I. Principle 9: Anticipate That You Must Put the Initial Agreement Back Together Again before Achieving a Final Settlement

• Library: Crafting Effective Settlement Agreements: A Guidebook for Attorneys and Mediators (ABA) (2018 Ed.)

I. Principle 9: Anticipate That You Must Put the Initial Agreement Back Together Again before Achieving a Final Settlement

The voyage of the best ship is a zigzag line of a hundred tacks.

— Ralph Waldo Emerson²⁷¹

Attorneys and mediators should expect to have to put an "agreement" back together again before a final written version is signed by all the parties. The need for repeated efforts to achieve a finalized deal is the norm rather than the exception. The data of settlements "convincingly show" that 84 percent of cases require multiple settlement efforts (such as telephonic or face-to-face negotiations, mediation, or exchange of e-mail messages) to reach a binding deal. The average case requires 3.3 separate settlement efforts to finalize a deal.²⁷² This means that you should expect to expend additional effort—whether you are the attorney or mediator—to ensure that initial agreement turns into a valid settlement agreement rather than a missed opportunity to resolve the litigation.

Circumstances that appear to require work to put the deal back together again generally fall into one of five categories: (1) when the success of an initial agreement masks the lack of agreement on other material terms, (2) when progress toward a final written agreement is derailed by distraction, inertia, or weariness that sets in once a mediation session adjourns, (3) when interpersonal conflict gets in the way of a finalized agreement, (4) when a party attempts to nibble at the agreement to try to get a better deal, and (5) when a party has a change of heart before the final agreement has been executed. Identifying the category into which the situation falls can guide you to the approach most likely to lead to a successfully finalized settlement agreement.

1. When There Has Not Yet Been Actual Agreement on All Material Terms

As a practical matter, "routine terms almost never are the subject of negotiation."²⁷³ Routine terms, however, can greatly affect the value of a deal. A defendant might pay far less for only a release of known claims if the agreement excludes unknown claims. A promise to pay the plaintiff is worth much more to the plaintiff if the check is due tomorrow rather than in two years. Every term of a settlement agreement can be written more favorably or less favorably for a party. This means that the hard and time-consuming work of distributive bargaining can continue over every single term in the settlement agreement. Although most terms in any settlement agreement are subject to implicit consensus, there usually are terms that greatly affect the value of the deal for which agreement must still be reached, even after the initial settlement amount seems to enjoy acceptance by all sides. In circumstances where the deal has not fallen apart so much as the details were never fully hammered out, the following approaches can be helpful:

Slog it out. When the parties' initial agreement is accompanied by heartfelt apology, a repaired relationship, or promise of future collaboration, attorneys might be pleasantly surprised to find that the remaining details of the agreement largely write themselves. In other instances where animosity continues unabated and doubts about compliance with the agreement permeate the negotiations, attorneys are likely to encounter a long slog through all of the terms. Stay with it! The task of drafting an agreement is no worse than answering endless form interrogatories, conducting dull depositions, or dealing with repetitive factual recitations for motions. As Robert Frost sagely advised, "the best way out is always through."²⁷⁴

Conduct another mediation session. There are efficient and less-efficient ways to craft a settlement agreement. When communication is chopped up by sporadic e-mails and imbued with increasing antagonism, the most efficient approach will often be to conduct another mediation session. Getting all parties and attorneys into the same room (or even two rooms close to each other) with the presence of a mediator can jumpstart and sustain progress at a rate that would otherwise not be possible. Moreover, a mediator's facilitative skills may mean the difference between success and failure. As mediator Dan Honeywell has noted, "increasingly, mediators find themselves often doing as much mediation of the language of the mediation settlement agreement as on the underlying dispute!"²⁷⁵

Finish incomplete homework. Attorneys might be surprised to settle a case during mediation they never dreamed would reach agreement and are therefore unprepared to write a final settlement agreement. Attorneys may need time to dig up the deeds to the real property to be transferred, check with the home office about how soon a check can be issued, schedule a meeting of the board of directors, and research the lawfulness of terms proposed for the agreement. Attorneys may simply need to finish their homework. Before leaving the mediation, mediators should ensure that the attorneys agree among themselves about the next steps to be taken, who will be responsible for each step, and the timing for their completion. Attorneys and mediators should immediately calendar all deadlines.

Shift the paradigm from distributive to integrative. Rather than haggling over terms one after another after another, frame the settlement agreement as a basket full of options. As Professor Robert Mnookin points out, "With respect to any one term, bargaining is distributive. . . . But because deals involve bundles of terms, each of which can affect the balance of risk and return, negotiators can trade among terms, swapping relatively inexpensive terms for more valuable provisions."²⁷⁶

Remember the value of "because." Attorneys should be able to articulate clear and concise reasons whenever they insist on including or excluding a particular term. "People simply like to have reasons for what they do."²⁷...