Chapter 15: The Settlement

Because somewhere between 95 and 98 percent of all civil cases end in settlement or dismissal before trial or final hearing, this chapter treats negotiation, BATNA, mediator-assisted compromise, and timing as the central craft of pretrial practice rather than as a footnote to trial.

Chapter 15

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Discourage litigation. Persuade your neighbors to compromise whenever they can. Point out to them how the nominal winner is often a real loser in fees, expenses, and waste of time. As a peacemaker, the lawyer has a superior opportunity of being a good person. There will be business enough.

Abraham Lincoln, Law Lecture

§ 15.1 Role of Settlement in Civil Cases

Settlement is an integral part of our civil justice system. Although the statistics vary, somewhere between 95 and 98 percent of all civil cases end in settlement or dismissal before trial or final hearing.^[1]^ Lawyers spend much more of their time preparing for cases that eventually settle rather than trying them. Settlement is an especially appropriate topic to discuss at the end of this book. If importance determined where chapters were located, it would be one of the first chapters in the book.

The law favors settlements.^[2]^ Settlement promotes economy, saving valuable time as well as avoiding a delay in a resolution for the parties. Settlement also removes the uncertainty inherent in a trial and the unpredictability of a jury trial, and saves unnecessary arbitration and administrative hearing expenses. Settlement also conserves the resources of the parties, and therefore society, that would otherwise be spent on dispute resolution costs, legal fees, and other expenses.^[3]^

Parties may well prefer to settle their dispute on their own terms and control their destiny, rather than have a third person (judge, arbitrator, or jury) determine their fate. And there is also a widely held view that settlements, being by definition satisfactory or acceptable to the parties, are more effective at removing discord within our social and commercial fabric, and are therefore more desirable from a societal view. There is nearly unanimous agreement of scholars and commentators that settlement is desirable and should be encouraged.^[4]^ There are, of course, some cases, because of the nature of the dispute or the seemingly impossibility of compromise, that should be decided by a trial or hearing.

The settlement process usually has begun before a lawsuit, arbitration, or administrative case is brought. It is typical for the disputing parties to initially make an effort to settle differences, often through the services of a lawyer. If this negotiation or mediation fails, parties then engage in litigation, arbitration, or an administrative proceeding. It is common at this point for compromise efforts to start again, or for the first time. If negotiations fail, parties and their lawyers may retain a mediator to resolve the dispute. See § 1.8.1. If all these efforts fail, resort is made to a judge, jury, or arbitrator for a decision.

The courts play varying roles in the settlement process, ranging from no involvement to substantial, or even coercive, participation in settlement discussions. ADR providers also play a prominent role by promoting the use of mediation, special masters, and other non-adjudicatory ADR methods. The success of settlement often depends on the pretrial and prehearing procedures discussed in the foregoing chapters of this book.

This chapter provides a concise, instructive overview of settlements and basic negotiation. Entire books have been written on negotiation,^[5]^ and those works explain in much more detail the dynamics and nuances of negotiation skills. Efforts to study negotiation skills and to review approaches used by experts can significantly improve negotiated results.

§ 15.2 Role of Negotiation in Pretrial

and Prehearing Practice

Disputes seldom settle by the abrupt capitulation of the other side (although if you frequently experience immediate opponent collapse, you are obviously in the right line of work). Even “overnight” successes are the culmination of months of intensive work, including earnest (at least on one side) but unsuccessful attempts at settlement. Similarly, even where there is a settlement mechanism (e.g., mediation) or active decision maker participation (a/k/a judge involvement) designed to achieve settlement, resolution by the parties typically involves negotiations by counsel.

Preparation. Negotiation possibilities exist at the outset of the dispute. Before initiating a case, client and counsel should create a reasonably clear picture of their objective: is it to end a relationship, obtain compensation, stop disparaging statements, or something else? Once the primary object has been identified, the best lawyers often outline more specific tentative best-and-worst case scenarios, such as estimating the realistically acceptable settlement range and amounts.

Many experienced lawyers use the “get it in print” theory against themselves, making a settlement memorandum to the file at the outset of the case. Later, in the heat of the case, they refer to such files to remind themselves of their evaluation during more placid times. Often, tempers cool after the initial bellicose euphoria of conflict as clients become pained with the delays and morass of legal fights and tired of paying legal bills. Whatever the effect of the experience on attorney and client, early evaluations must be constantly reviewed in light of changing conditions: new facts emerging from discovery, the bankruptcy of one of the parties (or its insurer), a new government assistance program, or a tax ruling that makes going forward less attractive.

Beginning and throughout settlement efforts, parties and lawyers need to consider what better alternative there may be to a compromise. This is known as BATNA: Best Alternative to a Negotiated Agreement. The only or best alternative may be to have the case decided by a judge, jury or arbitrator. The extent to what is truly a better choice affects the outcome of a settlement. AI can help with formulating an effective settlement plan.

Timing. Serious settlement discussions may begin early in a case. The court, the arbitration provider, or the administrative office may require the parties to begin early settlement talks or engage in discussions with a mediator. For other cases, extended negotiation or mediation may occur after a significant amount of discovery and through the final pretrial/prehearing conference (where a decision maker’s urging or the fear of losing control and outcomes provide an additional push).

The issues at stake in a case influence the timing of negotiation efforts. Settlement is more likely to occur early in simple or low stake cases because it makes economic sense to settle a case before the transaction costs and attorneys’ fees become disproportionate or excessive. Settlement is unlikely to precede some significant discovery and motion practice in a complex or high stakes case because the risks justify spending time and money to learn more about a case, to determine the viability of the legal theories, and to better evaluate its worth.

After the final pretrial or prehearing conference, many lawyers and clients see no turning back from the battle; but, of course, there is always an opportunity to settle and not fight anymore. Settlement not only occurs on the courthouse steps or immediately outside the hearing room before counsel begin to try the case, but also after each side has a chance to make a more specific evaluation of the decision maker, after significant evidence rulings, or after key testimony (“Gee, how’d you find out about my client’s conviction for embezzlement 9 years ago? Anyway, here’s the settlement you wanted.”) In jury trials, settlement even occurs during jury deliberations (longer deliberations tend to make everybody more nervous and susceptible to serious negotiation) or after verdict. Rulings on post-trial or post-hearing motions and counsel’s assessment of the risks on appeal also affect the timing of a settlement.

Competitive Approach. At whatever time is deemed right by at least one party, negotiations can occur. Negotiation styles are as varied (and as warped) as are lawyers’ personalities. Some lawyers demand complete surrender (if they represent a plaintiff) or reject any possible rapprochement (if they represent a defendant) while steaming full speed ahead toward Armageddon. These lawyers may be very aggressive and outspoken or soft-spoken and polite.

This does not mean that lawyers who take extreme positions are not interested in settlement. On the contrary, every sane lawyer is interested in settlement where the facts and law suggest it and the other parties are reasonably likely to agree to a settlement that is favorable, or at least fair. “Extremist” lawyers just happen to believe that they will most likely obtain good settlements for their clients by being tough, prepared, and unafraid of the trial or hearing process. Many are even averse to making the first offer (or even the suggestion) of settlement.

Cooperative Approach. Increasingly, a more cooperative tone for negotiation has gained favor, among many lawyers and commentators.^[6]^ Under this approach, lawyers do not play chicken, refrain from issuing ultimatums, and seldom stake out hard and fast “positions.” Rather, the facilitative lawyer, when negotiating, stresses the mutual interests of the adversaries and the joint benefits that might be derived from a “custom-made” settlement rather than through pursuit of the less flexible remedies offered by litigation, arbitration, or administrative proceedings.

A classic illustration of this is a parable of two people fighting over an orange when one wants the fruit to eat while the other wants the rind for baking.^[7]^ If litigated, only one will end up with the orange and will incur substantial litigation costs that may well exceed the value of the fruit (or, alternatively, the rind). However, an intelligently crafted settlement can provide each with what they really want less expensively and without the risk of losing all. Now, while the real world of disputes may not resemble a lovefest, the cooperative school of negotiation has a powerful point: frank discussion of interests, goals, and objectives can often lead to better results than mere posturing and bickering.

Client Approval*.* Of course, in being cooperative, lawyers should not be dupes: they should hold paramount their client’s needs and interests and should not disclose confidential or privileged information.^[8]^ Similarly, clients must be advised of pertinent facts affecting the settlement posture of the case and must authorize attorney strategy and tactics regarding negotiations, especially the deals offered or counter-offered and the specific range of settlement authority vested in counsel. Unfortunately, some clients have short memories; others are fair weather friends; and others are easily dissatisfied. When conferring with clients and crafting a negotiation strategy, it is usually wise to confirm these matters in print. This may be impossible in the heat of conflict, but later keyboarding the settlement story, or non-story, is often wise.

Strategy Selection. What negotiation strategy is best? As with so many other issues in law, the answer is a resounding “it depends.” Certainly, the list of tough and cooperative negotiation styles is not exhaustive. Rather, they are perhaps best viewed as poles of a continuum, with many lawyers in between the two “extremes” or varying their approaches with particular issues in the case or in response to particular stimuli. Lawyers are generally better doing what comes naturally (so long as this natural instinct is within the acceptable range of social behavior) rather than trying to imitate someone else.

Similarly, you will typically enjoy more success by being yourself. If the cooperative style suits you, by all means engage it in, subject to the caveat of preventing the less scrupulous from taking unfair advantage of you. If you feel more comfortable with the aggressive persona and waiting for your opponent to make the first conciliatory move, this will probably work best for you. Often a combination of approaches or a variance of approaches brings better results. Lawyers with different instinctive styles often make a good negotiating team. We’ve all seen enough prime time TV to know how to play “good cop/bad cop.” It may be unoriginal, but many lawyering teams swear by it or during it.

Evaluation. In coming to a negotiation strategy and evaluation of the worth of a case, many lawyers attempt to use an informed mathematical formula. GenAI can help with creating and applying a strategic method. It is best illustrated by a personal injury claim. If plaintiff asserts negligence by defendant in an auto accident case, the calculus can proceed like this:

• Plaintiff and counsel see the case on liability as strong since defendant hit the rear of plaintiff’s car while it was stopped at a traffic light. Plaintiff and a bystander pedestrian will testify the light was red but defendant will testify that the light was green for several seconds. A “fix-it” ticket issued to plaintiff a week before the accident shows that one taillight was burned out and plaintiff admits that this was not corrected. Defendant only suffered minor injuries. Plaintiff’s counsel estimates a 70 percent chance that a jury will find for plaintiff on liability.
• Plaintiff incurred $16,000 in medical expenses and spent $32,000 for a used car to replace his, which was totaled. Plaintiff missed a year of work from his $54,000 per year job as a schoolteacher and continues to have back pain, especially after a long day of classes. Plaintiff’s expert witness doctor and treating physician will testify the condition is permanent, while the defendant’s expert doctor will testify that the back will be as good as new within two-to-three years (plaintiff is 42 years old). Plaintiff has been forced to quit coaching the junior varsity ice hockey team, which was a source of real joy to him. Plaintiff’s counsel views the accident as causing plaintiff $82,000 in provable out-of-pocket or economic loss damages. As to the pain-and-suffering damages, counsel’s estimate is $250,000 but she also sees a reasonable chance that the jury will believe the defendant’s doctor that the injury is not permanent.
• Plaintiff’s counsel multiplies the amount of “realistically” calculated damages by the probability of recovery:

.70 × $82,000 = $71,400

.75 × $250,000 = $187,500 × .70 = $131,250^[9]^

Total Estimated Settlement Value = $188,650

• Plaintiff’s counsel mutes the valuation by remembering that the medical expenses and part of the replacement car purchase price were covered by plaintiff’s insurance and that plaintiff also collected unemployment benefits and some disability insurance for his year away from work. Although these funds cannot be mentioned at trial under the evidence rule excluding consideration of collateral sources of compensation, this $48,000 figure is significant and may be subconsciously appreciated by the jurors, many of whom have similar insurance protection.
• Plaintiff’s counsel also deducts the costs of trial expenses (e.g., expert fees) saved if the case is settled, estimating this amount at $12,000. The lawyer’s one-third contingency is another matter. It encourages plaintiff to hold out for the maximum realistic settlement since plaintiff will at best realize only two-thirds of any settlement amount.
• Other economic factors that influence the valuation of a case include indirect expenses and lost opportunity costs. What wages or money will the client lose from further litigation and trial? What income and revenue will the client forego having to spend substantial time responding to more discovery, preparing for and sitting at trial? These losses can amount to a significant cost.
• Other factors that also need to be considered by counsel are non-economic factors that substantially affect the client. The client may well recover sooner if the case settles, instead of living through the uncertainty and pain of trial. It is an unusual client, who having gone to trial and won, will say: “Hey, I want to do that again.” Clients invariably will say: “That was one of the worst experiences in my life.” And imagine what they will scream if they lose.
• All told, plaintiff’s counsel recommends settling the case for a figure in the $120,000–$150,000 range (easily divisible by 3) and with client approval aims the negotiating strategy toward achieving that figure. Through discovery, plaintiff’s counsel knows that defendant has $300,000 worth of liability coverage in her auto policy. If defendant had only $100,000 worth of coverage, the settlement objective would be clearer: obtain the policy limits.

Illustrations like the above suffer from a misleading appearance of quantitative precision. Forecasting a percentage likelihood of victory or a damage award (especially for non-economic damages) is more an intelligent “guesstimate” than an exact science. Nonetheless, wizened trial lawyers often amaze novice attorneys with accurate predictions. It can be done—but not with consistent computer-like precision.^[10]^

Tactics. Having evaluated the case is but half the battle. After setting settlement objectives and parameters, counsel must still negotiate toward the goal, by whatever method preferred. If the attorney’s style is to make a settlement demand, the lawyer must pick an opening amount. As with settlement styles as a whole, demand amount styles vary. Some lawyers prefer a big demand that leaves plenty of room to move toward opponents making them think they have “gotten something.” Plaintiff’s lawyer above might, for example, demand $300,000 from the defendant driver who has thus offered nothing and hope for a result that “splits the difference.”

Other lawyers prefer to make a demand reasonably above the bottom line goal. This leaves some room to feed the opponent’s negotiating ego but is less likely to make the opponent regard the demander as unreasonable, out-of-touch-with-reality, and not worth further negotiations. If the plaintiff’s attorney above demanded $220,000 and made reasonable concessions until the defendant came close, this approach would be the “goal plus reasonable cushion” school of demands. In a small legal community where personal habits cum vices become well-known, the more reasonable demander probably fares better: other lawyers come to take a demand seriously and can get down to the fine points of negotiation faster than when trying to filter out puff and blarney of a highball demand. Again, an LLM can assist with presenting alternative tactics and techniques

Techniques. Whatever the negotiator’s style, counsel should focus on objective facts, an assessment of the favorable law, and a hardheaded analysis of prior case settlements and verdicts, decisions, and awards when assessing the situation and dealing with opponents. A lawyer who overestimates a position due to emotional attachment to the case or a desire to placate the client ultimately disserves both case and client.

Counsel should also plan the negotiation environment:

• Preliminary email or correspondence of offer/‌counteroffers.
• Telephone or in-person meeting or text exchanges.
• Presence or absence of clients.
• Lawyer’s office or neutral site.
• General discussion or specific analysis of liability or damages documents.
• Preferred timing for negotiations.
• Cooperative, conciliatory, corroborative, or aggressive demeanor.
• Flexible, planned, set, or rigid positions.
• Alternative strategies, tactics, alternatives.
• Prepared initial settlement terms of preferred agreement.
• Questioning opponent’s choice of law schools.

Counsel must also plan the negotiation agenda:

• What issues need to be negotiated.
• What other issues need to be addressed.
• What to disclose.
• What not to disclose.
• What positions to take.
• What fallback positions are available.
• What items are readily traded for other considerations.
• Which items are essentially “non-negotiable.”
• What may be mutual interests.
• How will the other side view certain offers or demands.
• What are the tax consequences.
• What will cause an impasse or an overpass.
• Is deadlock a reasonable choice.
• What settlements documents need to be drafted and completed.
• Is there a better alternative to a negotiated resolution available (BATNA). Even if settlement is preferred, the other side must understand that the client and lawyer are ready, willing, and able to try the case if no reasonable compromise is reached. If the opponent recognizes that the BATNA is not really a viable alternative, the settlement will not be as favorable as it would be if the BATNA threat is real.

Within the broad outlines of a lawyer’s overall negotiation style, claim valuation technique, and demand/offer approach lie many personal variants of negotiation “micro-procedure.” Whatever the style, attorneys usually fare better in negotiations where they prepare well regarding the factual record of the case and controlling points of law. A poised and prepared negotiator will not only be taken as a serious threat should trial or a hearing ensue (and constitute an independent incentive to settle), but also will often convince opposing counsel of realistic limitations on their position. Complete preparation will also reveal the best theory of the case supporting why the lawyer (and client) will win, the explanation of which can be revealed to opposing counsel who will then surrender, unless it is best to keep this explanation a secret until the trial or hearing.

Client Needs. All of the above negotiation considerations are subject to the real world constraints of client needs. For example, if the hypothetical automobile plaintiff above has already “spent” the money on the planned purchase of a new automobile or a month-long vacation, the client may be very interested in getting paid sooner or now, even at some loss in claim value (besides, his back may get better).

An insurance company often is at the other extreme. It has the money third-party claimants want and can afford to wait a long time without becoming impatient. However, in most states, unreasonable bad faith insurer behavior can lead to extra-contractual damages like punitive damages. Even the deepest pockets may have some incentive to avoid foot-dragging. However, as a general rule, parties with ample resources (in money, market position, patents, friends in high places, whatever) are in a better position to plan and execute patient negotiation in aid of more advantageous settlements.

While the lawyer does all this and prepares to negotiate, it is ultimately not only the client’s decision but also the client’s preference in how and when a case settles. Unsophisticated clients (defined as a client who is unfamiliar with disputes or a first time player) may look to the lawyer as the wise counselor regarding negotiation strategies, timing, and amounts. Sophisticated clients (like business and corporate folk) will prefer or expect to make these decisions.

Advocates may become immune to the excessive costs, the waste of time, and the unpredictability of outcomes, but many clients do not. They feel—economically and psychologically—the real costs of dispute resolution. What is challenging and satisfying for the lawyer is often incredibly puzzling and painful for the client. Rightfully so, the client will stop the nonsense and want to settle the case—now. Advocates need to remember they are still part of a helping, caring profession.

§ 15.3 Settlement Within the

Adversarial Process

Settlement negotiations are often prompted by events in the lawsuit, arbitration, or administrative hearing that make settlement appear attractive to the parties. The ultimate event most likely to prompt a final settlement is an impending trial or hearing date or, in some cases, a jury sitting in a courtroom ready to hear evidence. All lawyers know that the realization that the end is about to begin may be one of the most effective events to make parties view their cases realistically.

Courts also take an affirmative and active role in the settlement process. Courts are increasingly recognized to be involved in the management of cases and not merely in deciding narrow disputes submitted by motion or for trial.^[11]^ Many jurisdictions now require the litigating parties to engage in mediation or another ADR method before pursuing further litigation efforts. Rules or court orders may require parties and their lawyers to retain a mediator in an effort to resolve the case, before the case may proceed to trial.

Active Involvement. Judges are frequently involved in settlement of actions by informal discussions and suggestions that the parties consider compromise and settlement of their disputes. Judges may initiate these discussions by asking questions about the status of settlement discussions when the attorneys are before the court for other reasons. Judges may also specifically inquire about any attempts to resolve a dispute before submitting a matter for resolution by motion.

Many courts have general rules or have adopted local rules that require counsel to “meet and confer” in an attempt to resolve disputes before filing motions for relief, as previously described. Counsel who find themselves having to talk to each other may well be able to resolve their motion disputes on their own and may engage in settlement talks. Enforcement of these rules also gives the court an opportunity to inquire of counsel about settlement discussions, and to point out the advantages of compromise.

In federal court, magistrate judges or a court appointed neutral may attempt to mediate a settlement. In some state courts, the parties may seek the services of a mediator appointed by the judge or court administrator. Of course, parties are always able to suggest to judges that they prefer to select a mediator, as long as they eventually and mutually do so.

Arbitration providers also have mediators available to help resolve a case. It often is best if the arbitrator who will be both the fact finder and law diviner avoids getting enmeshed in settlement talks that are likely to produce irrelevant and inadmissible information (and then they kicked the dog and shot the cat) that is hard to forget. Administrative proceedings may also have mediators available.

Approval of Settlements. Judicial approval, arbitrator consent, or administrative law judge authorization is not normally required for settlement of civil cases. The parties are allowed to settle their disputes on terms agreeable to all concerned. There are two circumstances in which a proposed settlement must regularly be submitted for approval. In addition, there may be other reasons to ask for approval.

First, most states require that actions involving injuries to minors not be settled without court approval. These requirements insure that the interests of the minor are adequately protected and that the settlement is reasonable. Typically, settlement proceeds not used to pay for expenses that have been incurred are placed in a trust account that assures safe investment of the funds. Court or trustee approval may be required for any disbursement of the settlement proceeds during the child’s minority.^[12]^ A personal representative of a decedent may also be required to obtain approval of settlements involving a decedent’s estate, as may the heirs or trustee authorized to pursue a wrongful death action.

Second, settlement of class actions also requires court approval. Fed. R. Civ. P. 23(e) and similar state rules require that any settlement of a class action be submitted for the court’s approval. The purpose of this rule is to protect the unnamed class members from a settlement that unfairly benefits the class representatives and to prevent the use of a class action to extort excessive settlements.

If a settlement may affect others, or is novel in some way, it may be desirable to have the settlement approved by the decision maker. A trustee, personal representative, or other person who is a party to a case in a representative capacity may want to obtain approval of a settlement for protection against future claims that the settlement was not appropriate. Although judges and other decision makers will not routinely grant advisory opinions, they may be persuaded to review and approve a settlement if the parties submit it for approval.

Settlement Conferences. Many judges and some arbitrators and administrative law judges hold conferences involving counsel and often the parties for the express purpose of exploring a resolution. Settlement conferences are the natural outgrowth of pretrial conferences held under Fed. R. Civ. P. 16 and its state court equivalents. Many judges use Rule 16 pretrial conferences to discuss compromise, and one of the purposes of the rule is to conduct a settlement conference. Federal magistrate judges often engage in settlement talks before the case goes to trial. In cases where lengthy or weekend negotiations or special expertise is needed, the court may appoint a special master to mediate. As a predicate, counsel may need to meet and confer on their own before directly involving a neutral.

Settlement Procedures.* *Judges, magistrates, and masters use varying techniques to encourage settlement of lawsuits. Most attempt to structure the conference to remove obstacles to settlement. For example, attorneys who will actually try the case are required to attend in order to prevent the settlement discussions from breaking down due to lack of knowledge or expertise. Similarly, parties must attend, along with other persons (insurance adjusters) who have full authority to settle the case. The purpose of these requirements is to bring everyone necessary to resolve the dispute together so that meaningful talks can occur. Rules that require early settlement efforts typically include these requirements.

After bringing the necessary players together, differing techniques to encourage discussions are used. One of the parties, frequently the plaintiff, begins by summarizing the current status of the settlement discussions that have taken place prior to the conference. Then each of the parties may outline their current settlement position and supportive reasons. The dynamics of the compromise process become largely a matter of the participants’ individual judgments.

The mediating expert will separate the various “sides” to the dispute and conduct separate conversations in private caucuses. This technique will increase the candor with parties, enhance trust, and avoid posturing. And it makes it easier to assess the likelihood that further settlement efforts will be effective and in devising a successful resolution strategy.

The judge, magistrate, or mediator may directly confront the weaknesses in each party’s case and focus on the experience they have had with similar cases. The purpose of the comments may be to ensure that the parties understand the difficulties presented in a particular case and to re-assess the parties’ perception of the risks of continuing. Observations may also be made regarding how evidentiary and motion rulings may affect the outcome. These comments help prevent either side from having an unrealistic view of what may transpire later.

Another technique occasionally is to speak directly with the parties rather than to the attorneys. This may be useful where the party, not the attorney, is unwilling to compromise to achieve a settlement. A party may be able to be convinced that some compromise is needed and that the case is not an appropriate one for an intractable settlement posture.

Attorneys can assist parties in responding to issues that arise and can ensure that events are consistent with what the attorney expects is reasonably likely to occur. If an attorney announces a settlement proposal has been communicated and recommended to a party but that the party nonetheless does not want to accept it, the judge, magistrate, or master may want to address directly the party’s concerns about settling.

Court Appointed Neutrals. Courts rely on experienced neutrals to assist in various aspects of a case, including settlement options. Lawyers and parties often request the appointment of a neutral to assist with a complex, multi-party, multi-district, or class action case. These judicial adjuncts perform significant and useful roles in a case saving the court, parties, and lawyers substantial time, money, and expenses. They can: act as a mediator; resolve discovery disputes; coordinate the work of lawyer committees; assist in drafting proposed orders; be a receiver; pay class action settlements; monitor injunctive decrees; and make the judge laugh.

In federal courts, a special master is a judicial officer appointed by a judge pursuant to Fed. R. Civ. P. 53. This rule encourages judges to use masters in pretrial, trial, and post-trial proceedings. In state courts, masters are appointed pursuant to a rule similar to the federal rule or under a statute. State court masters are also known as judicial adjuncts, referees, commissioners, monitors, and by other designations.

The Academy of Court-Appointed Neutrals supports and encourages the appointment of experienced neutrals in cases where such judicial adjuncts can accelerate case outcomes, help the lawyers work cooperatively, and assist the judge in administering and resolving the case. See www.courtappointedneutrals.org.

Use of Impartial Experts. Federal courts and most state courts permit the appointment of independent experts by the courts. Fed. R. Evid. 706 specifically authorizes the use of experts and similar state rules and the inherent power of the courts also permit the appointment of experts who provide opinions and assistance to the judge. Cases that lend themselves to the effective use of this device are large cases headed for lengthy and expensive trials.

Experts appointed by the judge are rarely used. These experts are not terribly popular since they are viewed as preempting the proper role of the lawyers, litigants, and judges. Some courts have appointed independent experts with success. In cases where the court anticipates a “battle of the experts,” the neutral expert may be of value not only to the fact-finder, but also to the lawyers and the parties in permitting a reasoned approach to evaluating the likely result of a trial.

§ 15.4 Alternative Dispute Methods

for Settlement

There are other methods for resolving disputes that augment negotiations, settlement conferences, and mediation efforts. Section 1.8.1 explained the use of mediation. These approaches are designed to encourage the parties to take a realistic view of the case and to compromise their positions based on the likelihood of success after considering the risks that attend a trial or hearing result. These methods can often be used as a basis to resolve the underlying dispute through subsequent settlement or mediation efforts and include:

• Conciliation and Collaborative Approaches
• Modified Arbitration
• Non-Binding Arbitration
• Summary Jury Trials
• Mini-Trials
• Fact-Finding
• Private Judging
• Online Dispute Resolution (ODR)
• Combination or Hybrid Processes

Conciliation and Collaborative Efforts.* *Some forums designate a mediation process as conciliation with the conciliator in effect operating as a mediator. Basically, the process is mediation with a different name. Some jurisdictions have developed collaborative settlement programs that involve a collaborative professional (or a team of legal professionals) who work directly with the parties in an effort to reach a compromise. Often, lawyers are not involved with representing the parties who appear on their own. The parties may, of course, seek the assistance of counsel before, during, or after a collaborative event. The underlying notion is that these collaborative efforts will reduce the adversarial nature of settlement talks, encourage the parties to be more reasonable, avoid attorneys from extending disputes, and result in more acceptable and satisfying outcomes. These methods are used in dissolution and other family court proceedings with success.

High-Low Modified Arbitration.* *Arbitration can be modified to resolve cases where the parties cannot compromise further. The arbitrator can be required to select between the last offers made by two parties (“last best offer” arbitration). This has the effect of encouraging parties to make the most reasonable settlement offer and preventing the arbitrator from compromising the dispute or “splitting the baby.” The parties may also submit a dispute for arbitration within fixed bounds. The arbitrator must select either the plaintiff’s number or the defendant’s number after a hearing. If the plaintiff sets $40,000 and the defendant $80,000, the arbitrator must choose one of these amounts as the final award.

Non-Binding Arbitration. Non-binding arbitration is provided for by rule in some courts for civil cases and is provided as an option in other jurisdictions. This form of arbitration may be an effective tool to help the parties view their dispute realistically. Unlike, traditional arbitration, the result is only advisory and may be rejected by one or more of the parties.

When conducted as part of the litigation process, non-binding arbitration will normally be conducted by an arbitrator selected or approved by the court. When conducted privately, the parties select their mutually acceptable arbitrator. Many of the courts that provide for non-binding arbitration require the arbitrator’s award to be entered as a judgment unless one of the parties objects and demands a trial de novo. Other systems simply require the award to be given to the parties for whatever use they may make of it in settlement.

Summary Jury Trial. The summary jury trial is an innovative judicial tool for resolving disputes. The procedure for the trial is simple: the parties present summaries of their cases, in the nature of arguments and summaries of testimony and exhibits, to a jury drawn from the regular jury pool. Each side makes a concise opening statement. The “evidence” portion of the case may be presented by the attorneys or by live or video-recorded witnesses. Each side then concludes with a concise summation. Each party is limited to a summary presentation of anywhere from a couple of hours to a day. The court then instructs the jury on the law using a dramatically streamlined charge. The jury then deliberates and returns either a unanimous verdict or separate signed “verdicts” of each jury member. The lawyers and parties may discuss with the jurors the reasons supporting their conclusions.

The summary trial result has no binding effect and is not admissible in another trial for any purpose. Courts using the device normally require the parties to attend the summary trial and have reported significant success in settling cases using it.^[13]^ This procedure is particularly useful in cases where the attorneys and parties have widely divergent views of the likely results of a trial.

The summary process can be very useful in helping evaluate the unique “value” of a case since the parties can present their side of a dispute. It also can remove or reduce disagreements about what will happen in a trial and is useful to settle cases that appear impossible to settle. The presence of the parties and lawyers helps them understand the merits of the other side’s case and the views of likely jurors.

Mini-Trials. One device for settling large lawsuits is the “mini-trial.” There is no single formula for a mini-trial as it is a procedure that the parties can design to meet their needs. Its use in one large patent dispute (Telecredit v. TRW) has been widely described in the legal literature, and that case is a useful model for understanding how the mini-trial can be used.^[14]^ The essential features of the mini-trial include: a limited period for expedited discovery of a limited nature, the exchange of position papers and exhibits, a one or two day trial of the dispute to the top managers of the business parties, and the meeting of business executives who attended the trial in an attempt to resolve the dispute.

A neutral advisor or moderator can be used to structure the mini-trial proceedings and help keep the proceedings directed to the effective resolution of the dispute. The advisor would not normally participate in the initial evaluation of the positions of the parties or the soundness of their respective settlement postures. The advisor would be available to provide input into the likely final result.

Fact-Finding. Fact-finding is a tool for resolving disputes in which an independent third person is brought into a dispute to identify facts that are in dispute and those that are not in dispute. This process may assist the parties in reaching agreement on some issues, narrowing their dispute, or may permit the parties to compromise their positions on matters on which there is no agreement but also no serious dispute. A fact-finder expert does not normally make any decisions. It is possible for a fact-finder to step into the role of mediator upon conclusion of the fact-finding in order to suggest a means of resolving the remaining disputes.

Private Judging. Another method for resolving disputes is the use of a private judge. The device permits parties to submit their dispute to a private (usually former) judge for resolution. Some states have recognized the procedure by statute,^[15]^ although it is available to any parties who can agree on a judge to act as referee or arbitrator, in effect. If there is a mechanism for private judging recognized by the courts it may be possible to have the referee’s decision enforced like a judgment. A private judge may be assigned as a special master by the court if there is a lawsuit pending and the parties want to have the court retain jurisdiction.

Private judging may be desirable because the parties may select a judge who has experience in resolving the type of dispute involved. Private judging is also of value when one or more of the parties feels that the rules of procedure, evidence, and appeal provided in the civil litigation process are preferable to those of arbitration or other means of dispute resolution. The private judge essentially presides over a civil action, although it is conducted outside the courthouse. A private judge could convene a private jury and hold a jury trial.

Online Dispute Resolution (ODR).* *Parties may be able to attempt to resolve disputes through the use of computerized settlement programs specially designed to settle cases. Programs such as Settlement IQ and Cybersettle provide secure online methods that can efficiently and effectively settle disputes. Parties can exchange offers, counteroffers, and messages in an effort to reach a compromise. These programs can work especially well in common cases or reoccurring disputes and afford successful results.

Combination or Hybrid Methods. Parties can customize these settlement methods to meet their needs. It is possible for the various distinctive tools for dispute resolution to be combined to suit the needs of particular parties. Mediation and arbitration can be combined as a Med-Arb process, previously discussed in § 1.8. The parties may engage in a mediation process with the understanding that the mediator can make a binding decision that may be enforced under the arbitration statutes if the mediation reaches an impasse. Conciliation and arbitration can be combined in a similar manner. A mini-trial can be conducted with the provision for a binding result by the neutral advisor if the parties cannot agree on a settlement. A summary jury trial can be used with a stipulation that the verdict will be sealed for a fixed period of time while the parties attempt to settle the case and that the verdict will be a final, binding verdict if it is disclosed to the parties.

Custom Resolution.* *The parties have great latitude in designing a means for resolution of a dispute that is satisfactory to them. Even if the parties do not agree on a binding means of resolving the dispute, they may agree to submit to a non-binding process with the further agreement that if a party does not abide by the result that party will bear the costs of any further procedures if the final trial or hearing does not result in a more favorable outcome. Imagination and the willingness to end a conflict define the ultimate limits on the dispute resolution process. Creative lawyers and parties who desire to live their lives or run their businesses rather than continue to fight can frequently settle seemingly intractable disputes.

§ 15.5 Documentation of Settlements

§ 15.5.1 Settlement Agreements

Settlement agreements should almost always be reduced to writing. Even if an oral agreement would be legally adequate, a written agreement is much less likely to be the subject of further disputes. Final agreements can be preserved in various settlement documents.

Negotiated terms can initially be recorded in an electronic memo, email, letter, memo of understanding, or list of terms and subsequently completed in final agreement form. These initial agreements can be signed or initialed in person or through electronic signatures. After the settlement negotiations, parties may reflect on the compromises made and perhaps want to change their minds. A written agreement prevents having to re-negotiate the major terms.

If the subject of the agreement is within the statute of frauds, the settlement agreement may be required to be in writing. The statute of frauds looks to the settlement agreement itself and not to the underlying claims. Thus, if an action claiming damages for fraud in the sale of securities is settled by an agreement to convey certain real estate to the plaintiffs, the settlement agreement would fall within the statute. Local court rules may also require settlements to be reduced to writing. This section considers some of the types of agreements that may be used to preserve and give effect to a settlement.

Settlement agreements are governed by contract law and should therefore be drafted with contract law principles in mind. Most importantly, the settlement document should make it clear that valuable consideration is being given by all parties. The consideration requirement is almost always met in compromise settlements, but it is useful to recite the consideration in order to remove any doubt about its inclusion.

One reason that more than one document is normally used to effect a settlement is the desire to keep the terms of a settlement confidential. There is no requirement in most jurisdictions that a settlement agreement be filed with the court or that its contents be made public. Parties may preserve the confidential nature of settlement terms by excluding from documents necessary to be filed with the court or made public confidential terms that typically include the monetary amount.

Some settlement provisions are common to the vast majority of cases. For example, confidentiality clauses are often included with the parties pledging to maintain the secrecy of the settlement terms, unless they need to disclose the terms to accountants and tax authorities. Some cases involve specialized terms depending on the circumstances and the needs and interests of the parties. For example, the parties may include a non-disparagement clause agreeing they will not speak ill or say anything derogatory of each other after the settlement. Other cases may include terms that protect other interests of one or more of the parties.

LLMs can help draft, review, and finalize settlement agreements with greater speed and accuracy. In early negotiations, GenAI can generate structured term sheets, memorializing key points. Attorneys can use LLM-backed tools to draft emails, memos, or letters that capture settlement discussions, ensuring that all agreed-upon terms are documented.

As settlement discussions progress, GenAI can also create first drafts of formal settlement agreements tailored to that case. Lawyers can also use GenAI to refine confidentiality, non-disparagement, and other clauses, ensuring that agreements align with client priorities. When opposing counsel provides revised drafts, LLMs can compare versions, highlight substantive changes, and assess potential legal and practical risks—such as increased exposure or weakened enforcement.

§ 15.5.2 Documents Implementing Settlements

In addition to agreeing on negotiated terms, most settlements require a document to implement the agreement. For example, if a lawsuit has been commenced, a dismissal is necessary. This section examines the major documents that are used to put a settlement into effect. The variety of potential settlement documents makes it impossible to catalog all possible forms. Indeed, just as innovative negotiation strategies result in settlements, the creative use of agreements and legal forms may permit a settlement to be effectuated that provides valuable benefits to the parties.

Examples and samples of settlement documents may be found through Internet searches, available in previously settled case files, or obtained from colleagues. The drafting of the initial settlement documents will need to be determined by the lawyers. Some attorneys prefer to do the first draft so they can be assured the terms accurately reflect the settlement. Other attorneys allow the other lawyer to complete the first draft to save their clients expenses and themselves time. Sometimes, who drafts what documents are part of the final negotiated terms. It is imperative that the final draft of the documents be carefully reviewed by all attorneys to make certain the settlement terms are correct and complete. There may be disagreements over the wording and effect of some terms, and further negotiations may be necessary to resolve these issues.

Dismissal. By far the most common device executed as part of a settlement of a case is a dismissal. There is not, however, a single standard form of dismissal that is appropriate in all cases. The two major forms are dismissals with prejudice and dismissals without prejudice.

If a dismissal is entered with prejudice, then the resulting judgment of dismissal will have full res judicata and preclusion effect. A dismissal without prejudice does not have any res judicata or preclusive effect, and the plaintiff may recommence the action at any time (before, of course, the statute of limitations would bar it).^[16]^ Under Fed. R. Civ. P. 41(a)(1) a dismissal, whether voluntary or by order of the court, that does not state whether it is with or without prejudice, will be deemed to be without prejudice. Not all state courts have the same rules. It is prudent to provide specifically in the agreement the language of the dismissal clearly stating that the settlement is made either “with prejudice” or “without prejudice,” with “with prejudice” being most common and preferred.

Upon completion of a settlement or as a condition of the settlement, the parties may seek to vacate any prior orders or judgments in the matter. Usually, this is desired by the losing party in order to erase the preclusive effect, the adverse precedent, or the public relations embarrassment of the judgment or order. Courts vary in their willingness to vacate a prior decision upon the request of settling parties. Some courts do so routinely. Others refuse. Still others weigh competing policy considerations and decide accordingly.^[17]^

A dismissal should also address the question of whether costs may be taxed by the prevailing party.^[18]^ The vast majority of settlements never contemplate that costs will be taxed, so the agreement should not leave the question open. The dismissal should normally state that all parties bear their own costs and disbursements or that no party shall be entitled to tax costs or expenses.

Silence on this subject is just a potential basis for a further dispute. If a judgment of dismissal is entered, the defendants will normally be deemed prevailing parties, and will be entitled to tax costs. If the parties intend costs to be taxed, it may be desirable for the parties to agree as part of the settlement on what items and what amounts are properly taxable. A specific agreement likely obviates future disagreements.

If the parties agree to the dismissal of an action without prejudice, it may be desirable for the plaintiff to obtain a specific agreement tolling the running of the statute of limitations. This settlement term may be useful in an action where the plaintiff has a number of different claims against more than one party. A defendant the plaintiff views as a secondary defendant may be able to convince the plaintiff to pursue other potential defendants if the plaintiff can be assured those claims will not be lost.

Release. A release is one of the most frequently used settlement documents. The parties may execute a separate document entitled “Release” or “Release of All Claims,” or may include language of release in a settlement or dismissal agreement. Unless there is some particular reason for execution of a separate document, it is probably better to include the release language in a comprehensive settlement agreement.

The most important thing to consider in preparing a release is the finality of the document. Although there are grounds for setting aside a release, such as fraud and mutual mistake, releases are intended to be final and permanent, and judges and arbitrators routinely construe them as such. Care must be taken so the release reflects the agreement and intent of the parties regarding its scope and coverage.

It is also important to remember the time-encrusted, if not time-honored, rule of tort law that “release of one joint tortfeasor is a release of all.” This rule operates to release persons not even mentioned in the release nor intended by any party to the agreement to benefit by it. If the case involves multiple tortfeasors, it is imperative the attorneys, especially an attorney for a claimant, are sure the settlement does not unwittingly result in the loss of rights unintended by the parties. Special considerations of releases in multi-party cases are covered in Section 15.5.3.

It is quite easy to prepare an adequate release. The word “release” is not necessary, but useful to show intent. Any writing that reflects an intention to release will be sufficient to release. In practice, however, elaborate and expansive language is used. Indeed, it is harder to limit the effectiveness of a release than it is to expand it. An example of language release for a personal injury case is:

The undersigned _______, for themselves and their heirs, successors, and assigns, hereby releases and forgives _______, and its officers, directors, employees, agents, servants, independent contractors, attorneys, insurers, sureties and heirs, successors, and assigns of any of them, from any claims, demands, causes of action, and actions, whether in tort, contract, or otherwise, whether now existing or hereafter arising, for any injury, known or unknown, real or imaginary, presently existing or which may arise at any time in the future, for any act, omission, or failure to act at any time from the beginning of history to the end of time.

Such terms may neither be necessary nor especially effective. It’s certainly possible to draft effective releases with a fraction of the verbiage.

“Standstill” Agreements. In some cases, the parties do not want to have the pending litigation dismissed, yet agree that nothing should transpire in the case unless and until the settlement agreement is completed or discharged by full performance. This may be a more desirable way to resolve a case that has been pending for a long period of time or pending in a jurisdiction with a lengthy calendar backlog.

The settlement agreement in such a case should contain appropriate provisions to memorialize the intentions of the parties. It may be desirable to supplement the agreement itself with a stipulated order removing the case from the trial or hearing calendar but preserving its priority if the settlement is not effectuated or if some future contingency does not occur. It may be useful to submit an order for approval by the judge or arbitrator to prevent a case being unilaterally dismissed or stricken from the calendar upon notice of a settlement that is not fully completed.

Covenant Not to Sue. A covenant not to sue is a contractual undertaking not to sue or otherwise pursue rights in the future. It is generally a part of a settlement agreement intended to resolve some pending disputes and may be contained in a release document. A covenant not to sue is not, however, a release in itself. The enforcement of a covenant not to sue is affected not by the doctrine of bar by release, but rather by estoppel. This document may have special value in effectuating a settlement of some, but not all, claims against a party or in settling claims against some, but not all, parties. As discussed above, it may be a useful tool to avoid the “release of one is release of all” rule in tort cases.

Loan Receipts. Loan receipts represent one of the classic legal fictions recognized by the law. Loan receipts are widely used in insurance settlements, particularly in property insurance cases. A loan receipt is an agreement that permits one party to pay another a sum of money, usually an insurer paying an insured, and to have the payment considered a loan rather than an outright payment. Usually, however, the loan receipt will provide that the “loan” need only be repaid out of the proceeds and to the extent of some future litigation or claim. Thus, the “loan” is never intended to be repaid directly.

The law has recognized this fiction, however, and judges and arbitrators have upheld the arrangement as a loan and not a payment. This device has widespread use in property insurance subrogation actions to permit an action to be brought in the name of the insured rather than the insurer by allowing the insured to remain the real party in interest.^[19]^ A loan receipt may also be used for other purposes by controlling the tax treatment of the settlement or for accounting reasons.

Final Accounting. One important settlement document frequently overlooked by attorneys is a final accounting of the settlement to the client. It is usually prudent to explain to the client in writing just what was paid or received in a settlement and how the settlement proceeds were applied. If a plaintiff settles a case and pays a contingent attorney’s fee based on a percentage of the settlement, a pro forma billing should be submitted to the client showing how the fee was calculated, what deductions were made for disbursements or expenses, and what other adjustments, if any, were made. This is an important way to ensure that no confusion exists as to the distribution of the settlement proceeds.

§ 15.5.3 Settlement of Multiple-Party Cases

Settlement of actions involving multiple parties may involve special problems that require careful consideration by counsel. The central focus of these problems is the rule that release of one tortfeasor releases all and the rules of contribution and indemnity among the parties. Because contribution and indemnity law varies widely among jurisdictions, it is impossible to identify all means of settling various types of multi-party disputes. The introduction of comparative negligence, comparative fault, and refinement of questions of contribution and indemnity in cases involving both fault-based and non-fault liability have made these questions virtually unique to each jurisdiction. Creative attorneys can achieve good results for their clients by analyzing settlement problems and preparing documents that are consistent with the interests of the parties and that comply with the applicable law.

One good example of a partial settlement of multiple claims is the Pierringer release, named after a Wisconsin case approving its use.^[20]^ This document releases the plaintiff’s claims against the settling defendant, satisfies any claim for that defendant’s portion of the negligence, and indemnifies that defendant from any contribution claim. The settlement specifically reserves the plaintiff’s claims against the non-settling defendants. The plaintiff agrees to reimburse the settling defendant for any additional sums that may be awarded or imposed against that defendant.

Settlement on this basis is disclosed to all the other parties in the case and can be disclosed to the jury. The *Pierringer *release has been recognized in other jurisdictions and is well-suited to most states with comparative negligence laws.^[21]^ This release is effective because it permits the settling defendant to be completely extricated from a case, without fear of further cross-claims.

A markedly different settlement device is the Mary Carter Agreement, named after the Florida case of Booth v. Mary Carter Paint Co.^[22]^ These agreements are secret settlements between the plaintiff and one defendant whereby the defendant continues to defend the case with the understanding that its maximum liability will be diminished by increasing the liability of other defendants in the case.^[23]^ Mary Carter agreements are widely criticized, and are unenforceable in some states, because they tend to continue, rather than end a dispute, and because they are collusive and secret.^[24]^ They also raise significant ethical problems.^[25]^

Mary Carter agreements are not normally releases. They may be embodied in various forms of agreements, including covenants not to sue and loan receipts. Because of the serious questions about their effectiveness and the ethical propriety of Mary Carter agreements, lawyers probably should not enter into the agreements unless the law of the jurisdiction approves their use. Some state courts have ruled they are illegal per se.^[26]^

Another related settlement device is the High-Low agreement, similar to the method used in arbitration. This agreement essentially removes some of the risk of litigation for settling parties by establishing the highest amount the defendant can be required to pay and the lowest amount the plaintiff can recover. In a tort case with hotly contested questions of damages, the parties might agree that plaintiff will recover the amount of a verdict within the range of $40,000 to $120,000. If the verdict is less than $40,000, including $0, the plaintiff would still recover $40,000. Similarly, even if the jury returned a verdict of $500,000 the defendant would only have to pay $120,000. This device can be effectively used in multi-party and two-party cases if it is disclosed to all participants.

§ 15.5.4 Structured Settlements

A form of settlement used in commercial, personal injury, and other cases is the structured settlement. This agreement compensates an injured party with a string of payments over a period of time rather than a lump sum payment at the time of settlement. Structured settlements generally address the cash flow needs of the parties and the tax ramifications to the party receiving funds and the party paying them.

“Structured settlement” has special implications in personal injury cases. Due to favorable tax treatment of personal injury settlements paid over time, it is frequently possible to arrange future payments to an injured person resulting in tax-free cash flow to pay for future medical expenses, loss of income, and other expenses. Periodic payments received for personal injuries are normally not considered “income” for tax purposes.^[27]^

Structured settlements may have inherent problems. No one can accurately predict the financial soundness of any company or carrier far into the future, even with financially secure defendants. This risk is normally handled by having an annuity issued by a first-rate insurance company fund the future payments. Also, no one can be assured that the agreed-upon future payments will be adequate to pay for future expenses. This risk can be avoided by having the defendant agree to pay actual future expenses. And no one can predict the value of future money. This risk can be reduced by providing for a graduated schedule of payments based on an economic price index such as the Consumer Price Index.

Many structured settlements provide three tiers of payments: a lump-sum payment at the time of the settlement, a guaranteed series of future payments, and additional future payments after the guaranteed payments. Further, the settlement has to determine the amount and payment timing of the contingent fees for the plaintiff’s lawyer. Some states require mandatory “structuring” of certain judgments, and some have adopted statutes similar to the Uniform Law Commissioners’ Model Periodic Payment of Judgments Act.^[28]^

§ 15.5.5 Deferred and Periodic Payments

Usually, it’s best to have a monetary settlement paid promptly providing finality and avoiding future disputes. However, there are cases involving defendants who cannot make a single large payment or who have financial problems. And there are cases where the plaintiff may prefer to be paid periodically. Deferred payment is a tool used to facilitate the settlement of these disputes.

A partial payment plan may be an effective or the only way to reach a final settlement. The plaintiff who refuses to budge from a final offer may be willing to accept payments over time, with or without interest; and a defendant who initially refuses to agree to pay more than a specific amount may be willing to do so if periodic installments can extend the payment deadlines. In these cases, terms will be negotiated regarding the number, amount, and timing of payments and, usually, a form of security.

An inherent problem with future payments, as mentioned earlier, is that the defendant may later refuse to pay or be unable to pay. Common forms of security to prevent or reduce the likelihood of these default events include liquidated damages and a confession of judgment. The former provides that if the payments are not forthcoming, the defendant will have to pay a larger or much larger amount. The latter provides that the unpaid plaintiff need not have to pursue another legal action to collect but can go back before the judge or arbitrator and obtain a judgment or award equal to the unpaid balance plus attorney fees. Other forms of security that may be available include security interests in property, a promissory note with a co-signor, a surety bond, or assured access to future assets. These are incentives for the defendant to pay as agreed. If all else fails, the unpaid party may need to enforce a settlement.

§ 15.6 Enforcement of Settlements

§ 15.6.1 The Need to Enforce Settlements

When settlement is reached, the matter is usually concluded. Most often, the parties, satisfied if not enthralled with their bargain, comply with the terms of the settlement and retreat from battle, carrying on with their lives.

Occasionally, however, one party fails to fulfill part of the bargain. A party may belatedly recognize a bad bargain, and balk at consummating the settlement. Another party may be unable to comply with agreed-upon settlement terms because of lack of money. Or circumstances may change adversely affecting the value or cost of settlement. And, sometimes, the breaching party is simply unscrupulous.

In such situations, four available remedies are:

1. An amendment to, or supplementation of, the pleadings to allege the settlement agreement as an executory accord;

2. The initiation of a separate action for breach of the settlement agreement;

3. A motion to enforce settlement; or

4. An arbitration clause in the settlement agreement to resolve enforcement disputes.

The third and fourth remedies are the most common and usually the most cost-effective. Amending the pleadings and commencing a separate action both require significant delay and require the parties to expend additional resources. A motion to enforce the settlement may be an effective tool to accomplish the intended result of the settlement agreement. And an arbitration can resolve alleged lingering issues with finality.

LLMs excel at ideation, making them valuable tools to analyze the four primary remedies for enforcing a settlement: amending pleadings, filing a breach of contract action, filing a motion to enforce, or invoking arbitration. GenAI can assess the case circumstances, suggesting pros and cons of each approach based on efficiency, cost-effectiveness, and likelihood of success.

As LLM reasoning capabilities continue improving, they may generate additional enforcement strategies beyond these traditional four options. By weighing factors such as factual history, as well as party dynamics, LLM-backed tools can help attorneys determine the best path forward.

Beyond assessing a remedy, GenAI can also identify weaknesses in settlement agreements that may complicate enforcement. LLMs can highlight vague or unenforceable terms that could create ambiguity, making enforcement more difficult. Additionally, LLMs could anticipate the breaching party’s potential defenses—such as fraud, mistake, or changed circumstances—allowing attorneys to prepare counterarguments. If litigation appears costly or impractical, GenAI can also suggest alternative negotiation strategies, such as modifying payment terms or structuring compliance plans.

§ 15.6.2 Motions to Enforce Settlement

Judges and arbitrators frequently show greater disdain for motions to enforce settlement than for other disdainful types of motions. In reviewing the enforceability of a written settlement agreement, the decision maker may have to find or imply that one party is dishonest or devious. In reviewing oral settlement agreements between counsel, it may be necessary to determine whether: an attorney had authority of the client to settle, a lawyer properly represented and counseled a client, an attorney exceeded the authority of the client, or one party deceived the other party or is attempting to deceive the forum.

The decision maker is likely to be favorably disposed to the party who can establish that a settlement occurred and was breached. Consequently, judges and arbitrators enforce a settlement far more than they find an absence of settlement. One surmises that the pain of implying dishonesty of a party or ultra vires action by counsel is outweighed by the joy of having the case over and done with.

A motion to enforce settlement should be made before the forum that had jurisdiction over the original claim. Amendment of the pleadings to seek enforcement of a settlement is unnecessary and superfluous because a motion will accomplish the same result. The commencement of a new action may only be necessary in a situation in which the original forum no longer has personal or subject-matter jurisdiction over the underlying action and settlement.

The movant’s best tactic will be a simple motion to enforce directed to the original judge or arbitrator who thought the case had settled some time ago. This decision maker, who may have even entered an order of dismissal because of the settlement, will want to resolve the matter expeditiously. The original tribunal also knows the procedural background of the case and may even have been involved in the settlement discussions upon which the settlement was based. Because of questions about jurisdiction to enforce a settlement in a dismissed action, it is prudent to provide in the settlement agreement for that forum to retain jurisdiction or to have the judge or arbitrator condition dismissal on performance of the settlement agreement.

The forum may have entered an order dismissing the case or declaring it inactive, so the movant seeking to enforce settlement may need first to make a motion to vacate the earlier action removing the case from the calendar and to reinstate the action on the calendar. This can be accomplished either through a short motion filed in advance of the motion to enforce or in a request for reinstatement made as part of the underlying motion to enforce.

Where the movant makes a separate and preceding motion to vacate and reinstate, the movant should file a notice of motion, motion, proposed order, memorandum, and affidavit setting forth the facts that justify reinstatement. Because the same supporting documents will be required for a motion to enforce settlement and because even the contents of the documents will be identical in part, it is easier and probably a better practice to submit a combined motion to reinstate and enforce settlement.

One advantage of specifically seeking both reinstatement of the action and enforcement of the settlement is the flexibility it allows the tribunal. In the event the motion to enforce is denied, the movant will nonetheless want to promptly reopen the original action to avoid problems with the statute of limitations, res judicata, collateral estoppel, and similar doctrines. A proposed reinstatement order makes this possible.

Often, an order dismissing the action or placing it in inactive file will be entered upon the forum’s learning of the settlement. These orders are sometimes entered without the request of the parties, or even despite requests that they not be entered. Such an order will normally specifically reserve the possibility of reopening the matter if the settlement is not achieved or if other good cause is shown.

The tribunal usually has the power to reopen the matter on the basis of its inherent authority, the authority granted by Fed. R. Civ. P. 60(b), and the interests of justice. Failure to comply with the terms of a settlement agreement constitutes misconduct of an adverse party within the meaning of Fed. R. Civ. P. 60(b)(3). That rule permits the court to relieve a party of the effect of an order or judgment upon a showing of fraud, misrepresentation, or other misconduct. Further, it would appear that the breach of settlement also qualifies as “any other reason justifying relief” from the order under Fed. R. Civ. P. 60(b)(6).^[29]^

If a party chooses to use the court for relief but prefers not to use a motion, a new separate action could be brought with a short complaint alleging the existence of the settlement agreement and a cause of action for breach. The requested relief may be either specific performance or reinstatement of the original claim, similar to the relief through a motion.

§ 15.6.3 Procedure to Enforce Settlement

The movant should normally schedule a hearing on the motion to enforce. In effect, the hearing on the motion is a mini-trial on a breach of contract claim, the contract being the settlement agreement. The movant will proceed to prove the factual and legal elements through witnesses and exhibits. The opposing party will either interpose a factual argument (e.g., insufficient proof of a final agreement) or a legal argument (e.g., lack of actual or implied authority of counsel) or will be unable to effectively contest the motion.

Where the underlying cause of action is based on state law, the contract law of the state with the closest nexus to the settlement will govern.^[30]^ Usually, the forum state will be the location where settlement is negotiated, reached, and memorialized and forum state contract law will govern. A federal circuit case, Gamewell Manufacturing, Inc. v. HVAC Supply, Inc., stated that federal courts should apply a federal common law of contracts in construing settlement disputes with respect to federal litigation already in progress because such disputes “implicate federal procedural interests distinct from the underlying substantive interests of the parties."^[31]^

§ 15.6.4 Authority to Settle and Finality

The major controversy in a motion to enforce usually concerns the authority of counsel (or some other agent of a party) to agree to the settlement terms and bind the party. The law requires that attorneys compromise and settle claims only with the authority of their clients.^[32]^ The Code of Professional Responsibility and the Model Rules of Professional Conduct mandate that an attorney obtain the approval of a client before agreeing to a settlement.^[33]^ This authority may be express because of the words of the party to counsel or implied because of the actions of the party and counsel.^[34]^

The party’s behavior after settlement may prove the existence of implied or actual authority of counsel to effect a binding settlement or may establish ratification of the settlement by the party.^[35]^ Similarly, a representative sent to a pretrial conference requiring such persons to be clothed with full settlement authority may be found, even without actual authority, to have sufficient authority to bind the party. If a question arises as to the authority to settle a case, the court may have to hold an evidentiary hearing to determine what authority existed.^[36]^

After the judge or arbitrator makes a final determination and decides there was a settlement, the prevailing party may have a choice of remedies. The party may seek specific performance of the terms of the settlement or reinstate the original claim.^[37]^ The preferred route will vary according to the terms of the settlement, the likelihood of success in the underlying action, the time and expense required for trial or hearing, and the resources of the parties.

Practice Problems and Assignments

Follow the directions from your professor in completing an assignment.

1. Prepare to discuss in class or online:

(a) Effective negotiation approaches

(b) Ineffective negotiation approaches

(c) Settlement conferences

(d) Mediation

(e) Conciliation and collaborative approaches

(f) Arbitration alternatives

(g) Summary jury trials

(h) Mini-Trials

(i) Fact Finding

(j) Private Judging

(k) Special masters

(l) Other ADR methods

(m) Combination or hybrid processes

2. Prepare to discuss settlement documents in class or online, including:

(a) Dismissal documents

(b) Releases

(c) Related settlement documents

(d) Multi-party settlement documents

(e) Structured settlements

(f) Deferred or periodic payment terms

3. Your client is involved in numerous individual lawsuits in various states throughout the country and is in need of a generic dismissal stipulation and proposed dismissal order that may be used as draft formats for settlement documents.

(a) Plan the terms of a dismissal stipulation.

(b) Plan the terms of a proposed dismissal order.

(c) Draft the terms of a dismissal stipulation.

(d) Draft the terms of a proposed dismissal order.

4. Your client is involved in numerous individual lawsuits in various states throughout the country and is in need of a generic release that may be used as the format for a settlement document. This draft release should include: (1) mutual release provisions, (2) a confidentiality provision preventing each party from disclosing the amount and other terms of the settlement, (3) anti-disparagement provisions whereby the parties agree not to disparage each other, (4) [presume the defendant will make settlement payments in installments over the period of one year] security for non-payment of the installment payments if the defendant should default and fail to pay the full settlement, and (5) any other provisions you deem appropriate.

(a) Plan the terms of this release.

(b) Draft the terms of this release.

5. Your client is involved as a business defendant in a commercial lawsuit brought by another business. This litigation is venued in the state where your law school is located. Your client needs a dismissal stipulation, a proposed dismissal order, and a release containing the provisions listed in Problem 4 above.

Research the law of this state and:

(a) Plan the terms of these three documents including terms that are required or enforceable in this state for these settlement documents.

(b) Draft the terms of these three documents including terms that are required or enforceable in this state for these settlement documents.

(c) Presume this lawsuit has been brought by an individual consumer (not a business) against your client. Research the law of the applicable state to determine whether there are any additional terms that are required to be included or that may not be enforceable.

(d) Presume this lawsuit has been brought by a former individual employee of your client against your client for discrimination and harassment. Research the law of the applicable state to determine whether there are any additional terms that are required to be included or that may not be enforceable.

6. Hot Dog Enterprise sues Tri-Chem for violation of federal and state statutes, for negligence, and for products liability claims seeking actual and punitive damages.

(a) You represent HDE. General counsel for HDE asks for advice regarding optional methods to resolve the dispute. Provide such advice.

(b) You represent HDE. General counsel tells you to settle the lawsuit.

(1) Plan appropriate settlement documents.

(2) Outline appropriate settlement documents.

(3) Draft appropriate settlement documents.

(c) You represent Tri-Chem. General counsel for Tri-Chem asks you to advise Tri-Chem on alternative ways the lawsuit can be resolved. Provide such advice.

(d) You represent Tri-Chem. General counsel has instructed you to settle the case.

(1) Plan appropriate settlement documents.

(2) Outline appropriate settlement documents.

(3) Draft appropriate settlement documents.

7. In a case assigned by your professor and on behalf of the party assigned to you:

(a) Select an appropriate ADR method or methods that you believe may likely lead to a favorable settlement.

(b) Plan appropriate settlement documents.

(c) Outline appropriate settlement documents.

(d) Draft appropriate settlement documents.

8. In Pozdak v. Summit Insurance (Case B), prior to an arbitration being commenced, the potential parties agree that Pozdak will accept $750,000 in full settlement. You represent Summit Insurance. Draft a dismissal and release and any other appropriate settlement documents.

9. In Miyamoto v. Snow Cat (Case C), the plaintiff brings a lawsuit only against Snow Cat. After discovery has been completed, Snow Cat proposes a structured settlement offer to Miyamoto of $3,000,000 payable over six years.

(a) You represent Mike LaBelle, advise him whether he should accept a structured settlement or whether he should demand a cash settlement. Outline the terms of a favorable structured settlement.

(b) You represent Snow Cat. Draft the structured settlement documents. Create any additional facts you need to draft the documents.

10. In Giacone v. City of Mitchell (Case D), the City agrees to establish procedures that provide water customers with notice and an opportunity to contest a decision to terminate their water service.

(a) Presume the lawsuit is not a class action and there has been no damage to her house. You represent the Plaintiff. She does not want any money and you approve the procedures established by the City.

(1) Plan the appropriate settlement documents.

(2) Draft the appropriate settlement documents.

(b) Presume the lawsuit is a class action for declaratory and injunctive relief only. You represent the defendant. The judge will only approve a settlement if it contains an order agreed to by the City consenting to implement the established procedures.

(1) Plan the appropriate documents to resolve the case.

(2) Draft the appropriate documents to resolve the case.

11. In LaBelle v. Mitchell Arts Council (Case G), presume the Defendant agrees to reinstate the Plaintiff for 18 more weeks and to pay all back pay.

(a) Plan the appropriate settlement documents.

(b) Draft the appropriate settlement documents.

(c) Presume that 6 (six) weeks after LaBelle is rehired pursuant to the settlement terms, the Mitchell Arts Council terminates LaBelle again because of lack of money. What relief is available to LaBelle?

(d) Plan a motion and proposed order to enforce the settlement, including all necessary documents.

(e) Draft a motion and proposed order to enforce the settlement, including any necessary affidavits and other supporting papers and exhibits. Outline a supporting memorandum.

12. In Luger v. Shade (Case H), presume that defendant Develco offers to settle with the Lugers for $275,000, letting Shade individually defend the rest of the lawsuit.

(a) You represent Develco. Draft a Pierringer-type release or any other appropriate settlement document for Develco and a memorandum of settlement.

(b) As the Lugers’ lawyer, should you recommend acceptance? What else do you need to know? What could your counteroffer be?

(c) You represent Shade. Is there anything you can do about this side agreement? What?

13. In Mitchell Computer Club v. Rainbow Computer, presume the parties have agreed to a class action settlement that has been approved by the federal court:

(a) Identify the types of settlement documents that are needed for this class action settlement.

(b) Outline the terms of settlement documents that are needed for this class action settlement.

(c) Draft the terms of settlement documents that are needed for this class action settlement.

14. Prepare to discuss in class or online:

(a) Available remedies to enforce settlements

(b) Motions to enforce settlements

(c) Motion procedures

15. In Luger v. Shade (Case H), presume that Develco in settlement offered the Lugers a less desirable townhouse condo in Fire Island plus $96,000 in cash and payment of their legal fees, but paid by installment over two years. The Lugers accept. When they arrive at the condo, it is rife with structural problems. Then, Develco’s second installment check bounces.

(a) What relief is available to the Lugers? What relief do they want?

(b) Plan a motion and proposed order and other necessary documents to enforce the settlement.

(c) Draft a motion and proposed order to enforce the settlement, including any necessary affidavits and other supporting papers and exhibits. Outline a supporting memorandum.

(d) Now, draft the civil commitment papers for the Lugers citing as proof of their diminished mental capacities their acceptance of a second Develco townhouse (just kidding).

16. In Vasquez v. Hot Dog Enterprises (Case F), presume that plaintiff and HDE reach a settlement agreement, one provision of which is the rehiring of plaintiff and protection for her against further sexual harassment. Two months after Vasquez begins round two at Sunray, Don Winkle, a cousin of Dan Wankle, begins making lewd remarks to Vasquez and brushing against her at the time card line. The rest of the crew appears to find this hilarious.

(a) What could the parties have done as part of their settlement agreement to create a resolution process for future problems such as this?

(b) As counsel for Vasquez, what can you do? What should you do? Do you recommend a mediator? Why or why not?

(c) As counsel for HDE, outline your reaction to any action plaintiff is likely to take. What is the most likely scenario? Do you recommend a mediator? Why or why not?

(d) As the judge, what, if anything, should you do to resolve this case? Suggest a preferred approach. What will you want to know before making any decision?

(e) Presume the settlement had an arbitration clause. As the arbitrator, what, if anything, should you do to resolve this case? Suggest a preferred approach. What will you want to know before making any decision?

17. You have been requested by Summit Continuing Legal Education to make a presentation at its annual Negotiation and Settlement CLE Program. Prepare a concise outline of your presentation regarding the topic:

(A) Top Ten Effective Negotiation Techniques.

(B) Three Highly Successful ADR Methods.

(C) Dismissal and Release Settlement Documents.

18. You represent Denial Mutual Insurance Co. defending the litigation brought by Mike Mullarkey (Case N). Conduct an in-house assessment of your exposure in the case and realistic range of results at trial. In light of this assessment, construct a settlement strategy and implement it with whatever actions (or non-actions) will facilitate obtaining a reasonable settlement. Do you want to pursue some form of ADR or would you have more success negotiating directly with opposing counsel? Before or after the Final Pretrial Conference (see Ch. 16)?

19. You represent Gravitas Grinch in his suit against ProTectCo Life Insurance in Case O, and recognize that the circumstances of the death of Dara Domestic do indeed look suspicious. Craft a realistic settlement strategy. Do you want to pursue some form of ADR or would you have more success negotiating directly with opposing counsel? Before or after the Final Pretrial Conference (see Ch. 16)?

20. You represent Igor Investor in an individual claim against TechTrust Wealth Management in a matter that otherwise has the same facts as Case P. Conduct an in-house assessment of your exposure in the case and realistic range of results at trial. In light of this assessment, construct a settlement strategy and implement it with whatever actions (or non-actions) will facilitate obtaining a reasonable settlement. Do you want to pursue some form of ADR or would you have more success negotiating directly with opposing counsel? Before or after the Final Pretrial Conference (see Ch. 16)?

21. You represent Igor Investor and the Investor Class that has been certified by the Court. (Case P). How does this change the settlement behavior that you would have pursued in Question 20?

22. See, e.g., David A. Sklansky & Stephen C. Yeazell, Comparative Law Without Leaving Home, What Civil Procedure Can Teach Criminal Procedure, and Vice Versa, 94 Geo. L.J. 683, 696 n.37 (2006) (discussing civil and criminal statistics on percentage of cases that go to trial); William W Schwarzer, The Federal Rules, the Adversary Process, and Discovery Reform, 50 U. Pitt. L. Rev. 703, 707–08 (1989) (stating that 95% of all civil cases filed in federal courts are terminated before trial). ↑

23. • See *Schering-Plough Corp. v. FTC, 402 F.3d 1056 (11th Cir. 2005); United States v. Pfizer Inc., 560 F.2d 319 (8th Cir. 1977). ↑
24. • See *Amchem Prods., Inc. v. Windsor, 521 U.S. 591 (1997). ↑

25. For one academic criticism of the propriety and desirability of encouraging, or even permitting, settlement, see* *Owen M. Fiss, Against Settlement, 93 Yale L.J. 1073 (1984). Professor Fiss’s views are not widely shared, however. See, e.g., Geoffrey C. Hazard, Jr., The Settlement Black Box, 75 B.U. L. Rev. 1257 (1995). ↑

26. • See* Roger S. Haydock & Peter B. Knapp, Lawyering: Practice and Planning (4d ed. 2017); Gerald R. Williams & Charles B. Craver, Legal Negotiating (2d ed. 2007). ↑

27. This approach is perhaps best captured in the national best seller, Getting to Yes by Robert Fisher and William Ury, first published in 1981. Roger S. Haydock in Negotiation Practice also advocates more cooperative and less contentious negotiation styles. ↑

28. Fisher and Ury popularized it. See Getting to Yes at 76. For an expansion of the cooperative possibilities of the “battle of the orange” see Haydock, Negotiation Practice 7–8 (1984). ↑

29. However, the legal system often provides extra “breathing room” for settlement. For example, Fed. R. Evid. 408 provides that nothing said during settlement discussions may be used as evidence if the dispute proceeds to trial. ↑

30. This calculation is oversimplified in that a jury might believe the injury to be non-permanent but award more in pain-and-suffering damages for the past and future temporary injury. Conversely, a jury could see the injury as permanent but award less compensation. ↑

31. See Fleming James, et al., Civil Procedure §§ 6.3 & 6.4 (5th ed. 2001)(presenting estimate of “true” value of claim and discount for likelihood of success and other factors in different form); Roger S. Haydock, Negotiation Practice § 2.3, at 24 (1984)(attorneys given case to evaluate as part of survey gave widely varying assessments of liability and damages). ↑

32. • See* Richard L. Marcus, Slouching Toward Discretion, 78 Notre Dame L. Rev. 1561 (2003); Robert F. Peckham, The Federal Judge as a Case Manager: The New Role In Guiding a Case From Filing to Disposition, 69 Calif. L. Rev. 770 (1981). But see Jonathan T. Molot, An Old Judicial Role for a New Litigation Era, 113 Yale L.J. 27 (2003) (skeptical of judges’ expanding role in managing pretrial practice and reviewing class action settlements); Judith Resnik, Managerial Judges, 96 Harv. L. Rev. 374 (1982)(critical of role of judges as managers and doubts their effectiveness as resolvers of disputes in that capacity). ↑
33. • See, e.g*., Minn. Stat. § 540.08 (2020). ↑
34. • See* Donna Shestowsky, Improving Summary Jury Trials: Insights From Psychology, 18 Ohio St. J. on Disp. Resol. 469 (2003); Thomas D. Lambros & Thomas H. Shunk, The Summary Jury Trial 29 Clev. St. L. Rev. 43 (1980). ↑
35. • See* John D. Feerick, Toward Uniform Standards of Conduct for Mediators, 38 S. Tex. L. Rev. 455 (1997). ↑
36. • See* Cal. Civ. Code Proc. § 638. ↑

37. Many jurisdictions have statutes that toll the running of any statute of limitations during the pendency of an action on the claim. Thus, if the first action is brought a month before the statute of limitations would run, a dismissal of the action without prejudice even after it has been pending for five years would not prevent the case from being refiled. These statutes and relevant case decisions are collected in [Annot., 13 A.L.R.3d 979 (1967 & Supp. 2020)](https://www.westlaw.com/Document/I224d975814fe11da9868bc2addac329c/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0" \o “https://www.westlaw.com/Document/I224d975814fe11da9868bc2addac329c/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0). ↑

38. For representative cases regarding the different approaches, see* *Izumi Seimitsu Kogyo Kabushiki Kaisha v. U.S. Philips Corp., 510 U.S. 27 (2001). ↑

39. The procedures for and right to taxation of costs are discussed David F. Herr & Roger S. Haydock, Motion Practice § 23.02 (8th ed. 2020). ↑

40. The use of a loan receipt in this context and its treatment by the courts of the various states is discussed in a useful annotation, Annot., Insurance: Validity and effect of loan receipt or agreement between insured and insurer for a loan repayable to extent of insured’s recovery from another, [13 A.L.R.3d 42 (1967 & Supp. 2020)](https://www.westlaw.com/Document/I224c85e114fe11da9868bc2addac329c/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0" \o “https://www.westlaw.com/Document/I224c85e114fe11da9868bc2addac329c/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0). ↑

41. [Pierringer v. Hoger,](https://www.westlaw.com/Document/I8b47340dfe9211d98ac8f235252e36df/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0" \o “https://www.westlaw.com/Document/I8b47340dfe9211d98ac8f235252e36df/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0)[ 21 Wis. 2d 182, 124 N.W.2d 106 (1963)](https://www.westlaw.com/Document/I8b47340dfe9211d98ac8f235252e36df/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0" \o “https://www.westlaw.com/Document/I8b47340dfe9211d98ac8f235252e36df/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0). ↑

42. • See, e.g., *Kelly v. Ellefson, 712 N.W.2d 759 (Minn. 2006). ↑

43. [182 So.2d 292 (Fla. App. 1966)](https://www.westlaw.com/Link/Document/FullText?cite=182SO2D292&VR=3.0&RS=da3.0" \o “https://www.westlaw.com/Link/Document/FullText?cite=182SO2D292&VR=3.0&RS=da3.0), aff’d, [202 So.2d 8 (Fla. App. 1967)](https://www.westlaw.com/Document/I2112f11b0d2911d9821e9512eb7d7b26/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0" \o “https://www.westlaw.com/Document/I2112f11b0d2911d9821e9512eb7d7b26/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0). An essentially similar settlement device is the Gallagher covenant, named after the Arizona case of City of Tucson v. Gallagher, 108 Ariz. 140, 493 P.2d 1197 (1972). ↑

44. • See *Hashem v. Les Stanford Oldsmobile, Inc., 266 Mich. App. 61, 697 N.W.2d 558 (Mich. App. 2005). ↑
45. • See *Elbaor v. Smith, 845 S.W.2d 240 (Tex. 1992). ↑
46. • See* Abigail Carson, *Are Gallagher Covenants Unethical?: *An Analysis Under the Code of Professional Responsibility, 19 Ariz. L. Rev. 863 (1977). ↑
47. • See **[Elbaor v. Smith](https://www.westlaw.com/Document/Id9083612e7d311d99439b076ef9ec4de/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0&fragmentIdentifier=co_pp_sp_713_252" \o “https://www.westlaw.com/Document/Id9083612e7d311d99439b076ef9ec4de/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0&fragmentIdentifier=co_pp_sp_713_252)*[, 845 S.W.2d at 252](https://www.westlaw.com/Document/Id9083612e7d311d99439b076ef9ec4de/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0&fragmentIdentifier=co_pp_sp_713_252" \o “https://www.westlaw.com/Document/Id9083612e7d311d99439b076ef9ec4de/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0&fragmentIdentifier=co_pp_sp_713_252). ↑

48. This view was consistently upheld by the Internal Revenue Service. The Periodic Payment Settlement Act of 1982, [Pub. L. No. 97–473](https://www.westlaw.com/Document/I2320D6BC55DA47F0A10397A3EFACE27D/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0" \o “https://www.westlaw.com/Document/I2320D6BC55DA47F0A10397A3EFACE27D/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0) amended section 104(a)(2) of the Internal Revenue Code specifically to exclude damages from personal injuries or sickness from income, whether received as a lump sum or periodically. ↑

49. Model Periodic Payment of Judgments Act (1990 Act), 14 Uniform Laws Annotated 141 (1990 & Supp.2020) (including text of model act and information on versions adopted versions). ↑

50. 11 Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2860. ↑

51. • See *Roberts v. Browning, 610 F.2d 528 (8th Cir. 1979). ↑

52. [715 F.2d 112 (4th Cir. 1983)](https://www.westlaw.com/Document/I24275cca940f11d993e6d35cc61aab4a/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0" \o “https://www.westlaw.com/Document/I24275cca940f11d993e6d35cc61aab4a/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0). But see [Auer v. Kawasaki Motors Corp.](https://www.westlaw.com/Document/I17653540953e11d9bc61beebb95be672/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0" \o “https://www.westlaw.com/Document/I17653540953e11d9bc61beebb95be672/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0)[, 830 F.2d 535 (4th Cir. 1987)](https://www.westlaw.com/Document/I17653540953e11d9bc61beebb95be672/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0" \o “https://www.westlaw.com/Document/I17653540953e11d9bc61beebb95be672/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0)(which limits the scope of jurisdiction). ↑

53. • See, e.g., *Sarkes Tarzian, Inc. v. U.S. Trust Co. of Fla. Sav. Bank, 397 F.3d 577 (7th Cir. 2005). ↑
54. • Compare* ABA Code of Professional Responsibility EC 7–7, EC 7–8 & DR 7–101(A)(3) with ABA Model Rules of Prof’l Conduct R. 1.2. ↑
55. • See *Shoels v. Klebold, 375 F.3d 1054 (10th Cir. 2004). ↑
56. • See *Marchese v. Secretary, United States Dept. of Interior, 409 F. Supp. 2d 763 (E.D. La. 2006). ↑

57. See, e.g., [Gomez v. City of New York](https://www.westlaw.com/Document/Ie278962283e911e5a807ad48145ed9f1/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0" \o “https://www.westlaw.com/Document/Ie278962283e911e5a807ad48145ed9f1/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0)[, 805 F.3d 419 (2d Cir. 2015)](https://www.westlaw.com/Document/Ie278962283e911e5a807ad48145ed9f1/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0" \o “https://www.westlaw.com/Document/Ie278962283e911e5a807ad48145ed9f1/View/FullText.html?transitionType=Default&contextData=(sc.Default)&VR=3.0&RS=da3.0). ↑

58. • See *Mills v. United States, 69 Fed. Cl. 358 (Fed. Cl. 2006). ↑