Contrary to what many might believe, it’s important to push hard at the outset of a civil legal dispute to reach a settlement agreement, because in litigation, there are no guarantees, says Andrew R. Zellers, a Partner at Buckingham, Doolittle & Burroughs, LLC.
“A settlement is always more desirable than proceeding with litigation because it offers greater control of the end result,” Zellers says. “When you factor in legal fees, time, and the emotional highs and lows, resolving it at the outset can be the better approach.”
Smart Business spoke with Zellers about settling litigation — how this process works and what to expect from it.
Why settle when you can win with litigation?
It’s not often that a person who is damaged receives compensation via litigation that restores them to the exact position they were in before a particular claim arose. Sometimes, receiving just 25 percent of the loss is a fair settlement, which can help repair the financial damage. It will likely cost far more in legal fees, as well as months or years of the person’s time, to proceed with litigation through a trial.
Getting a fair resolution of a legal dispute is not getting everything that you want. It’s about getting what is important to you and what you may have to give up in return. Fairness, in these instances, means conceding some points to save the financial and emotional toll of litigation that can span anywhere from three months to five years, depending on the complexity of the case. Settlement, as opposed to litigation, may not only give a party more of their desired control of situation and closure, but also be more economically sound.
What does the settlement process entail?
A settlement can happen anytime during a civil case — from the receipt of a pre-litigation demand letter, after the lawsuit is filed, or even after judgment. Typically, counsel for each party confer to identify each party’s goals, then negotiate back and forth to achieve their clients demands without the need for further litigation. Counsel’s role is to provide objectivity and guidance to help a client achieve as many of their goals as possible. If the parties reach a settlement, then their agreement is formalized into a written agreement that specifically outlines each party’s rights, responsibilities, duties and monetary compensation. Once the agreement is executed, each party is left to perform their contractual duties.
Settlement agreements are generally confidential. They typically contain provisions that dictate when, where and how further disputes concerning the subject matter of the settlement agreement are to be handled. This can dramatically narrow the scope of future litigation to a breach of contract claim versus the complex details of the underlying dispute.
If a lawsuit has been filed with the court before a settlement is reached, counsel typically file a concise pleading indicating the matter is settled and the pending lawsuit is dismissed without disclosing any of the details of the settlement agreement. Or, if the settlement is reached post judgment, typically a pleading is filed indicating that the judgment has been satisfied.
Beyond financial compensation, agreements can include requirements that a party do or not do something. For example, settlement agreements can include confidentiality, non-disparagement, non-compete, non-solicitation or other restrictive clauses prohibiting certain actions. Any party can request anything as part of a settlement, but it will always come at a cost. Weighing the cost against the desired result is an important part of the settlement negotiations.
Should a lawyer be involved in settlement negotiation?
A lawyer who has the skill and experience of resolving disputes can provide valuable insight into the subjective and objective components of a dispute and evaluate the potential costs, risks and outcomes of litigation. A lawyer can advises their client on the each step of the legal process, including settlement, taking into account the state and federal law, as well as local ordinances, municipal codes and administrative regulations that may otherwise be overlooked.
Get a lawyer involved even if the intent is to reach a settlement. Lawyers’ skill and experience are valuable assets in resolving any dispute, big or small. ●
INSIGHTS Legal Affairs is brought to you by Buckingham, Doolittle & Burroughs, LLC.
