Not Ready to Settle: Never Commit Unless You Mean It

If you’re ever been a plaintiff or a defendant, you know that a lot of lawyer time can be spent outside the courtroom trying to get to a settlement. Settlement negotiations can go south for a lot of reasons, but there’s one great way to help get to a deal that you’re satisfied with.

Get to the Right Settlement Deal: What Not to Do

You’ll never get stuck with a settlement that you don’t like unless you agree to it. This is what happened to a Defendant in Killick Fisheries v Atlantic Treasure Seafoods Limited et al., 2012 NLTD(G) 69. The case was a small commercial dispute – the parties were involved in commercial sea foods – but the background facts don’t matter except to say that it was a contract dispute over monies owing.

The dispute was ongoing for some years and involved multiple parties and back-and-forth claims for relatively low amounts of money. A few years in it seems that the Defendant offered to settle for $7000. The Plaintiff countered, asking for twice as much at $13,500. A month or so later, Defendant’s lawyer rejected the $13,500 and offered the Plaintiff an even $10,000. The Plaintiff thought about it for about two weeks and finally accepted it, albeit with a little quibbling about the details.

But the problem was that the Defendant had done something you should never do in settlement negotiations: He put an offer on the table he didn’t really want to agree to.  As a result, the Defendant flip-flipped and instructed his lawyer to attempt to back away from the $10,000 offer, even though it had already been accepted in principle by the other side. This error cost the Defendant even more in legal fees, since the Plaintiff brought a successful action to enforce the settlement. In the end the Defendant was required to pay the $10,000, its own lawyer’s fees for time spent on litigation and negotiation, and also ordered by the Court to pay a significant portion of the Plaintiff’s legal costs for behaving “disingenuously” and taking an “obstructionist approach”.

Read the case here: http://www.canlii.org/en/nl/nlsctd/doc/2012/2012canlii31223/2012canlii31223.html

Never instruct your lawyer to make an offer that you aren’t committed to. Judges take a dim view of parties who renege on a settlement deal.

Get to the Right Settlement Deal: What to Do

Depending on the industry, many businesses deal with contract disputes on a regular basis.  For example, if you’re a contractor you might deal with claims for extras, delays, bonuses and penalties, unpaid builders, unpaid suppliers, unpaid subcontractors, defective workmanship, defective materials, flawed designs, warranties, botched tenders, you name it. As a result getting bogged in any one dispute is undesirable. Some disputes will only be resolved in front of a judge, but most of them can be settled without the expense of a trial.

Do be honest and up front with your lawyer and with yourself. Work with your lawyer to weigh the strengths and weaknesses of your case and the costs and benefits of proceeding with litigation to decide on an acceptable range of outcomes. Approach the negotiation with realistic expectations. Work with your lawyer to put your best foot forward on the facts and law and don’t be afraid to negotiate hard for the deal you want in the upper end of your acceptable range.

And only tell your lawyer to make or take an offer if you’re committed to following through on it. Otherwise you could find yourself in front of an unimpressed judge.

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