Settlement and Alternative Dispute Resolution (ADR)

AuthorJennifer Duncan-Brice
Scope of Chapter:
Settlement: How to evaluate a case for settlement; how to negotiate towards settlement (both from a plaintiff’s perspective
and from an insurer’s perspective); offers of judgment; the role of courts in settlements; the mechanics of settlements;
and the enforceability of settlements.
Alternative Dispute Resolution: Mediation and arbitration, including both court initiated (non-voluntary) arbitration and
contractual arbitration.
Strategies and Overview:
Settlement: The settlement process is integral to the practice of law since the vast majority of cases are settled before to
trial. Prepare for settlement with care, and maintain an awareness of what will be convincing to the other side.
Alternative Dispute Resolution: Mediation and arbitration provide increasingly popular alternatives to the choice of
trial or settlement through negotiations by the parties. Parties in contractual relationships may include provisions for
mediation or arbitration of disputes in their contracts, but even without a prior contractual requirement, parties may
choose mediation or arbitration at any time.
Statutes and Rules:
9 USC §§2-16; 210 ILCS 45/3-606 and 3/607; 710 ILCS 5/1-18, 15/1 et seq.; 735 ILCS 5/2-1301, 5/2-1401, 5/2-
1009(a), 5/8-1901, 5/11-1; 740 ILCS 5/2-1117; 740 ILCS 100/.01 et seq.; Rule 91(b), 219(c); SCR 36, 86-95, 237.
Related Topics: Taking the Case, Ch 1, Presuit Activities, Ch 2; Parties, Ch 12; Defaults Judgment, Ch 31.
Forms: See the following forms in digital access:
Form 32:10, Initial Letter to Defendant, and Attorney’s Lien Notice.
Form 32:20, Client’s Settlement Acknowledgment.
Form 32:30, Joint Stipulation For Dismissal.
Form 32:40, Order for Joint Stipulation of Dismissal.
Form 32:50, Court-Annexed Mediation Referral Order (Cook County).
Form 32:51, Stipulation for Appointment of Mediator (Cook County).
Form 32:52, Order for Appointment of Mediator (Cook County).
Illinois Pretrial Practice 32-2
Form 32:53, Conf‌identiality Agreement and Nonrepresentation Acknowledgment (Cook County).
Form 32:54, Mediation Agreement (Cook County).
Form 32:55, Memorandum of Agreement/No Agreement (Cook County).
Form 32:56, Mediator Report (Cook County).
Form 32:57, Mediator Evaluation (Cook County).
Form 32:58, Party Evaluation (Cook County).
Form 32:59, Attorney Evaluation (Cook County).
Form 32:60, Conf‌identiality Agreement and Non-Representation Acknowledgment (6th Judicial Circuit).
Form 32:61, Court-Annexed Mediation Memorandum of Agreement (6th Judicial Circuit).
Form 32:62, Court-Annexed Mediation No Agreement (6th Judicial Circuit).
Form 32:70, Mediation Order (16th Judicial Circuit).
Form 32:80, Order of Referral to Court-Annexed Mediation (17th Judicial Circuit).
Form 32:81, Conf‌identiality Agreement and Nonrepresentation Acknowledgment (17th Judicial Circuit).
Form 32:82, Mediation Held/No Agreement (17th Judicial Circuit).
Form 32:83, Memorandum of Agreement (17th Judicial Circuit).
Form 32:90, Order of Referral to Court-Ordered Mediation (18th Judicial Circuit).
Form 32:91, Order for Mediation Conference (18th Judicial Circuit).
Form 32:92, Conf‌identiality Agreement (18th Judicial Circuit).
Form 32:93, Notice of Mediation Conference Completion (18th Judicial Circuit).
Form 32:94, Memorandum of Full (18th Judicial Circuit).
Form 32:95, Memorandum of Partial Agreement (18th Judicial Circuit).
Form 32:96, Memorandum of No Agreement (18th Judicial Circuit).
Form 32:100, Order of Referral to Court Annexed Mediation (19th Judicial Circuit).
Form 32:110, Procedures Concerning Settlement of Minors’ and Disabled Persons’ Personal Injury and
Wrongful Death Cases and Sample Orders.
A. Case Evaluation
1. Why Try To Settle?
§32:01 Most Cases Settle
§32:02 Benef‌its Not Achievable by Litigation
§32:03 Financial Considerations for Client
§32:04 Financial Considerations for Attorney
2. When Should You Settle?
§32:10 Key Times
§32:11 Know the Case
§32:12 When Not to Settle
3. Tax Consequences
§32:20 PI and WC Settlements Not Generally Taxable
§32:21 Workers’ Compensation
§32:22 Discrimination Actions
§32:23 Interest Payments
§32:24 Punitive Damages
4. Impac t on Government Benef‌its
§32:30 Settlements Remove Medicaid and SSI Eligibility
§32:31 Preserving Medicaid Benef‌its
5. Liens
a. General Points
§32:40 Effect on Settlement
§32:41 Court Review of Liens
§32:42 Creatures of Statute
32-3 Settlement and Alternative Dispute Resolution (ADR)
b. At torney’s Liens
§32:50 Statutory Liens
§32:51 Common Law Retaining Liens
§32:52 Severing Attorney/Client Relationship
c. Health Care Provider Liens
§32:60 Classes of Health Care Providers
§32:61 Notice Requirement
§32:62 Lien Limited to 40% of Recovery
§32:63 Common Fund Doctrine May Apply to Medical Payments
§32:64 Lien Does Not Exhaust Recovery
§32:65 Structured Settlements Do Not Avoid Lien
§32:66 Hospital Lien Protections
§32:67 No Interest With Physician Liens
§32:68 Adjudication of Rights
§32:69 Retroactivity of 770 ILCS 23/1 et seq.
§32:70 Hospital’s Contract Affects Lien
§32:71 Common Fund Doctrine Does Not Apply
§32:72 Calculation of Lien
§32:73 Minor’s Responsibility to Pay Lien
d. Medicare and Public Aid Liens
§32:80 Medicare Liens
§32:81 Computation of Medicare Liens
§32:82 Public Aid Liens
e. Workers Compensation Liens
§32:90 General Provisions
§32:91 No Reimbursement for Non-Medical Services
§32:92 Not Recoverable in Legal Malpractice
§32:93 Serve Summons
§32:94 Evidentiary Hearing
§32:95 Waiver of Contribution Limits (“Kotecki Cap”)
Does Not Waive Workers’ Compensation Lien
f. Common Fund Doctrine and Interplay With Subrogation Actions
§32:100 General Application of Doctrine
§32:101 Attorneys Liable for Failure to Satisfy Subrogation Actions
§32:102 May Not Apply to Recovery by a Minor
§32:103 Subroger May Opt Out of the Common Fund
§32:104 Not Preempted by ERISA
§32:105 Common Fund Doctrine Does Not Apply
6. Ethical Considerations
§32:110 Settlement Authority
§32:111 Duty to Communicate Offers
§32:112 Safekeeping of Client’s Property
§32:113 Conf‌identiality Clauses
B. Negotiation
1. General Points
§32:120 Method & Style
§32:121 Keep Authority Clear
§32:122 Communicate All Offers
§32:123 Offers of Settlement Not Admissible
2. Plaintif f’s Perspective
a. Set tlement Letters
§32:130 General Points
§32:131 Liability Statement
§32:132 Documentation of Liability

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