Tag Archives: settlement

PEACE THROUGH WAR – A SHORT PRIMER ON HOW TO ACHIEVE A COST EFFECTIVE AND RELATIVELY QUICK SETTLEMENT

  • “All warfare is based on deception. Hence, when we are able to attack, we must seem unable; when using our forces, we must appear inactive; when we are near, we must make the enemy believe we are far away; when far away, we must make him believe we are near.”

Sun Tzu, The Art of War

Many business people that come to our office for a litigation consultation utter a similar refrain: “how long will a litigation take, how much will it cost and when will this case be settled ?” These are all good questions for which there are, most often, no easy answers.

Typically, prior to the initial consultation, we have not been involved in the underlying dispute and, therefore, cannot reliably predict what stimuli will bring the other side to the settlement table. However, there are several universal truths, that are, or should be, self-evident.

  1. Very Few Wars End on the First Day

In a perfect world, we would file and serve a complaint, and the other side, either through counsel or on their own, will plead for a settlement conference or make an offer to resolve a pending lawsuit. The problem is that, the receipt of a summons and complaint most often does not inspire the receiving party to become more conciliatory. Usually, the initial reaction is for the other side to “go to the mattresses,” a phrase made famous in the G-dfather, which means to get ready for a long and contentious fight.

So, if the client’s objective is to settle quickly, then it would be reasonable to conclude that, if the other side begins to gear up for a long fight, that is a bad thing.

Right ?

Wrong.

  1. Sometimes Wars Need to Be Fought

How many business people come into our office, after having tried unsuccessfully, to settle a dispute, despite multiple efforts, which occur over an extended period of time. The distressed business person walks into the conference room, lays the settlement correspondence out on the conference room table, and justifies what is sometimes an extensive delay in bringing suit by stating:

“Look at how many letter and emails I sent. Look at how many times I spoke to my adversary on the phone. We had lunch. We had dinner. I offered them everything. I got nothing.”

This somewhat sad scenario is a regular occurrence in business. A client who offers everything and who gets nothing. To the battle tested litigator, the problem should be obvious; to the average business person and the neophyte, it is likely not. Here are some suggestions which will help the client, a prospective combatant, move from the “I offered everything approach and got nothing” to a place where maybe he or she will get a lot, maybe everything.

  1. Learn to Love the War

If you can accept the proposition that there is likely to be a war, you might as well win it. In order to do this, you must reconcile yourself to the fact that you might be involved in a prolonged conflict most often against your wishes. This happens when you have an adversary who simply will not cooperate. As we all know, there are people like this whom we encounter in business and in life. The trick is to learn how to convince them to move their position. The only way to effectively do this is to convince them that they will lose more by fighting than by settling.

When you learn to love the war, and see it as a means to an end, there is a greater likelihood that you will be able to convince your adversary that you will defeat him.   Therefore, rather than dreading the many hearings which are part of litigation, or the depositions, a business person would be wise to look forward to, and indeed, embrace those occasions.

Each circumstance, in which you and your lawyer are in the presence of your adversary, provides an opportunity for you to convince your adversary that he will lose more by fighting. This is often accomplished by persuasive and competent advocacy. This objective is also assisted by the demeanor of the client. It is the client who must be able to convince the adversary that he or she has the stamina, the will power and the funds to take the case to trial. If both the client and the lawyer or able to convince the adversary of this fact, whether true or not, it often causes the adversary to look at their checking account balance, assess the likelihood of prevailing, and take stock of their stomach for conflict.

Does your adversary really plan to take the case to trial? It is only by convincing your adversary that you plan to do this that you will ever know.

  1. Judges and Mediators Don’t Love War

Judges and mediators have a sentimental love for settlement. This is laudable. This sentiment exists because judges and mediators know that the court system can be unfair and, in some instances, a settlement which the parties negotiate on their own is often better than a trial decided by a Judge or a Jury.

Litigators most often welcome a Judge who encourages the parties to talk to one another, after a court hearing, or a mediator who tries valiantly to bridge the gap between the parties at mediation. The problem is that judges, and sometimes mediators, understandably have no idea of the prior efforts which have been made to settle the case and the timing of their request.

  1. Every Battle Presents an Opportunity

In any lawsuit, the concept of settlement never completely disappears. It can often be seen lurking, silently, beneath the surface. Depositions and court hearings often provide opportunities for the parties to reassess their settlement position.

Court hearings sometimes provide insight into what the Judge may think of the case. Reading the Judge’s mind is often a business that is fraught with peril; nonetheless, a concrete decision by the Court can often provide an excellent forecast for the long term outcome of the dispute.

Depositions are also wonderful tools for inspiring settlement. They can be far more effective than the client’s letter writing campaign or invitations to dinner. A deposition often reveals how a person’s testimony will play at trial. Will the adversary be a good witness or a bad witness ? Is the witness likely telling the truth ? Does either side’s story cohere ? Will it stand up to scrutiny and cross-examination ?

Unless you are willing to wage war, you and your client are likely to never know the answers to these and other questions about the long term prospects for success.

 

 

  1. In Litigation, as in War, Timing is Everything.

 

The person who wishes to win the war on the first day, and believes that he or she can do so, will surely lose. The reason that “scorched earth” litigators are often successful is because they are able to convince the opposing parties that, before a settlement can be achieved, he or she will burn down the village.

 

Will they actually burn down the village?

 

Who knows?

 

However, the old adage that perception is reality is useful in this context since it is only when your adversary believes that you will pursue the case to conclusion that you will be able to favorably resolve it.

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How to Settle a Commercial Case (And How Not To)

Settlements can be achieved at the strangest times. There are settlements which can be made over the telephone, in the office, on the courthouse steps, or while you are driving in your car. Seldom does a settlement occur at the optimum time. The key to achieving an enforceable settlement, whenever and wherever it may occur, is understanding how to properly document it.

1. When to Make a Settlement Offer and Demand (and when not to).

There is an art form to settling cases. Part of the art consists of, as poker players say, “when to hold em and when to fold em.” This takes experience and generally cannot be described in detail in the context of this article. However, there are several general rules which bear mention.

The worst time to discuss settlement is generally after a ruling on the Summary Judgment Motion. If you have won the motion, chances are that your opponent is likely not in the proper frame of mind to discuss settlement. If you lost the Motion, it is likely that you or your client will not be in the proper frame of mind. Try discussing settlement after the motion has been fully briefed but before argument and before it has been ruled upon. At this time, there is often uncertainty in the air. Uncertainty is one factor which often convinces litigants to resolve disputes. After all, a settlement will remove the uncertainty and take the decision out of the hands of the Court or the Jury which is often desirable.

I like to discuss settlement after an important deposition has gone well for my client’s case. Most lawyers know, instinctively, whether the deposition has helped their case or hurt their case. During depositions, the parties are often all together in the same room. This is often a good time to discuss a potential resolution of the case. However, as mentioned, settlements can be discussed in a variety of contexts and there is no hard and fast rule as to when to make a settlement offer or demand.
2. How to Make a Settlement Offer.
Written settlement offers are often helpful. However, there should always be a legend at the top of the letter which indicates “Privileged and Confidential Settlement Communication.” Similarly, I like to include the phrase in the body of the letter which says: “this settlement shall not be enforceable unless a written agreement is signed by all parties.” This statement will likely eliminate the possibility that opposing counsel may argue that there was a “meeting of the minds” as to “all material terms” and, therefore, the settlement, which has yet to be signed, is enforceable. The settlement cannot be enforceable if there is a caption on your letter or email which indicates that no such enforcement can take place until a settlement agreement is signed by everyone.
3. Are Client Signatures Required ?

There are several misconceptions about settlements under Florida law. The first is that all of the relevant parties must sign settlement documents. While this may be a requirement for an enforceable mediation settlement, client signatures are not necessarily required in order to enforce a settlement achieved outside of mediation. See Fla. R. Civ. P. 1.730; Gordon v. Royal Caribbean Cruises Ltd., 641 So.2d 515, 517 (Fla. 3d DCA 1994) (holding that a settlement agreement reached in mediation must be in writing and executed by both parties in order to be binding); see also Smiley v. Greyhound Lines, Inc., 704 So.2d 204, 204-06 (Fla. 5th DCA 1998) (enforcing a settlement agreement despite one party’s refusal to sign the release); State Farm Mut. Auto. Ins. Co., 781 So.2d 500, 502 (Fla. 3d DCA 2001) (noting that when all parties have agreed to the essential terms of a settlement, it will be enforced). Since email can be the preferred mode of communication in the modern world, many settlements can actually be achieved by email and may be enforced by a Court. See Miles v. Northwestern Mutual Life Ins. Co., 677 F.Supp.2d 1312, 1315 (M.D. Fla. 2009) (concluding that an email constituted a binding and enforceable settlement agreement). The key is not necessarily the mode of communication but, rather, the ability to demonstrate that there has been a meeting of the minds as to all of the material terms.

4. The Material Terms of the Settlement

So, what are the material terms? Monetary settlements in collection cases tend to be straightforward and easier to document. For example, if your client is suing for the repayment of money the settlement can be easily documented by making a determination as to how much is to be paid, when, and what happens if the payments are not made. Complicated settlements arise when the parties are required to do things such as return products, calculate amounts owed based upon future events and exchange releases. The more extensive the settlement terms, the more likely the Court is to find that the settlement has to be in writing and signed by the parties.

However, the courts have held that a settlement does not necessarily need to be signed by the parties to be enforceable. Settlements can be enforced based upon an email exchange between the lawyers if the Court finds that all of the “material terms” have been included as part of the email exchange. See Warrior Creek Dev., Inc. v. Cummings, 56 So.3d 915, 917 (Fla. 2d DCA 2011) (finding that an email contained the essential and material terms of the settlement and thus enforcing the settlement agreement); Blunt v. Tripp Scott, P.A., 962 So.2d 987, 989 (Fla. 4th DCA 2007) (the party seeking to enforce a settlement agreement must show that the opposing party agreed to all of the material terms).

Generally, the mere fact that the parties have not agreed to the scope of a release is not enough to prevent enforcement of the settlement. See BP Products N. Am., Inc. v. Oakridge at Winegard, Inc., 469 F. Supp. 2d 1128, 1133 (M.D. Fla. 2007) (holding that uncertainty as to nonessential terms in a settlement agreement will not preclude its enforcement); Sands v. Wagner & Hunt, P.A., No. 09-60557-CIV, 2009 WL 2730469, at *4 (S.D. Fla. 2009) (noting that the “scope of the release” is not an essential settlement term). Conversely, lack of client approval can often be a valid reason for a Court to decline enforcement. See Sharick v. Southeastern Univ. of Health Sciences, Inc., 891 So.2d 562, 565 (Fla. 3d DCA 2004) (a party seeking to compel enforcement of a settlement must prove that the attorney has the “clear and unequivocal” authority to settle on the client’s behalf); see also Baratta v. Homeland Housewares, LLC, No. 05-60187-CIV, 2007 WL 2668585, at *2 (S.D. Fla. 2007).
5.  How to Conclude a Settlement

If you want to conclude an enforceable settlement, treat it as an urgent matter. This is because the longer each side has to negotiate the terms of the settlement, the longer they will negotiate. Trading one draft of the settlement agreement per day is a very inefficient way to conclude the deal. I like to have meetings with opposing counsel in which it is agreed, in advance, that no one will leave until the principals have all signed the settlement agreement or reached an impasse. In this manner, you will be able to see whether the parties are serious about settlement or are simply blowing smoke.

One way to document a settlement is to put it on the record in Court or at deposition. Many settlements are achieved at deposition, during a hearing or even at trial. If there is a court reporter present, it is usually a good idea to announce a settlement on the record and explain the terms in as much detail as possible. If clients are present, have them affirm the terms of the settlement by indicating their agreement on the record. In this manner, the client will not be able to change their minds and the settlement will later be immune from challenge.
In real life, even the best meaning people sometimes get cold feet and change their minds. The best way to prevent this is through signatures of all parties or an announcement on the record.

Litigation concerning the enforcement of the settlement can be time-consuming and expensive. Be forewarned, however, the courts will enforce settlements even when a client signature is not present and even when the scope of releases to be exchanged is in doubt. The key to the enforcement of settlements is the same as the law that governs the enforceability contracts – whether the parties had a meeting of the minds as to all of the material terms of the deal.

 

The Author gratefully acknowledges the assistance of Jacob Epstein in the preparation of this Post.

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