If it’s an ethical issue, it’s testing whether you understand – in a broad sense, what lawyers do, what conflicts they may run into and why this matters i.e. how would this affect the law firm. The partner will be looking to see how you think about the problem (rather than knowing the particular legal process).
So here, the main issue is that opposing counsel is trying to force your hand by making a threat. It can help to think about the steps you’d take, rather than coming to a definitive answer. There’s a few ways to go about this, but one might be:
- If we’re talking an immediate response during the phone call, I wouldn’t be making a decision either way. We don’t make decisions for our clients, and definitely nothing as big as a settlement.
- I’d speak to a more senior lawyer to discuss the threat made against the client – see what the law says about making threats to reach a settlement. Maybe there’s some action we can take.
- Depending on how that goes, I’d speak to the client (hopefully with the senior lawyer) about the settlement. I presume we’d have a clear idea about what happened at this point and take a view as to how strong the case is. I’d also tell the client that opposing counsel threatened to report to the regulatory body. The client is likely to be displeased – so I’d reiterate that the client shouldn’t submit based on this – especially if the lawyer has acted in poor faith. Based on the findings above, I’d also present a view as to whether we’d be taking some kind of action against the lawyers.
- There are also more factors which (hopefully) the partner would share to you. I.e. it would matter how big the settlement was for. Whether the client had a strong case against it. Whether the client wanted to fight it. Reputational damage etc. If they’re not – you may want to ask the partner, as they demonstrate you consider the bigger picture questions i.e. if it’s a small claim, you’re not going to start a legal action fighting against the other law firm.