract, and signatures are generally seen as objective manifestations of that consent. In anti-SLAPP motions, the defendant must demonstrate that the plaintiff’s claim arises from protected speech or petitioning activity, shifting the burden to the plaintiff to show a probability of prevailing. If the agreement contains provisions that reference attorneys and impose obligations on them, their signatures under the notation “approved as to form and content” may be scrutinized to determine if there was intent to be bound.

Analysis

Monster Energy sued attorney Schechter, alleging that he breached the confidentiality provisions of a settlement agreement by commenting on the settlement terms in a public article. The settlement explicitly included provisions binding both the parties and their counsel to confidentiality. The trial court found that Schechter was bound by the agreement despite his argument that his signature, which was under the notation “approved as to form and content,” did not indicate his consent to be bound by its terms. The court noted that the inclusion of attorneys in the agreement and the substantive provisions referring to them showed a potential intent to bind them. The Court of Appeal, however, reversed the decision, relying on previous case law indicating that such a signature typically only signifies that the attorney has approved the document for the client’s signature, not that the attorney consents to be personally bound. Nonetheless, the broader context of the agreement, especially the detailed provisions regarding confidentiality, could lead a fact-finder to reasonably conclude that Schechter intended to be bound. The case highlights the importance of context in determining whether attorneys are bound by settlement agreements they approve as to form and content.

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