Keeping Your Settlement Agreement Out of Jeopardy

As most claims professionals and lawyers know, the majority of civil cases these days resolve via settlement.  Resolution is generally memorialized by way of written settlement agreements (a/k/a “receipt and release”).  Along with the filed stipulation of dismissal, the settlement agreement is the magic document that enables you to close the file.  And a closed file is a good file.

Post by Christian Stegmaier

Settlement agreements are contracts.  A fundamental component of a contract is the existence of mutual assent.  This means all of the parties are on the same page when it comes to what is being agreed upon.  This blog entry is about getting to that mutual assent with a minimum of disagreement and fuss.

Detail points that are typically desired and/or required by settling defendants include:

            
      ·        No admission of liability

All of the above terms are excellent and should be included in most settlement agreements, especially those involving personal injury.  However, notwithstanding how we may feel about the necessity of including these conditions in a settlement agreement, (for whatever reason) often there is push back from the plaintiff’s counsel.  Where we encounter the most headwinds in settlement agreement discussions are the provisions involving confidentiality, CMS (especially any mention of set-aside), and defense/indemnity involving lienholders.

While we can (sometimes) appreciate opposing counsel’s opposition to our proposed settlement agreement, we still want our desired/mandatory provisions in the deal. So, how do you make your life easier when it comes to ensuring all of your crucial deal points are included in the settlement agreement? Talk to the other side about the pertinent terms and conditions you need in a prospective written agreement before agreeing to settle the case.  One simple strategy is to send a letter to opposing counsel when settlement discussions appear to be on the horizon (e.g., like before mediation) that expressly outlines those terms and conditions that your client requires in the final written agreement. 

If there is going to be disagreement from the other party about certain terms and conditions (i.e., “Under no circumstances can we agree to confidentiality”), it is better to discuss and negotiate those terms in dispute on the front end rather than after the parties have notified the court of settlement and the settlement check has arrived.  Because once those events have occurred, you and I both know the opposing parties tend to become more frantic to get things done and the conversation can become shrill.  Plus-at least in South Carolina state courts-if you have placed the settlement on the record, you arguably can be compelled to consummate settlement irrespective of your conflict with the other party concerning settlement language. 

Like anything else in life, talking things out solves the majority of problems. Quite often, language can be amended to suit the parties and the defendant can get what it wants/needs in the written settlement agreement.  If an understanding about certain provisions can’t be had, then the defendant needs to determine if it live with those provisions excised from the agreement.  The bottom line is that as counsel to you, I’d rather know sooner than later if there is going to be a problem that would block settlement.

Litigation is hard. Look for ways to make it easier. In this instance, early communication with opposing counsel can likely smooth out the potentially rough patches and keep your settlement out of jeopardy.