Denver Bar Association
September 2010
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Form ‘R Substance: “How Was That Part Of The Deal?”

by Dennis Walker

 

Now that you have just finished eight more costly depositions (in a civil case monopolizing your entire office for months), you see a chance to conclude the whole dispute. During mediation, the parties find a way to make an agreement. The amount works for everyone. Bitter enemies and, at times, antagonistic counsel show relief that it is finally over. Partial smiles reveal a little joy on both sides. Each side states a few qualifications. They strike a deal. They describe the scope of the release openly. They don’t debate or act with uncertainty. They state their mutual understanding — this case, these claims, this subject matter, and nothing else. The basic document is signed by everyone with the help of the settlement judge.

Then, the first draft of a more fully-stated settlement agreement arrives from the defendants’ attorneys after a stretch of anxious waiting. On review, you notice right off the bat a significantly more broadly stated release, one that was really not expected.

The other side now seeks to wipe out everything under the sun, along with unknown future possibilities — not just the subject matter — with any claims that could have been included.

Maybe this won’t be too terribly removed from the deal the parties shook hands on. However, to help your client, now you know you must explore for the first time, a variety of unrelated potential issues, known and unknown. This leads to sessions of unexpected quizzing about any other relationships and attenuated affiliations. You end up talking about possible issues in totally different subject areas. Perhaps, you wonder, this might be turned in to a non-problem. Yet, this emerges as an expensive inventory. Your folks did not expect this in their budget.

You think that suitable wording can be suggested. You are acutely aware of the need for expediency and damage control. The clients think the deal is done. Naturally, you still need to try and at least minimally avoid unintended pitfalls that crop up in the new language. What occurs to you is that your job has evolved.

A debate thrusts you in to a funny campaign of dampening the other side’s fears. Are they reasonable? Opposing counsel reveals for the first time his people’s worry that your clients may harbor some secret desire to plunge the other side in to litigation all over again. You know, based on the expense, delay and long haul you have just come through together, that such a potential fails to resonate with your clients. Recent experience assures you there is no such chance.

A devil emerges in troublesome new wording in the other side’s draft. Without prior discussion, they now insist that potential post-settlement behavior of your clients should be subject to monitoring. They are calling for limitations, restrictions and management for their supposed benefit. They seek this by urging phrases that call for, in effect, self-censorship by the plaintiffs, restricted speech, policing by the defendants and long-term worry for your clients. This all appears under the guise of proposed "non-disparagement" and "non-assistance" clauses.

You react. Where did this come from?

Here is an example of a conversation you might experience about this matter:

"Oh, our clients insist that because they are paying big money, they don’t want to turn around and find the plaintiffs are stirring up other litigation against them. They are telling us these things have to be in there. We have our marching orders."

That wasn’t part of the deal.

"What do your clients have to worry about, especially if they don’t intend to harm the defendants?"

Why should we be holding up the settlement to address this stuff?

"Why, this is typical for cases of this kind. It’s virtually standard. Our clients never settle without this language."

How would I know that? I never see this as a matter of course. I don’t see how your experience in other cases could require this of my clients?

"Oh, of course you had to know this would be in the more-detailed release."

What do you mean? Such phrases have never been standard in my years of experience.

"It’s a ‘condition’ of the settlement. Just talk to your people. We doubt that they will have any problems with it."

I have spoken to them. There is no way they want to step in to dubious provisions that will get them sued for something they might say. They have agreed to release your people and walk away from these claims and subject matter. That’s it.

"Well, this deal is about complete ‘peace,’ and if there is total peace being achieved, the defendants should not be subject to more grief later from your clients."

Yes, "total peace" for this subject is the deal. But, my clients should not have to be looking over their shoulders for years, worrying that ordinary comments may be used against them to assume they violated some clause in an old confidential settlement.

"I don’t know why you are making such a big deal out of this. There is no way that the defendants want to sue anybody."

Then we should not even be talking about this. Work devoted to these proposals can’t be justified.

"Yeah, but let’s maybe see if we can narrow these clauses a little. What are you really worried about, specifically?"

Nobody negotiated for this.

"We’ll be happy to go over your possible exceptions, if you really think they’re important."

I don’t think this is productive. We should not be trying to carve out exceptions to restrictions that were not agreed upon.

"But this is common practice."

How in the world would there be any way to manage such clauses? There can’t be any economic benefits to the defendants’ operations from these impossible-to-enforce clauses.

"Yeah, if that’s true, then your clients have nothing to fear. So, why do you want to waste time arguing over things that will never matter?"

Why are we holding up the settlement payment? Is this about some manager’s need to "save face" in a corporate hierarchy?

Then, what comes can be terrific or mind-numbing.

Are we seeing an instance of pre-budgeted attorney fees for work following a settlement that drives one side’s approach to the documents? Perhaps this is where some lawyers lose patience and grouse about whose word is good.


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