to compromise his client's claim, or to release his client's cause of action. He cannot bind his client by any act, which amounts to a surrender, in whole or in part, of any substantial right.
McClintock v. Helberg, 168 Ill. 384, 391-92, 48 N.E. 145, 147-48 (1897) (citations omitted); accord Danziger v. Pittsfield Shoe Co., 204 Ill. 145, 149-50, 68 N.E. 534, 535-36 (1903); Hopkins v. Holt, 194 Ill. App. 3d 788, 793, 551 N.E.2d 400, 403-04, 141 Ill. Dec. 407 (1st Dist. 1990); Kazale v. Kar-Lee Flowers, 185 Ill. App. 3d 224, 227-28, 541 N.E.2d 219, 221-22, 133 Ill. Dec. 382 (2d Dist. 1989) (citing Danziger). Federal law also requires express authority for attorneys to bind their clients to settlements. Bradford Exch. v. Trein's Exch., 600 F.2d 99, 102 (7th Cir. 1979); Balavender v. Shelley, 587 F. Supp. 1054, 1056 (N.D. Ill. 1984).
Adams, as the party seeking to enforce the alleged agreement, has the burden of showing that Lohwater had express authorization to enter into the agreement on Towers, Perrin's behalf. Danziger, 204 Ill. at 149, 68 N.E. at 536; Kazale, 185 Ill. App. 3d at 229, 541 N.E.2d at 223.
Nonetheless, Adams seeks to evade the rule requiring express authority for attorney settlements by arguing that the rule does not apply until a lawsuit has been filed, and does not apply to in-house counsel for corporations. Adams, however, has not offered any authority for these purported exceptions to the rule; he merely argues that pre-litigation settlements and in-house counsel are outside the facts of the cases establishing the rule.
These arguments are unavailing because Adams's purported exceptions are inconsistent with the rule's rationale. There is no basis, logically or legally, for finding that the filing of a lawsuit triggers the express authority requirement for settlements. Clients who hire an attorney to handle a particular matter need just as much protection from unauthorized settlements before a lawsuit is filed as they would after a lawsuit is filed. Adams offers no reason to think otherwise. The passage quoted above from McClintock clearly provides that express authority is required before an attorney can "surrender . . . any substantial right" of a client. McClintock, 168 Ill. at 392, 48 N.E. at 148. Moreover, corporations with in-house counsel are no less entitled to this protection than corporations with outside counsel. The attorney-client relationship is essentially the same when representation is by in-house or outside counsel. See, e.g., Textor v. Board of Regents, 711 F.2d 1387, 1396 (7th Cir. 1983) (defendant with in-house counsel entitled to share in attorney fee award; "a prevailing party's decision as to how to engage counsel should have no bearing upon the court's decision to punish malfeasant counsel"); Herbster v. North Am. Co. for Life and Health Ins., 150 Ill. App. 3d 21, 26-27, 501 N.E.2d 343, 346, 103 Ill. Dec. 322 (2d Dist. 1986) (in-house counsel for corporation cannot sue for retaliatory discharge; "we cannot separate plaintiff's role as an employee from his profession"), appeal denied, 114 Ill. 2d 545, 508 N.E.2d 728, cert. denied, 484 U.S. 850, 108 S. Ct. 150, 98 L. Ed. 2d 105 (1987).
Towers, Perrin can therefore only be bound by Lohwater's agreement with Adams if Lohwater had express authority, or if Towers, Perrin ratified the agreement. Apparent authority cannot be sufficient.
Adams has filed to show that the uncontroverted facts establish that Lohwater had express authority to settle with Adams. The Towers, Perrin board's executive committee apparently gave such express authority to Giesinger, who clearly opposed Lohwater's agreement as soon as he learned its details. Giesinger's assignment of the negotiations to Lohwater was not specific enough, based on the materials submitted to the court, to constitute a grant of express authority to settle upon Lohwater, assuming that Giesinger could delegate such authority, which has not been shown.
Additionally, the uncontroverted facts do not establish that Towers, Perrin ratified or adopted the agreement. Ratification, either express or implied, "occurs where the principal with knowledge of the material facts of the unauthorized transaction, takes a position inconsistent with non-affirmation of [the] transaction." In re Marriage of Clarke, 194 Ill. App. 3d 248, 255, 550 N.E.2d 1220, 1224, 141 Ill. Dec. 174 (1st Dist. 1990) (quoting Hofner v. Glenn Ingram & Co., 140 Ill. App. 3d 874, 883, 489 N.E.2d 311, 316, 95 Ill. Dec. 90 (1st Dist. 1986)). Ratification can only occur where the principal had both full knowledge and the option of accepting or rejecting the benefits of the unauthorized transaction. Bank of Waukegan v. Epilepsy Found. of Am., 163 Ill. App. 3d 901, 908, 516 N.E.2d 1337, 1341, 114 Ill. Dec. 943 (2d Dist. 1987). Additionally, acquiescence -- waiting to oppose an unauthorized transaction until after the benefit or detriment of the transaction becomes clear -- may constitute ratification if the principal had a duty under the circumstances to repudiate the transaction. Forkin v. Cole, 192 Ill. App. 3d 409, 427, 548 N.E.2d 795, 807, 139 Ill. Dec. 410 (4th Dist. 1989).
There was no apparent delay in Towers, Perrin's opposition to the alleged agreement Lohwater reached with Adams's attorney. Once Giesinger learned of the details of the agreement, he opposed it and directed that Adams's attorney, Slater, be informed that there was no agreement. Although the agreement was partially performed -- Adams's Towers, Perrin stock was repurchased at the agreed value -- it is disputed as to whether that part of the deal was beneficial to either party. Adams contends he received a lower interest rate than he was entitled to under a formula in the Towers, Perrin bylaws. Towers, Perrin contends that Adams received a $ 6,000 dividend payment to which he was not entitled, and that the valuation date for his stock was a year later, and the price therefore higher, than provided for in the bylaws. Moreover, the stock repurchase check was prepared at Lohwater's direction. It is not clear how much Giesinger, or any higher authority within Towers, Perrin, knew about that action. Adams has therefore failed to show, for purposes of summary judgment, that Towers, Perrin ratified the alleged severance agreement.
In sum, Adams was required under the circumstances to show either that Lohwater had express authority to enter into the alleged severance agreement with Adams or that Towers, Perrin ratified that agreement. Adams, however, failed to show that the uncontroverted facts establish either of those possibilities. Consequently, Adams's motion for summary judgment on Count III of his amended complaint is denied. In view of this disposition, the court finds it unnecessary to decide whether the uncontroverted facts establish a "meeting of the minds" between Lohwater and Adams's attorney.
For the above reasons, Adams's motion for summary judgment on Count III of his amended complaint is denied.
IT IS SO ORDERED.
CHARLES RONALD NORGLE, SR., Judge
United States District Court