Michael Kelsheimer | Gray Reed
Prepare a draft settlement agreement that suits the case before mediation. Take it with you and use it to make a full and final settlement agreement at the end of mediation.
In my early mediations as a young litigator, I used the mediator’s short form to conclude a settlement at the end of a long day of mediating. After the second occasion I fought with opposing counsel about clarifying or including terms that may or may not have been in the mediator’s short form, I started taking a full settlement agreement to mediation and avoiding these issues. As a Great White, a hair-band of my youth, sang: Once Bitten, Twice Shy.
I know we as litigators, gladiators on the battlefield yearning to try cases, don’t like to think about such things, but . . . depending on who you listen to, 70-80% of cases settle through mediation and more than 95% of cases settle at some point. You will need a settlement agreement. What are you waiting for? When you are putting together your Position Statement for mediation, go ahead and put together that settlement agreement.
Need more convincing?
- Make the Mediator Earn Their Keep: You’re paying a fair sum for me to mediate your case which means helping you hash out any term relevant to settlement. Why not make use of my assistance to help get potentially contentious “side” issues hammered out while the actual party is in the other room listening and participating?
- Litigating Mediation Agreements is Expensive: Whether you are on a contingency or hourly, time is money in one way or another. Does your client want to pay you to litigate over that important term that you forgot to include or nail down in that bullet point agreement? How many hours are you going to spend fighting over that term now that you’ve already arrived at the end of the case? How much will you actually make on that time?
- Mediation Agreement Litigation Outcomes are Uncertain: While it might seem litigating over the terms of a mediated agreement would be straight forward, it is not. Have the parties expressed an intent to be bound by the document if they contemplated the completion of another document? Is the agreement ambiguous? Cases are not absolutely clear about how these points shake out.i
- Tired Lawyers Can Make Mistakes: You started mediating at 9. You met with your client before mediation at 8. You left to start the day at 7:30. Your lunch was probably spent embroiled in a discussion about whether to start using brackets or not. It is now 5:30 and you have a tentative arrangement to settle. You’ve been “on” for 10 hours going back and forth between boredom and intense negotiation. Studies show that concentration falls off precipitously after 8-10 hours of work. This is not the best time to start preparing the document that actually involves the conclusion of litigation and payment of settlement. And, it probably isn’t the best time to start collaborating with your opposite number to put together a settlement. What if they took my advice and hand you a full settlement that they prepared while bright-eyed and bushy tailed that has loopholes for them you may not be ready to catch? Not every case is that complicated, but is it worth the chance?
- Get Paid Quicker: Short mediation agreements often indicate payment will be some period of time after the final agreement is completed and executed by all parties. If the settlement agreement negotiation takes a few weeks among busy lawyers and isn’t executed quickly, payment could easily be delayed a month or even longer. If you have a final agreement at mediation, the person required to execute is right there and the clock for payment starts immediately.
- Avoid Missed Terms: When parties use bullet points to convey terms, they might forget a “no-rehire” provision or some other small but important detail. In that scenario, if plaintiff’s counsel wants to be difficult, they could press to leave that out or extract something additional from the defendant to get it.
- Avoid Unclear Terms:When the parties use a bullet point agreement to convey “mutual non-disparagement provisions, for example, they leave a lot to be desired. I never would agree to non-disparagement without limitations on either side. How are you going to hash out exactly what that means with a potentially contentious opposing counsel after the fact.
- Don’t Stay Late: When the settlement agreement and terms are ignored until a final deal is reached, lawyers tend to end up staying late hashing out a document with multiple drafts. Draft early. Go home to see your kids.
- Make Use of Down Time: There is often significant downtime while the mediator is in the other room. Make use of it by working on a final agreement. My clients always appreciated it when I made known I was using the time to their benefit and saving them money by preparing the agreement instead of talking about whether Max Verstappen really deserves another F1 title.
- You’re Going to Need it Anyway: As noted above (in case you glanced over it) 70-80% of cases settle at mediation and 95% or more settle at some point. You’re going to need a settlement agreement. It almost assuredly won’t go to waste. Go ahead and put it together.
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