The insurer brought suit to enforce the settlement and vacate the arbitration award. The trial court found in favor of the defendant, finding that the defendant’s attorney had not “subscribed” his settlement email, as required by New York law regarding attorney agreements, by retyping his name into the email before sending it.
The appellate court reversed, holding that the attorney’s standard signature block on his email was sufficient to bind his client. The court held that the “distinction between prepopulated and retyped signatures in emails reflects a needless formality that does not reflect how law is commonly practiced today.” The email—not the nature of the signoff within it—reflected the parties’ intentions, the court held.
The Times Are Changing
“This decision takes into account the less formal ways in which parties and their counsel may communicate—without needing a revision to the statute,” notes Betsy A. Hellmann, New York, NY, cochair of the Section’s International Litigation & Dispute Resolution Committee. “Indeed,” she adds, “the court’s decision on how to interpret the statute’s requirement that a writing be ‘subscribed’ takes into account that ‘electronic storage of records has become the norm, email has become ubiquitous, and statutes allowing for electronic signatures have become widespread.’”
This less formal email practice comes with risks. “The automatic inclusion of a signature block in an email does not reflect the same deliberate intent to subscribe a document as a wet signature,” states Blanca F. Young, San Francisco, CA, cochair of the Litigation Section’s Expert Witnesses Committee. “I think many attorneys would be surprised to learn that a court might treat their email signature block as an electronic signature,” she adds, noting that attorneys should “take care to engage in email communications with that in mind.”
What Is the Worst that Can Happen?
Leaders note that the impact of the court’s holding is limited. “Not every attorney email will be treated as evidence of a binding settlement,” suggests Hellmann, pointing to the court’s language that “an email settlement must, like all enforceable settlements, set forth all material terms.” Here, Hellman explains, “there was only a single issue to decide, the amount of the settlement. That won’t be true for many complex commercial matters.” Nevertheless, Hellman advises that email disclaimers should be utilized to avoid risk. “When in the midst of settlement negotiations, counsel can consider including language in every email” that makes a binding settlement conditioned upon “a separate writing signed by the client,” she says.
Consenting to settlement is not the only potential hazard, advises Young. While the decision to settle belongs solely to the client, “consent is not always required for other agreements, such as those relating to litigation strategy or logistics—e.g., a briefing schedule. There may therefore be a risk that attorneys will bind their client to an agreement before they have had an opportunity to confirm the agreement with the client,” she cautions. Asked whether the court here reached the “right” result, Young concludes: “Attorneys should be aware that courts have adopted this rule and take care to engage in email communications with that in mind.”