January 01, 2015

Advance Sheet: Do Lawyers Think about What They’re Doing?

Litigators should start questioning the inclusion of standard provisions that actually make little sense.

Robert E. Shapiro

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A distinguished corporate lawyer who later went on to fame and fortune as a successful businesswoman once remarked that litigators should never be trusted to draft settlement agreements. She had a point. Litigators are trained to provide a persuasive point of view in an adversarial context, pressing the client’s perspective on a particular factual or legal issue to the court or fact finder. Transactional lawyers, by contrast, work in a more cooperative context, especially once the basic terms of an agreement are set, thinking only at the margin about situations that might arise in the future and how to provide for them. There is artistry in both, of course. But the litigator primarily tries to parry an alternative point of view, while the transactional lawyer is trying to provide for a later problem that both sides have an interest (usually) in resolving in advance. In both respects, the latter, not the former, is the goal of a settlement agreement.

So it stands to reason that settlement agreements should be the province of transactional lawyers. But it almost never happens that way. Seldom do the litigators even think of consulting a transactional colleague, let alone relinquishing to that colleague the drafting of a settlement agreement. Most litigators are, in fact, rather insulted at the idea that they don’t know what they are doing. They mostly do, of course, especially where it really counts. For example, they are well versed in the various forms releases may take, from the narrow transactional release to the broad and mutual variety that wipes out everything known and unknown, matured or not. Even if transactional lawyers can be useful consultants, a double-check to make sure there are no eventualities left unconsidered, litigators understandably prefer to draft the documents themselves.

There is reason to believe, however, that many litigators do not really know what they are doing. The proof is that the standard settlement agreement often has provisions that really make no sense. Take the so-called “severability” provision. You know the type: a provision saying something to the effect that if a court later determines that one clause of the settlement is not enforceable, it will be carved out and the settlement will remain in effect. This may be standard, but it is completely nonsensical. The provision literally means that if a court later finds that the release the plaintiff has given the defendant is unenforceable, the agreement as a whole still stands. Huh?

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