Ratifying Settlement After Firing Lawyers Still Obligates Client to Pay Contingency Fee

A recent decision from the California Court of Appeal highlights a critical principle in contingency-fee litigation: a client who later ratifies a settlement negotiated without prior authorization may still be obligated to pay the original attorneys their full contractual fee.

In Chong v. Mardirossian Akaragian LLP (2025), Division Five of the Second District Court of Appeal affirmed summary judgment awarding a law firm more than $2.7 million in attorney fees after the client ultimately signed a settlement agreement the firm had negotiated earlier without his express consent.

The court concluded that the client’s later decision to accept the settlement amounted to voluntary ratification, triggering the fee provisions of the original contingency agreement.

Case Background

The dispute arose from a catastrophic freeway collision in 2016.

Christopher Chong stopped his Porsche 911 in the fast lane of the 134 Freeway in the early morning hours and fell asleep while the vehicle was parked. Less than ten minutes later, a truck collided with the car, leaving Chong with catastrophic injuries.

Chong retained Mardirossian Akaragian LLP to pursue a personal injury action against multiple defendants, including the truck driver and his employer. The contingency agreement entitled the firm to 45% of any recovery obtained through settlement or judgment.

The $6 Million Settlement

By 2022, the case had narrowed, and mediation had failed. The law firm continued negotiating with the remaining defendants.

In May 2022, the defense agreed in principle to a settlement exceeding $6 million. Although Chong had previously offered to settle for that amount, he had not specifically authorized the firm to finalize the agreement at that time.

Concerned about how much money would remain after liens and fees, Chong consulted new counsel and ultimately terminated the firm.

A Change of Course

After hiring new lawyers, Chong faced a motion by the defendants to enforce the settlement that had already been negotiated.

Rather than oppose the motion and proceed to trial, Chong signed the agreement in August 2022 and accepted the $6 million-plus recovery.

He later sued the original firm, arguing that the settlement had been negotiated without authorization and that the attorneys should not receive their contingency fee.

The Court’s Decision

The Court of Appeal rejected that argument.

Presiding Justice Brian Hoffstadt explained that under long-standing agency principles, a client may ratify an agent’s unauthorized act—including a settlement—if the client later accepts the transaction with full knowledge of the circumstances.

Once that ratification occurs, the agent’s prior lack of authority is effectively cured.

Here, the court found that Chong had complete knowledge of the situation and had the ability to reject the settlement and proceed to trial. Instead, with the assistance of new counsel, he chose to accept the agreement and its benefits.

That decision constituted voluntary ratification.

Why the Duress Argument Failed

Chong argued that he signed the settlement because he had “no realistic alternative.”

The court disagreed.

Even if the firm had urged him to settle or expressed uncertainty about trial representation, Chong still had the option to challenge the settlement and proceed with litigation. The availability of that option defeated any claim that his acceptance was involuntary.

As the court noted, the settlement did not impose a loss that needed to be minimized—it provided a recovery of more than $6 million.

Key Legal Principle

The ruling reinforces an important rule in agency and contingency-fee law:

A client ratifies an unauthorized settlement when:

• The client chooses to accept the settlement and its benefits
• The client has full knowledge of the settlement terms
• The client has the power to rescind or challenge the agreement

In this case, that meant the firm was entitled to its 45% contingency fee, totaling more than $2.7 million, along with prejudgment interest.

Why This Decision Matters

Disputes over attorney authority and settlement ratification arise more often than many lawyers expect, particularly in high-value personal injury litigation.

This decision illustrates how courts analyze those disputes:

• Unauthorized settlements may still become enforceable through ratification
• Clients who knowingly accept settlement benefits may remain bound by contingency agreements
• Claims of duress require evidence that the client truly lacked meaningful alternatives

For litigators, the case is a reminder that post-settlement conduct can determine fee entitlement just as much as the original retainer agreement.

Bottom Line

Even when a settlement is initially negotiated without express authorization, a client’s later decision to accept the agreement can bind the client to the terms of the original contingency contract.

Once a settlement is ratified with full knowledge and the opportunity to reject it, courts are unlikely to relieve the client of the agreed-upon attorney fee.

If you are handling a significant injury matter that requires experienced trial counsel from intake through resolution, we welcome the opportunity to collaborate.

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