A settlement agreement is a legally binding contract between two parties that is meant to resolve disputes or streamline legal issues. When people think about settlement agreements, the first thing that comes to mind is often separation agreements between divorcing or separating spouses. But settlement agreements can be useful in any type of dispute and do not have to deal with every aspect of a legal issue if it is too complex or there are too many points of disagreement. They can also be used to settle smaller issues and provide a basis for good faith negotiation with the other party.
Whenever a lawsuit is either being considered or has already started, it is important to be aware of alternatives resolutions like settlement agreements that exist at various stages of a legal matter. Why? Because lawsuits are time-consuming and expensive processes in which it’s very possible that neither party will achieve the outcome they desire. One of the major motivations behind encouraging settlement is to avoid those significant legal, financial and personal costs of proceeding to trial. For many people, a lawsuit is a significant financial burden and many individuals also experience a great deal of personal stress and anxiety as a result.
For example, we once spent five days in Small Claims Court for a lawsuit. Even though our client was successful, the legal fees were significant, and the stress of a trial was high for everyone involved. Pursuing settlement, where reasonable, can avoid unnecessary expense, wasted time and undue stress.
Often, lawyers only begin discussing settlement expectations with their clients during settlement meetings or well into the litigation process. However, lawyers have a duty to encourage settlement whenever it is reasonable to do so. Considering settlement early on also helps establish your expectations about what can realistically be achieved through Alternative Dispute Resolution (ADR) processes, like mediation and arbitration. Contemplating settlement at an early stage is a practical way to assess your underlying desires and to set realistic expectations moving forward. Reviewing a draft settlement agreement with your lawyer before the settlement meeting and being encouraged to provide input allows you to have a greater sense of control in an unfamiliar process where many people feel vulnerable. We at Walker Law often create draft settlement agreements with our clients so that they focus on what they are willing to forgo to settle.
Understandably, negotiating a settlement agreement face-to-face with lawyers for both parties present can create a stressful environment. You may feel pressured to accept conditions you do not truly agree with, or may refuse to accept an otherwise reasonable settlement if emotions are high. Discussing your settlement expectations privately with your lawyer, in a less emotionally-charged environment, ensures that you have an opportunity to express your thoughts and concerns about the terms of the settlement agreement prior to meeting with the opposing party. If your feelings or opinions shift throughout the settlement process, the document can be easily amended during negotiations to reflect any necessary changes or clarifications.
When it comes to approaching settlement, we recommend that you take the time to draft a settlement agreement and review it with your lawyer before sitting down at the negotiation table. This small amount of additional preparation can have substantial benefits, both in terms of ensuring you have the opportunity to carefully consider what is important to you about the legal matter, and in terms of your preparation for any upcoming mediation or negotiation. Considering settlement at an early stage is not a sign of weakness. It is a practical way to put your expectations on paper, and can save a significant amount of time and expense if early settlement is reached.
Brittany Miller also contributed to this article.