Just because you agreed on a settlement that is in line with your client’s goals, that doesn’t mean your job is done. Wrapping up your negotiation and finalizing the written agreement is crucial.
Get It in Writing
Let’s put aside whether or not an oral agreement is binding, because the best practice is to confirm any settlement in writing. Lawyers have jobs because things go sideways all the time. Don’t make your settlement one of those things that lands on someone else’s desk.
The easiest method is to send a short and clear email confirming the material terms of the agreement you reached:
Counsel, I am confirming that we have a settlement in principal for $XXXX in exchange for a dismissal/release of all claims.
You can add whatever you would like, depending on the material terms of the agreement you reached. Perhaps you want to confirm a payment time frame, whether confidentiality was included, or whether the settlement depends on a mutually agreeable release.
How much you add (or omit) is case-specific. For example, if you want to make them pay (or bargain) for additional terms, make the confirmation email is simple as possible. If the other side does not raise a concern, it will make them look bad later when they ask for additional terms. On the other hand, if you want additional terms that may not have been expressly discussed, then put them out there right away.
There are two reasons for sending this kind of email:
- You will sleep better knowing you have written confirmation of the settlement.
- It puts you in a much better position to deal with disagreements down the road.
My Place or Yours?
If opposing counsel asks you if you want to draft an agreement, you should always say yes. You will likely have more control and can likely get something more favorable to your client.
There is a good chance your agreement will be shorter, simpler, and easier to understand than the one submitted by opposing counsel. And you can take the time to carefully craft and include (or omit) more favorable terms. Additionally, you will undoubtedly have a better understanding of what your agreement actually says, compared to the agreement drafted by opposing counsel.
Think of it this way: when you draft the agreement, you are more likely to carefully consider each term and clause and make sure it says exactly what you want it to say. Also, it will force opposing counsel to do extra work to request any changes. And in some situations, opposing counsel may be too busy or too careless to review and edit the entire agreement.
As a bonus, it may speed things along if you just sit down and draft the agreement. Also, instead of asking the other side “where is the proposed release?” you can just ask them to sign the release you already sent.
We Never Agreed to That Term
You should assume this will happen in every case, which is why you should take specific precautions when confirming any settlement in writing.
Let’s say you resolved a case for a set monetary amount, and neither side discussed confidentiality during settlement discussions. When you sent a written confirmation of the settlement, it was not included. And opposing counsel replied with a simple “Yes/correct/I agree.”
That’s going to make their life difficult when they start insisting on confidentiality. It puts your client in an excellent position for outright refusing the term, bargaining for something more in exchange for confidentiality, or just dictating the exact confidentiality clause to which they will agree.
If push comes to shove, you have some options to resolve the dispute. First, if the other side wants something, then your client should be entitled to something. Second, your client can potentially walk away from a deal if the other side claims some new term is a deal-breaker. Or, if you really want to make things fun, you can get the court involved and ask them to enforce the agreement.
Notify the Court
Most scheduling orders or local rules require you to notify the court immediately (or within an express period) if you settle a case. It’s a good idea to pay attention to those things.
For one thing, it is a courtesy to the court so that it can clear any upcoming hearings of its calendar. Also, courts love it when a case drops off of their docket, so go ahead and earn those brownie points. If you do not notify the court right away, you might forget to do it later, which means you may still have hearings on the court’s calendar.
Here’s a pro tip: you never want to skip a hearing, even if the case was settled. The court may not know it was settled, and it is not going to consider that a reasonable excuse. I know of one local attorney who was sanctioned for missing a hearing even though the case had been settled, precisely because the court was never notified of the settlement.
Review the Agreement with Your Client
If you’ve read this series of posts, then you know the importance of understanding and confirming your client’s goals. Never assume that a proposed agreement is ok with your client until your client has read it.
And let’s be real: part of your job is to review the settlement agreement with your client. Most settlement agreements contain language along the lines of “Party was represented by _______ and has had an opportunity to consult with an attorney before signing this agreement.” That shouldn’t be a lie.
Exactly how you facilitate this is up to you. Some attorneys send settlement agreements to clients, ask them to review, sign, and return. Other attorneys will read an agreement line by line to the client in their office. Something in between can also work, such as a phone call in which you explain the most important provisions.
You should make that decision on a case-by-case, client-by-client, and release-by-release basis. Some cases are complicated, while others are relatively straightforward. Some clients want that extra level of review, while others will resist coming into your office like the plague. The best releases can be understood by anyone, while the bad ones are the equivalent of reading Shakespeare in Morse code.
Dismiss the Case Only After the Check Clears
This may seem like a no-brainer, but apparently some attorneys are lacking in the brains department.
Never agree to dismiss a case until you have a fully executed copy of a settlement agreement, and any settlement funds have cleared your bank account. Opposing counsel may tell you that their client is fine with the agreement, but that agreement is not fully executed until everyone has signed it. You can potentially throw opposing counsel under the bus for misrepresenting to you that an agreement is fine, but they may not have the actual authority to sign the agreement. So don’t take their word for it.
The old phrase “the check is in the mail” is great unless the check never shows up. And one day, you will probably experience that horrible feeling. Or even worse, you may receive a check, deposit it, and find out two weeks later that the check bounced. You have recourse if either event occurs, but it is a giant pain, and if you already dismissed the case your leverage is limited.
So, always make sure you get everything in writing, go over things with your client, and make sure that check clears. Then you can rest easy knowing your case is actually settled.