Tuesday, October 23, 2007

Crafting an Enforceable Settlement Agreement

I was recently asked to submit an article for Plaintiff Magazine's Alternative Dispute Resolution issue. For those of you whose addresses I do not have, I have included a link to the full published article here. For those of you whose addresses I do have, you most likely received a copy in the mail.

The purpose of the article was to highlight the importance of drafting an enforceable settlement agreement as well as to detail the many "general" provisions which can prove immensely useful in negotiating the terms of a settlement.

I have included below the first few paragraphs of the published article:

Enforceability of settlement agreements is an important consideration for all of us. Whether you are plaintiff or defense counsel or mediator, our common goal is securing a settlement that satisfies you and your clients. None of us likes the idea of spending the time, money and effort to reach and draft agreements on what we think are the important settlement terms only to realize afterward that key terms were left out or left uncertain. And we shudder to think that the settlement agreements we have drafted might be held unenforceable if challenged, possibly resulting in lost clients, lost money and malpractice suits.

The California Supreme Court has wisely cautioned counsel to “be wary of ‘overly broad, loose terms in release agreements’” stating that “‘(A)ttorneys’ energies are better spent making sure that release agreements accurately reflect their clients’ intentions than in litigating what their clients really intended when they signed agreements.’” (Hess v. Ford Motor Co. (2002) 27 Cal.4th 516, 530).

So what can counsel do to craft complete and durable agreements which will stand up to challenge and which eliminate uncertainties between parties and counsel?
• First, have a draft settlement agreement to take with you to each mediation or settlement discussion.
• Second, remember that some “general” provisions we might not always think of as being valuable negotiation items may in fact be of value to one or more parties and may significantly impact the overall agreement or outcome.
• Third, have a solid understanding of the laws regarding settlement agreement enforcement before approving a settlement agreement.

If you are interested in reading the full text of the published article, e-mail me and I'll send you a copy.

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