Settlement Terms Are Important

A recent LinkedIn conversation about settlement terms raised an important issue. The topic — A defendant adds additional (and unacceptable) terms to a release document.

Lawsuit Release

The issue is far too common. Here’s the scenario. The lawyers agree to settle an injury claim. Maybe the lawyers reached a settlement informally and confirmed it with letters or emails. Maybe the lawyers reached a settlement through mediation. Where that occurs, the mediator typically has the parties sign a short settlement memorandum with the basic terms. In both situations, the defendant paying money to a plaintiff will typically require a “general release” of the claims. And, the defense attorneys will prepare or provide this release when the settlement is paid. That’s fine. An injured plaintiff receiving compensation will certainly release or give up his/her claims upon payment.

Yet, far too many defense lawyers stick additional terms in these “release” papers. In essence, the release becomes a much more extensive contract creating potential liability. How many injury attorneys ignore additional and unacceptable terms? How often do these attorneys expose their injured clients to the potential of future liability? It happens far more often than you think. Face it, many mass advertising lawyers spend zero time protecting their injured clients from more harm. When an attorney appears on television in a cape and does not appear in court, it’s a safe bet he or she is not reading settlement paperwork to protect the client. These lawyers advertising fast checks for people in wrecks make the quickest settlement possible. They don’t advocate for maximum compensation. They don’t negotiate costly medical liens to save the client money. And, they don’t read or review settlement paperwork that can create future problems. That’s wrong.

A Lawyer Who Advocated For His Client

The LinkedIn discussion involved a recent Florida workers’ compensation case. Here is the short version of the case — The parties reached a settlement at mediation. At that time, they signed a short agreement. This mediation agreement required the injured plaintiff to sign a “general release” and “resignation” of her employment. The final release and resignation document would be prepared by the defendant. So far, nothing is unusual. The injured plaintiff gets paid and signs a general release of her claims. Plus, here the plaintiff would also resign her employment upon receiving payment. For a number of reasons, the parties to workers’ compensation claims sometimes agree to employment termination at the time of settlement. Again, nothing is unusual about that.

The problem began when the injured plaintiff’s attorneys received the final paperwork — the “general release” and “resignation.” This final paperwork was much more extensive. The defendant’s attorneys had added broad indemnity language. This language actually gave the defendant rights to sue the injured plaintiff in many future situations. So, instead of receiving money and dropping claims, the injured plaintiff was now actually promising to pay the defendants upon certain contingencies. The lawyer for that injured party did the right thing. He refused to sign the paperwork and filed a motion to enforce the mediation settlement. On appeal, the court agreed with him.

Negotiate Specific Terms In Advance

The truth is — some cases do have issues beyond a simple payment and simple release of claims. If they do, the time to discuss these issues is during settlement negotiations. For example, in car wreck cases the injured person may have liens or subrogation claims against them by medical providers. A defendant who pays money for the car wreck may want assurances the injured plaintiff’s counsel will handle those liens so no medical providers file lawsuits. We frequently handle car accident claims and understand that issue. But, you don’t want a defendant adding potential indemnity claims for a host of unrelated issues. Another example relates to confidentiality clauses in settlement paperwork. Some cases involve issues that the parties wish to remain confidential. That’s fine. But, confidentiality needs to be discussed during settlement negotiations for a couple reasons. First, confidentiality provisions can create tax issues. Second, between the time of the initial agreement and the final paperwork containing the surprise confidentiality clause, the parties or their counsel may have told numerous people about the settlement.

If you need a personal injury attorney, seek experienced counsel. Seek an attorney who knows a courtroom. Seek an attorney who will work hard in every phase of your case. Our firm carefully reviews the settlement paperwork for all clients. We consider this an essential part of helping and protecting our clients.