Settlement and Alternative Dispute Resolution (ADR)

• Author: Robert F. Kane/Donald G. Rez
• Pages: 505-582

Chapter 30

Settlement and Alternative

Dispute Resolution (ADR)

QUICK VIEW

Scope of Chapter:

Settlement: How to evaluate a case for settlement; how to negotiate towards settlement; statutory offer to

compromise; the role of courts in settlements; the mechanics of settlements; and motions to enforce settlement.

Alternative Dispute Resolution: Court ordered mediation; judicial arbitration, both voluntary and court ordered.

Strategies and Overview:

Settlement: The settlement process is integral to the practice of law since it is generally in the best interest of your

client to resolve the case - and it makes little sense to spend more money on the case then it is worth. Most cases by far

are settled. Prepare for settlement with care, and maintain an awareness of what will be convincing to the other side.

Alternative Dispute Resolution: Consider whether the court will order arbitration or mediation and if so, pre-

pare just as for trial. Consider whether stipulating to mediation or arbitration will lead to a good result with less

expenditure of time and money.

Statutes and Rules: CCP §§372, 664.6, 664.7, 998, 1141.10 ff, 1775 ff; Evid C 1152; Prob C §§3400 ff, 3500 ff;

CRC 3.810 ff, 3.850 ff, 3.1380, 7.950 ff.

Related Topics: Taking the Case, Ch 1; Presuit Activities, Ch 2.

Forms in Digital Access: See digital access for the following forms:

• Form 30:10 Proposed Judgment of Dismissal.

• Form 30:20 Notice of Settlement.

• Form 30:30 Application for Determination of Good Faith Settlement.

• Form 30:40 Declaration #1 in Support of Application for Determination of Good Faith Settlement.

• Form 30:50 Declaration #2 in Support of Application for Determination of Good Faith Settlement.

• Form 30:60 Proposed Order Finding Good Faith Settlement.

• Form 30:70 Memorandum of Points and Authorities in Support of Motion to Enforce Settlement.

• Form 30:80 Declaration in Support of Motion to Enforce Settlement.

• Form 30:90 Memorandum of Points and Authorities in Opposition to Motion to Enforce Settlement.

• Form 30:100 Declaration in Opposition to Motion to Enforce Settlement.

California Pretrial Practice & Forms 30-2

TABLE OF CONTENTS

I. SETTLEMENT

A. CASE EVALUATION

1. Why Try to Settle

§30:01 Most Cases Settle

§30:02 Benefits Not Achievable by Litigation

§30:03 Financial Considerations for Client

§30:04 Financial Considerations for Attorney

2. When Should You Settle

§30:10 Key Times

§30:11 Know Your Case—Evidence

§30:12 Know Your Case—Law Applicable to Your Facts

§30:13 Know Your Case—Insurance Coverage

§30:14 Know the Damages

§30:15 Consider Other Relevant Interests

§30:16 Meet With Client

§30:17 When Not to Settle

§30:18 Insurance

3. Tax Consequences

§30:30 Personal Injury Settlements Not Generally Taxable

§30:31 Worker’s Compensation

§30:32 Interest Payments

§30:33 Punitive Damages

§30:34 Damages to Business or Property

§30:35 Attorney Fees

§30:36 Payments by Defendants

§30:37 Address Tax Consequences in Settlement

4. Impact On Government Benefits

§30:40 Settlements Remove Medicaid and SSI Eligibility

§30:41 Preserving Medicaid Benefits

5. Ethical Responsibilities

§30:50 Settlement Authority

§30:51 Duty to Keep Client Informed and Advise of Offers

§30:52 Safekeeping of Client’s Property

§30:53 Illegality

B. NEGOTIATION

1. General Points

§30:60 Method and Style

§30:61 Keep Authority Clear

§30:62 Communicate All Offers

§30:63 Offers of Settlement Not Admissible

2. Plaintiff’s Perspective

a. Settlement Letters or Brochures

§30:70 Basic Elements

§30:71 Liability Statement

§30:72 Documentation of Liability

§30:73 Documentation of Damages

§30:74 Demand Statement

§30:75 Set a Time Limit

b. Negotiations With Insurers

§30:80 Know the Motivating Factors

§30:81 Reserves

§30:82 High-Balling and Low-Balling

30-3 Settlement and Alternative Dispute Resolution (ADR)

§30:83 Learn the Policy Limits

§30:84 Insurer’s Obligation of Good Faith

C. STATUTORY OFFER TO COMPROMISE

1. Offer

§30:90 General Points

§30:91 Actions to Which §998 Not Applicable

§30:92 Requirements for Offer

§30:93 Application to Arbitration

§30:94 Form of Offer

§30:94.1 Timing and Service

§30:95 No Requirement to Allocate Between Causes of Action

§30:96 Joint Offers to Multiple Plaintiffs

§30:96.1 Joint Offers by Defendants

§30:97 Joint Offers by Plaintiffs

§30:98 Non-Cash Offers

§30:99 Multiple Offers

2. Acceptance of Offer

§30:110 When Offer Must Be Accepted

§30:111 Revocation of Offer

§30:112 Unaccepted Offer Cannot Be Used as Evidence

§30:113 Multiple Offers

3. Judgment

§30:120 Filing and Entry of Judgment

§30:121 Whether Costs Are Included in Judgment

§30:122 Relief From Judgment

§30:123 Costs Deducted From Judgment

4. Plaintiff Fails to Obtain More Favorable Judgment

a. Plaintiff’s Liability

§30:130 Plaintiff Liable for Defendant’s Costs and Expert Witnesses Costs

§30:131 Costs Include Attorney Fees

b. Whether Verdict for Plaintiff Is More Favorable

§30:140 Costs

§30:141 Attorney Fees

§30:142 Liens on Judgment

§30:143 Interest

§30:144 Post-Offer Payment

§30:145 Payments by Other Defendants

§30:146 Reducing Medical Bills

5. Defendant Fails to Obtain More Favorable Judgment

a. Defendant’s Liability

§30:150 Defendant Liable for Expert Witness Costs

§30:151 Right to Interest in Personal Injury Actions

§30:152 What Are Personal Injury Actions

b. Whether Verdict for Defendant Is More Favorable

§30:160 Reduced by Settlements Paid by Other Defendants

§30:161 All Costs Included in Plaintiff’s Recovery

§30:162 Prejudgment Interest Not Included for Comparison

§30:163 Punitive Damages Included

§30:164 Structured Settlement

§30:165 Voluntary Dismissal

6. Expert Witness Costs

§30:170 Expert Fees

§30:171 Police Officers