It’s the final pretrial conference, and counsel are ready to try their case. The key witnesses have been deposed, and the resulting transcripts are tabbed and highlighted. The lawyers have traded exhibit notebooks and stand ready with motions in limine. The dispositive motions have long been resolved, and proposed jury instructions are nearing their final draft. A lot of work has gone into the case, and the lawyers are feeling confident. Until the judge asks about the status of settlement discussions. Counsel shift in their seats, looking uncertain. “Of course, we’re always willing to explore settlement,” each dutifully notes. But after an early round of discussions failed the previous year, neither side has meaningfully revisited the topic. Each party had left that earlier effort believing their opponent to be intransigent and unrealistic. Neither wanted to broach the issue further—or at least didn’t want to be the first to do so. Both believed the gap to be insurmountable.
The court directs counsel to discuss settlement with their respective clients, and then with each other. Three weeks later—and only two weeks before trial was set to begin—the lawyers report back that the case has settled.
There are, of course, good reasons why some cases settle at the last minute on the courthouse steps. Final trial preparations have a way of focusing attention and clarifying costs and benefits. It can take time for lawyers to build trust with their own client, let alone with their opposing counsel. Sometimes the adversarial process itself gets in the way, frustrating efforts to find common ground. Sometimes it’s about how much time and money has already been spent, and trial preparation has taken on a life of its own. And, of course, civil jury trials are a feature of our system, not a bug. If the parties want their day in court, having a full appreciation of the associated risks and rewards, the civil docket exists for that purpose.
All of which is to say that even the most well-lawyered cases sometimes settle late in the game or not at all. But if many months of trial preparation have gone by without the parties ever revisiting negotiations—throughout the principal fact and expert depositions; in the course of dispositive motions and the resulting decision; past motions in limine and right up to the brink of trial itself—counsel may have missed multiple opportunities to help their client resolve the dispute more quickly, at less expense, and with finality.
But it takes preparation to capitalize on those opportunities. Just as lawyers start building their trial strategy from their first meeting, revisiting it often with their client as the case develops; so, too, should they develop a comprehensive settlement strategy, also from the outset, and with the same level of intentionality and client participation. As the lawyer drafts the anticipated litigation budget, time should be reserved at regular intervals not only to discuss how discovery is progressing, but also how much the next steps will likely cost, and whether those inputs change the evolving settlement calculus. Is there a claim for statutory fee shifting? Is there a wasting insurance policy, where every dollar spent litigating will reduce the coverage limits available for resolution? In either instance, the duration and intensity by which the parties litigate the dispute may meaningfully affect the prevailing party’s recovery. Better to know such things early on, and revise your settlement strategy accordingly.
What discovery will you need before you and your client can meaningfully assess settlement value? Can you front-load the most critical discovery, to expedite negotiations? Or, conversely, are there strategic reasons to wait, filing dispositive motions before tendering the initial demand or offer? As to the latter, the persuasive force of your written argument might catalyze more fruitful negotiations. But it could also have the opposite effect. By forcing your opponent to respond, you might be helping them organize their own positional thinking about the dispute—or triggering attitude polarization—the psychological phenomenon where an individual’s attitudes or beliefs strengthen and become more extreme as they engage in intensive thought about a subject. Either way, because the subjective answers to these questions may turn on the shifting psychology of the parties and their lawyers as much as on the evolving facts, it is better to revisit your settlement strategy with your client recursively as the case unfolds.
At the same time, it can also be helpful to engage your opposing counsel in ongoing, collaborative “pre-settlement” talks; laying the foundation for fruitful negotiations once the demand or offer is eventually tendered. If there are critical documents or witnesses you need for valuation purposes, you might negotiate with your counterpart how to expedite focused discovery of those limited materials—even if it means deferring broader discovery (and the associated expense) regarding other aspects of the case. This type of focused cooperation not only saves the clients time and money, but can also serve as a trust-building exercise, developing reservoirs of transparency, professionalism, and goodwill for the negotiations to come.
Moreover, if your opposing counsel is reporting to an institutional client (usually meaning either an in-house lawyer or an insurance claims adjuster), you should consider tendering your initial position via an annotated written memoranda. By methodically and dispassionately laying out your client’s perspective, excerpting the supporting documents and testimony, and appending the handful of key pages or summary charts, you make it easy for your opposing counsel to send the entire package directly to their decision-maker without filter or spin. If there is a claims committee on the other side of your case, the sooner and more directly they understand your valuation, the quicker they can adjust their coverage assessment and the more likely you will have someone with actual authority scaled to your demand or offer as talks progress.
In so doing, however, be mindful of the ethical guardrails governing all settlement negotiations. Rule 4.1 of the ABA Model Rules of Professional Conduct provides:
In the course of representing a client a lawyer shall not knowingly: (a) make a false statement of material fact or law to a third person; or (b) fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by Rule 1.6.
Applying this rule to the specific context of settlement talks, The ABA Standing Committee on Ethics and Professional Responsibility has issued Formal Opinion 06-439, explaining that:
Under Model Rule 4.1, in the context of a negotiation, including a caucused mediation, a lawyer representing a client may not make a false statement of material fact to a third person. However, statements regarding a party’s negotiation goals or its willingness to compromise, as well as statements that can fairly be described as negotiation “puffing,” ordinarily are not considered “false statements of material fact” within the meaning of the Model Rules.
Thus, while you have some latitude in framing your client’s enthusiasm for the suit, their asserted bottom line number, or the ease of mitigation, the lawyer remains duty-bound to accurately represent material facts such as price terms, current salary, liquidated medical expenses, and the like.
The offer or demand should invite response, projecting a pathway and timetable for future negotiations. And at the close of each successive round of talks thereafter, transparently identify next steps to keep the dialogue open and moving forward. If necessary, all the way through to the trial itself and those courthouse steps.
