Settle and Sue – Don’t Let It Happen To You

As the attorneys and adjuster hammered out the settlement agreement in the main conference room, I passed the smaller room and saw the plaintiff weeping. I’ve also seen some very angry defendants. I have had to take steps to assure that parties didn’t feel ramrodded into settlement.

These are extreme examples of a situation which could lead to a second lawsuit, this time for legal malpractice, a phenomenon called “Settle and Sue.”

Be Realistic
At intake, some attorneys will provide prospects a rosy picture of their likely outcome to induce them to sign a retainer agreement. (I know. You’re shocked, right?) Then, as time passes and expenses mount, that favorable outcome no longer seems so inevitable.

At this point, clients may seek new counsel. But they might not be successful. That could be due to a large lien for advanced costs or because other attorneys are wary of working with what could be the client from hell. If the client has already gone through two attorneys, the third lawyer on the case is likely to see a history of problems.

Even when attorneys strive for transparency at intake, there are usually twists betwixt intake and mediation.

Keep the Client Informed
And that’s why it’s so important to let the client know what is happening in a timely fashion and how it affects the evaluation of the case. Even if the professional’s evaluation of the case is unchanged, it’s important to inform the client of major events such as receipt of discovery or hearings.

Will the client actually read these status reports? Perhaps not. But a well-drafted report will explain what is happening in easily understandable language. When the client expresses dismay at first learning about adverse information during mediation, it helps to have copies of the status reports readily available.

Unreasonable Client Demands
Clients get information from many mass media sources. For example, if a TV show or Google says important information can be extracted from the opponent’s cell phone, a client may demand that the attorney hire an expert to do just that. These types of demands may be cost-prohibitive or simply not going to be helpful for this situation. Even when clients are told that the procedure they want will cost, say, $100,000, they may grumble now, but later claim that the attorney’s refusal to comply with a “simple request” is what forced them to agree to a terrible settlement. Documenting the substance and outcome of these conversations is critical.

Prepare for Settlement
I’m amazed at the mediation participants who show up with what seems like willful ignorance of the case. Some parties cast aspersions on their opponents with little consideration of the merits. Participants need to pay attention to others’ input, not brush it off. Some participants in remote mediation seems to be barely there; yet, they are being asked to make important decisions.

Getting these folks to pay attention at mediation can be a challenge for me and their representatives. If an attorney does manage to wrangle a settlement, participants with buyer’s remorse could later threaten a legal malpractice action.

How the Mediator Helps
As mediator, at the outset I always tell participants that nothing can happen without their consent. When it’s time to document a settlement, settlement terms should be carefully reviewed with the parties to make sure there is no misunderstanding. Parties should not feel coerced to enter what they view as an unjust settlement.