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Bill O’Reilly Settlement Raises Ethics Issues for Lawyers

April 9, 2018, 8:26 PM

A recently released settlement agreement between former Fox News host Bill O’Reilly and a woman who accused him of sexual harassment raises ethics issues for the lawyers involved, legal ethics experts told Bloomberg Law.

Andrea Mackris’ 2004 settlement agreement with O’Reilly provides that her lawyer, Benedict P. Morelli and his then-firm, Benedict P. Morelli & Associates, P.C., agreed not to represent other women who might have a similar claim against O’Reilly. Morelli also agreed to advise O’Reilly “regarding sexual harassment matters,” to which Mackris waived any conflict. The agreement says both provisions are “an inducement to O’Reilly and Fox News” to settle.

In a statement sent to Bloomberg Law, Morelli denied representing O’Reilly during or after settlement negotiations with Mackris and said he got her the best deal for her he could.

The part of the agreement that is “so problematic” is the “limitation on the right to practice as part of a settlement,” University of Connecticut School of Law professor Leslie C. Levin told Bloomberg Law. This was to “lock [Morelli] up so that he could not do any damage down the line,” Levin said. If Morelli actually did work for O’Reilly while trying to finalize the agreement for Mackris, that could present a problem, Levin said.

The agreement came to light in a suit brought by Mackris as well as Rachel Witlieb Bernstein and Rebecca Gomez Diamond, who had each previously settled sexual harassment claims against O’Reilly. The women allege that O’Reilly and Fox News have defamed them and breached the non-disparagement clauses in the confidential settlement agreements by stating that the women didn’t complain about O’Reilly’s conduct, “portraying them as liars and extortionists.”

O’Reilly sought permission to file Mackris’ and Diamond’s settlement agreements, which he claims support his arguments, in redacted form and under seal. Judge Deborah A. Batts of the U.S. District Court for the Southern District of New York denied the request, so the agreements became public.

No More Plaintiffs

The 2004 Mackris settlement agreement says the Morelli firm won’t “represent, assist or cooperate with any other parties or attorneys in any action against O’Reilly” or Fox News involving “alleged sexual harassment issues.”

In a statement provided to Bloomberg Law, Morelli said that "[e]very step we took was to negotiate the best possible deal for Ms. Mackris. We worked extremely hard to secure a significant financial settlement for her.”

If a court finds that the restrictions placed on Morelli’s right to bring other claims or assist others in doing so violates legal ethics rules, the agreement says, the rest of the agreement will remain in force.

Levin told Bloomberg Law this was “clearly an effort to circumvent the professional rules, and not a very good one.”

Under an ethics rule the settlement agreement mentions by name- DR 2-108(B), which is now New York Rule of Professional Conduct 5.6(b)-"[i]n connection with the settlement of a controversy or suit, a lawyer shall not enter into an agreement that restricts the right of a lawyer to practice law.” ABA Rule 5.6(b) from 2004, also mentioned, is similar.

Neil Mullin, Mackris’ attorney, told Bloomberg Law that the rule says “a defense lawyer is not even allowed to ask for such a deal in a settlement agreement, and a lawyer’s not allowed to enter into such a deal.”

Levin said neither lawyer should have entered into this agreement. “Obviously they fully contemplated the possibility that this would not be enforceable” and were just “trying to tie up Morelli,” Levin told Bloomberg Law. And Levin found it “shocking” that the amendment to the Mackris agreement “straight out” says Morelli can’t represent a new plaintiff, who was mentioned by name. Levin said that is “so baldly improper.”

Professional responsibility lawyer Tom Spahn has posted a hypothetical that addresses this very situation. He concludes that under ABA Rule 5.6(b), a plaintiff’s lawyer can’t enter into a settlement agreement that prevents him from bringing similar suits on behalf of other plaintiffs against the defendant. Spahn quotes a 2000 opinion by the New York State Bar Association’s Committee on Professional Ethics that says an “agreement restricting a lawyer’s right to practice law may be enforceable even if it violates the disciplinary rule.”

Switching Sides, or Playing Both?

The settlement agreement also says Morelli “agrees to provide legal advice to O’Reilly regarding sexual harassment matters,” and that Mackris “waives the conflict of interest in O’Reilly’s retention” of Morelli.

In a statement provided to Bloomberg Law, Morelli said that "[t]he claim that I did not vigorously represent her, or that I represented O’Reilly during or after the settlement process, is absolutely false.”

Mullin told Bloomberg Law the agreement doesn’t say Morelli was “going to cease representation of Ms. Mackris” so “that’s not even side-switching.” He said it’s “an apparent conflict of interest involving current clients, which is covered by ethics rules, New York Rules of Professional Conduct 1.7 and 1.8.” Those rules govern conflicts of interest for current clients.

Levin told Bloomberg Law that it could be a “sham agreement” where Morelli “wasn’t really going to be doing anything for O’Reilly.” If Morelli actually did any work for O’Reilly, there could be a problem, Levin said.

But the agreement also says that “O’Reilly (i) has agreed to waive any and all actual or alleged conflicts of interest that may arise from Mackris’ retention of the Morelli Firm to enforce the terms of this Agreement, and (ii) has agreed not to seek to disqualify the Morelli Firm in any proceedings to enforce the terms of this Agreement.” Mullin said this agreement “contemplates something ridiculous” with Morelli simultaneously representing both Mackris and O’Reilly, creating an “impossibly conflicted position.”

If Morelli represented Mackris in enforcing the agreement, Levin told Bloomberg Law that he “probably still couldn’t use confidential information he obtained from O’Reilly,” and vice versa. That would need to be explained to Mackris and O’Reilly to get informed consent to proceed, Levin said.

Counsel for O’Reilly and Fox News did not respond to requests for interviews from Bloomberg Law.

Plaintiffs in the defamation case were represented by Smith Mullin, P.C. O’Reilly was represented by Hoguet Newman Regal & Kenney, LLP . Fox News was represented by Williams & Connolly LLP.

The case is Bernstein, et al. v. O’Reilly, et al., S.D.N.Y., No. 17-cv-9483.