Settlement, Negotiated

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Settlement, Negotiated


A settlement is a contract between two or more parties to resolve a legal dispute without a trial. Most civil cases are decided by settlement, and the contract usually incorporates the desire of the parties to give up their legal claims against one another in return for certain conditions written into the settlement agreement. When a settlement agreement is reached, it is usually submitted to the court with jurisdiction over the dispute in the form of a joint stipulation by the parties to be incorporated into an order. In suits where the plaintiffs claims have been satisfied by the payment of money, the plaintiff can simply file a notice with the court that the case has been dismissed.

Because litigation is expensive and parties may not have the financial resources to afford protracted legal proceedings, settlement is encouraged. A court may request, or order, the parties to a dispute to participate in a settlement conference or mediation to attempt to resolve their dispute before a trial is held. A mediation or settlement conference provides the parties with an opportunity to resolve their differences without a costly and time-consuming trial. Settlement talks also reduce the risks associated with a trial. In many cases, settlement negotiations lead to a more favorable outcome for the parties than a trial because the parties retain more control over the process. Courts tend to favor settlement negotiations as a way to promote judicial efficiency and reduce the backlog of cases on the docket.

In the interest of facilitating settlement, the law treats settlement discussions as confidential and the substance of such discussions as inadmissible at trial and other proceedings. In highly sensitive cases, if a settlement agreement is achieved, the agreement may require the parties to keep its contents confidential. It is important to note, however, that confidentiality is not possible in class action cases in the United States. Pursuant to Rule 23 of the Federal Rules of Civil Procedure and complementary state court rules, all settlements are subject to approval by the courts, and notice to be bound by a settlement must be directed to all class members. Class action lawsuits are more likely to be resolved by a negotiated settlement given the number of parties and the scale of the potential damages involved. Other types of lawsuits that tend to result in settlement include personal injury lawsuits and product liability actions.

Courts will enforce a settlement in the same way they enforce other valid contracts. If a party breaches a settlement agreement, that party can be sued for breach of contract. In some jurisdictions, the original civil action can be revived if a party breaches the settlement agreement.

Settlements are exclusive to civil cases. In criminal proceedings, a prosecutor and defendant may enter into a plea bargain prior to trial. Similar to the class action context in civil proceedings, the judge in a criminal proceeding must approve the plea bargain reached by the parties.

SEE ALSO Law; Settlement, Tobacco


Coben, James R., and Peter R. Thompson. 2006. Disputing Irony: A Systematic Look at Litigation about Mediation. Harvard Negotiation Law Review 11: 69-70.

Corpus Juris Secundum. 2002. Vol. 15An, 61-172. Saint Paul, MN: Thompson West.

George, James P. 2006. Access to Justice, Costs, and Legal Aid. American Journal of Comparative Law 54 (suppl.): 293-316.

Shaw, Margaret L., and Linda L. Singer. 2005. Settlement, Post-Settlement, and More: Issues in Mediating Class Action. Alternatives to the High Cost of Litigation 23: 61-73.

Klinton W. Alexander