Securing Non-Monetary Terms Prior to a Settlement Conference Prevents Disputes Later
When settling civil cases, many attorneys focus exclusively on one thing: the number. The dollar amount to be paid takes center stage during pretrial conferences, mediations, and even informal settlement discussions. Non-monetary terms and conditions are often treated as an afterthought, only broached after the parties have painstakingly negotiated a dollar figure. Unfortunately, this practice can lead to unnecessary disputes and renewed negotiations over relatively minor terms that can derail a deal that was apparently done.
In my civil litigation practice, I routinely convey my client’s non-monetary terms and conditions to opposing counsel before commencing substantive settlement discussions. This proactive step streamlines negotiations, minimizes conflict, and helps shield clients from unpleasant surprises.
Common Terms and Conditions
In civil litigation cases – including personal injury, employment, contract, construction defect, and property disputes – certain terms and conditions can be deal-breakers for one or more of the parties involved. For instance, in a personal injury case, the defendant and/or the insurance company may require that the plaintiff agree to keep the settlement confidential. Additionally, insurers often require that plaintiffs provide their Social Security number to permit a search for Medicare liens and existing obligations. In cases involving children or estates, the settlement may need to be conditioned on probate court approval. In multi-defendant cases, it is critical to clarify upfront whether any settlement would resolve the entire matter or apply only to a single party.
In employment cases, employers frequently insist on confidentiality clauses as well as non-disparagement provisions to prevent the former employee from publicly criticizing the company. For property disputes, clauses pertaining to the condition of the property and timing of departure may be required to protect a client’s interests.
If these requirements are not raised until after the number is agreed upon, they may trigger renewed negotiations. Opposing counsel may demand additional money in exchange for a new term, or reject the belatedly proposed term altogether – putting what appeared to be a done deal back in limbo. Further, a party may seek to enforce the settlement thereby resulting in further litigation.
Communicating the Terms Upfront
While it takes a bit of time and effort upfront, the practice of itemizing and conveying non-monetary terms prior to a settlement conference or mediation has several benefits. Typically, I send opposing counsel an email that itemizes the required terms and conditions. This laundry list of items will be tailored to the case. I invite counsel to review the terms and either sign off on them or raise any concerns before the conference or mediation. If a concern is raised about the details of a term or condition, I often will send a draft release to opposing counsel so they can see the specific language sought. When agreement is reached, the email exchange serves to memorialize the non-monetary terms; either side can refer back to it if an issue arises later. The language can then serve as a term sheet for the settlement and release documents.
This upfront approach allows me to better serve my clients’ interests. When an attorney seeks to negotiate secondary terms after a number has been established, leverage is often lost. The other party may be less inclined to agree to new conditions after securing an acceptable dollar amount. Clients appreciate that all their terms and conditions are met without any last-minute surprises or disappointments.
In addition, this practice promotes good faith and transparency. Opposing counsel has often expressed appreciation to me for disclosing required terms upfront. Even if opposing attorneys do not agree with every term, they know it is something we will need to deal with before the conference. They appreciate that I am not putting them in a position where they have to go back to their clients later to discuss a new term or condition.
The Takeaway
Securing non-monetary terms and conditions in advance allows both sides to focus solely on arriving at a number during settlement negotiations. By hammering out terms and conditions upfront, attorneys can protect their clients, create goodwill, and make the process more efficient.
Brian E. Tims, a partner at FLB Law in Westport, Conn., represents businesses of all sizes as well as individuals in a variety of litigation matters. He previously worked for one of the country’s largest property and casualty insurance companies and has more than 15 years of private legal practice focused on litigation, including insurance defense. Contact Brian at tims@flb.law or (475) 236-5219. For more information about FLB Law, click here.