Summary. This checklist organizes the preparation for a litigation settlement negotiation into twelve phases, from deciding when to negotiate through signing a term sheet. Each item is a concrete task, tied where possible to the governing rule, statute, or case, with short notes on how to carry it out. The phases cover case assessment, valuation inputs such as fee-shifting, interest, collectability, taxes, and liens, client interests and authority, the reservation price and target, procedural leverage such as Rule 68 offers, the choice of format and neutral, the opening and concession plan, the mediation statement, client preparation, conduct on the day, and closing. Red-flag boxes mark the problems that most often derail a deal, and a deadlines table collects the time limits that matter. A short worked example and a list of common failure points close the checklist.

How to use this checklist

Use this checklist from the moment settlement becomes a realistic possibility, which in most cases is earlier than the scheduling order's mediation deadline. Work through the phases in order the first time; afterward, revisit Phases 2, 3, and 5 after every significant ruling or deposition, because those are the phases whose answers change.

Each item is written as a task. Where an item depends on a rule or statute, the authority is linked. Where an item calls for a worksheet or letter, the template is in Settlement Negotiation Toolkit: Case Valuation Worksheets, Concession Plans, and Offer Letters. The reasoning behind each phase is explained step by step in Planning and Running a Litigation Settlement Negotiation: A Practical Guide, and the tactical and ethical background is in Settlement Negotiation Tactics: Principled Negotiation, Anchoring, and Handling Hardball in Litigation.

This checklist stops at the signed term sheet. For the formal agreement and release, use Settlement Agreement Checklist: A Practical Checklist.

Items marked (P) apply mainly to plaintiffs; (D) mainly to defendants; unmarked items apply to both.

Phase 1: Timing and triggers

  • List the case events for the next six to twelve months (rulings, depositions, expert deadlines, trial date) and note how each could change value. Note: negotiate before an event that is likely to hurt you and after one that is likely to help.
  • Check the scheduling order and local ADR rule for mandatory mediation or settlement conference deadlines. Authority: 28 U.S.C. § 651 and 28 U.S.C. § 652 (district courts must provide ADR and require litigants to consider it).
  • Check the judge's individual practices for settlement conference procedures, attendance requirements, and submission rules.
  • Consider raising ADR at the Rule 26(f) conference or a Rule 16 conference. Authority: Fed. R. Civ. P. 16(c)(2)(I) (settlement and special procedures).
  • (D) Decide whether to time a Rule 68 offer so that the post-offer period captures the expensive phase of the case. See Phase 6.
  • Decide whether a joint request to move the mediation deadline would put the session after a more useful event.

Phase 2: Facts, evidence, and case assessment

  • Update the case assessment memo with the current state of each claim and defense. See Evaluating and Assessing a Civil Case.
  • Identify the two or three issues that will decide the case (a contract interpretation, a causation question, an expert's admissibility, a limitation of liability clause).
  • Assess each pending or anticipated dispositive motion and record a probability for each outcome.
  • Identify the documents and testimony that are most damaging to your side and decide how you will address them in the mediation statement.
  • Have a colleague who is not on the case argue the other side's position. Note: self-serving bias is strongest in the people closest to the case.
  • Review the judge's track record on similar motions and the jury pool's tendencies, if verdict data are available.
  • Confirm that any evidence you plan to use in negotiation is preserved and authenticated. See Litigation Hold and Evidence Preservation Checklist: A Practical Checklist.

Phase 3: Valuation inputs

Red flag: the single-number valuation. If the valuation memo states one number without a range, the probabilities have not been tested. Run high and low cases before the client sees the number, or the client will anchor on it.

Phase 4: Client interests, authority, and approvals

  • Meet with the actual decision maker, not only the day-to-day contact.
  • Ask and record the client's interests: timing, cash needs, confidentiality, relationships, reputation, precedent, tax, and vindication.
  • Explain the client's role. Authority: ABA Model Rule 1.2(a) (client decides whether to settle); Model Rule 1.4 (duty to inform, including of settlement offers).
  • Disclose any fee-structure incentives that could affect the lawyer's advice (contingent percentage, hourly billing, fee-shifting expectations).
  • Obtain written settlement authority stating the range the lawyer may offer or accept and how authority can be expanded during the session.
  • (D) Confirm the insurer's position: coverage, reservation of rights, authority amount, the adjuster's attendance, and consent requirements. See Business Insurance and Coverage Disputes: CGL, E&O, Cyber, and D&O.
  • Identify any required approvals (board, committee, lender, funder, co-owner, guardian) and the time each takes.
  • For multiple clients, plan for aggregate settlement rules. Authority: ABA Model Rule 1.8(g) (informed consent in a signed writing).
  • For class, minor, or incompetent parties, confirm the court approval process. Authority: Fed. R. Civ. P. 23(e); Fed. R. Civ. P. 17(c).
  • If a litigation funder is involved, review consent and waterfall terms. See Third-Party Litigation Funding: Structures, Privilege, and Disclosure Obligations.

Red flag: authority you cannot reach. If the person with final authority will not attend and cannot be reached by phone during the session, the deal will stall in the final hour of the session. Fed. R. Civ. P. 16(c)(1) allows a court to require that a party or its representative be present or reasonably available, and G. Heileman Brewing Co. v. Joseph Oat Corp., 871 F.2d 648 (7th Cir. 1989) (en banc) upheld an order requiring a corporate representative with authority.

Phase 5: BATNA, reservation price, target, and the other side's view

  • State the BATNA as the net expected value of continuing (middle case from Phase 3).
  • State the WATNA, the plausible worst outcome, in dollars and consequences.
  • Set the reservation price (walk-away) with the client, adjusted for risk tolerance and non-monetary interests. Note: never set it by reference to fees already spent.
  • Set the target (realistic best outcome).
  • Estimate the other side's BATNA, costs, and pressures (fee spend, insurance erosion, fiscal deadlines, product launches, board meetings, funder economics).
  • Estimate the zone of possible agreement and identify what could widen it (non-monetary trades, payment structure).
  • Have the client sign off on the one-page summary of BATNA, WATNA, reservation price, target, and opening.
  • Agree on what new information would justify changing the reservation price during the session (a new document, a candid concession), as opposed to pressure or fatigue.

Red flag: a reservation price above the BATNA with no reason. If the client's walk-away number is higher (plaintiff) or lower (defendant) than the valuation supports, and no non-monetary interest explains it, revisit the valuation with the client before the session. The client decides, but should decide with the numbers in view.

Phase 6: Leverage and procedural tools

  • List events that would strengthen your alternative (a pending motion, a key deposition, an expert report) and decide whether to complete them before talks.
  • (D) Evaluate a Rule 68 offer of judgment. Authority: Fed. R. Civ. P. 68; Marek v. Chesny, 473 U.S. 1 (1985) (costs include fees where the statute defines fees as costs). Note: the rule does not apply if the defendant wins outright, Delta Air Lines, Inc. v. August, 450 U.S. 346 (1981).
  • (D) Draft any Rule 68 offer to state expressly how costs and fees are treated. Note: ambiguities are generally construed against the offeror.
  • (D) Confirm the offer will not be used to moot a class claim. Authority: Campbell-Ewald Co. v. Gomez, 577 U.S. 153 (2016) (unaccepted offer does not moot the claim).
  • (P) Check for a state two-way offer statute if the case is in state court or state procedure applies, such as California Code of Civil Procedure § 998. Note: thresholds and timing differ from Rule 68 and from state to state; read the current text before serving.
  • (P) In insured cases, consider whether a time-limited policy-limits demand is appropriate under the governing state's law. Note: several states, including Georgia (O.C.G.A. § 9-11-67.1) and Missouri (Mo. Rev. Stat. § 537.058), prescribe the content and timing of these demands by statute.
  • (D, patent) Calendar the inter partes review deadline. Authority: 35 U.S.C. § 315(b) (one year after service of the complaint). See Inter Partes Review Strategy: Discretionary Denial, Estoppel, and the Parallel District Court Case.
  • Confirm that any motion or sanctions threat is well grounded. Authority: Fed. R. Civ. P. 11 (21-day safe harbor for sanctions motions).
  • Do not threaten criminal referral to obtain payment. Authority: 18 U.S.C. § 873; ABA Formal Opinion 92-363; state extortion statutes and professional conduct rules.

Phase 7: Format, neutral, and confidentiality

  • Choose the format: direct talks, private mediation, court-annexed mediation, or a judicial settlement conference.
  • Shortlist mediators by subject-matter knowledge, style, credibility with the other side's decision maker, and willingness to make a mediator's proposal.
  • Call colleagues who have recently used each candidate.
  • Book the session (often four to eight weeks ahead) and reserve a full day for a significant case.
  • Agree on fee allocation with the mediator and the other side.
  • Sign a mediation agreement that addresses governing law, confidentiality, mediator immunity from subpoena, and enforceability and disclosure of a signed term sheet.
  • Check the local rule on ADR confidentiality. Authority: 28 U.S.C. § 652(d).
  • Check state mediation privilege law, including the Uniform Mediation Act where adopted and stricter statutes such as California's. Authority: Cassel v. Superior Court, 51 Cal. 4th 113 (2011).
  • Understand the limits of Rule 408. Authority: Fed. R. Evid. 408 (inadmissible to prove or disprove validity or amount, or to impeach; admissible for other purposes such as bias). Note: courts split on a discovery privilege; compare Goodyear Tire & Rubber Co. v. Chiles Power Supply, Inc., 332 F.3d 976 (6th Cir. 2003) with In re MSTG, Inc., 675 F.3d 1337 (Fed. Cir. 2012).
  • In IP cases, consider how a settlement or license may be used in later royalty disputes. Authority: ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860 (Fed. Cir. 2010).

Phase 8: Opening, concession plan, and trades

  • Decide who will make the first number and when (demand letter, mediation statement, or session).
  • Set the opening at the defensible edge of the range, with written reasons.
  • Write the concession plan: rounds, planned numbers, shrinking increments, and the condition for each move.
  • List non-monetary trades with an estimated value to each side.
  • Plan bracket proposals and the midpoint each is meant to signal.
  • Decide in advance how you will respond to an extreme anchor (decline to counter from it; ask for the basis; re-anchor).
  • Decide how you will respond to a mediator's proposal, including who must approve and how quickly.
  • Identify all non-monetary terms the other side is likely to request (confidentiality, non-disparagement, no-admission clause, release scope) so they are priced before money is agreed.
  • Mark the concession plan as privileged work product. Authority: Fed. R. Civ. P. 26(b)(3).

Red flag: no room to move. If the opening is within one or two planned concessions of the reservation price, the plan will run out before the other side does. Either widen the opening (with reasons) or plan non-monetary moves.

Phase 9: Mediation statement and materials

  • Confirm the mediator's or court's requirements for length, format, deadline, and whether a confidential submission is permitted.
  • Draft the shared statement as persuasion aimed at the other side's decision maker, with the best documents attached.
  • Address your main weakness candidly in the statement or confidential submission.
  • Present the damages model with its sources.
  • Draft the confidential submission: interests, settlement history, authority, constraints, and where the mediator's help with your own client would be useful.
  • Label both as confidential settlement communications under Rule 408 and the governing mediation rule.
  • Exclude privileged material from the shared version. Authority: Fed. R. Evid. 502 on waiver.
  • Prepare a short visual (timeline or damages chart) if it will help the decision maker.
  • Bring copies of the key exhibits, the decision tree, and a blank term sheet.

Phase 10: Client preparation and logistics

  • Hold a preparation session two to five days before the mediation.
  • Walk the client through the expected opening numbers and explain that the first exchange will feel unreasonable.
  • Review the concession plan and the reservation price together.
  • Explain the mediator's role, including reality-testing.
  • Decide whether to hold a joint opening session and, if so, who will speak and for how long.
  • If the client will speak, rehearse a short, sincere statement that does not attack the other side.
  • Confirm attendance of everyone with authority, or their availability by phone into the evening.
  • Arrange logistics: rooms, remote access, food, printing, and a way to sign documents on site.
  • Remind the client that leaving without a deal is an option, and that many cases settle after an unsuccessful mediation.

Red flag: the surprise attendee. A board member, spouse, or business partner who arrives on the day without having seen the valuation can reopen everything. Identify every attendee in advance and prepare each one.

Phase 11: Conduct on the day

  • Tell the mediator what may and may not be shared with the other side.
  • Keep a log of each move, with the time.
  • Do not move twice in a row without a response.
  • Make every concession conditional on a reciprocal move or a trade.
  • Take breaks before major decisions, especially when the client is angry or tired.
  • Recognize and answer pressure tactics (exploding deadlines, limited authority, nibbling, walkout threats) by testing them and redirecting to the substance.
  • Keep statements of fact accurate. Authority: ABA Model Rule 4.1 and comment [2]; ABA Formal Opinion 06-439 (puffery about value and settlement intentions generally permitted; false statements of material fact are not). See Fire Insurance Exchange v. Bell, 643 N.E.2d 310 (Ind. 1994) (misstated policy limits).
  • Disclose facts whose concealment would be fraudulent or that invalidate your authority, such as a client's death. Authority: Kentucky Bar Ass'n v. Geisler, 938 S.W.2d 578 (Ky. 1997); ABA Formal Opinion 95-397.
  • In a judicial settlement conference, remember the higher duty of candor to the tribunal (Model Rule 3.3). Decline to disclose authority rather than misstate it.
  • Get any expansion of authority from the client expressly, preferably in writing.
  • Compare every proposal to the reservation price and BATNA, not to the other side's last number.

Phase 12: Closing and the term sheet

  • Bring a term sheet template with blanks for all material terms. The toolkit includes one.
  • Confirm all material non-monetary terms before the final dollar exchange.
  • Address payment: amount, timing, method, security, installment and acceleration terms.
  • Address releases: parties, scope, known and unknown claims, carve-outs.
  • Address dismissal and request retained jurisdiction. Authority: Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375 (1994); Fed. R. Civ. P. 41(a).
  • Address fees, including any fee waiver. Authority: Evans v. Jeff D., 475 U.S. 717 (1986); Buckhannon Board & Care Home, Inc. v. West Virginia Department of Health & Human Resources, 532 U.S. 598 (2001) (private settlement may not confer prevailing-party status).
  • Address confidentiality, non-disparagement, taxes, liens, and required approvals.
  • State that the term sheet is binding and enforceable and may be disclosed to enforce it.
  • Have the parties (or confirmed representatives) sign, not only counsel.
  • Calendar every deadline in the term sheet before leaving.
  • Notify the court of the settlement if the local rule requires.
  • If no deal, schedule a follow-up with the mediator and record each side's last position.

Red flag: "subject to a formal agreement." A term sheet that says the deal is subject to a later agreement, without saying the term sheet itself is binding, invites the argument that there is no deal. Say both: binding now, with formal papers to follow.

Deadlines and time limits

Item Time limit Authority
Rule 68 offer At least 14 days before trial (or before a hearing on damages after liability is determined) Fed. R. Civ. P. 68(a), (c)
Acceptance of Rule 68 offer 14 days after service Fed. R. Civ. P. 68(a)
Rule 11 safe harbor 21 days after service of the motion before filing Fed. R. Civ. P. 11(c)(2)
IPR petition 1 year after service of patent infringement complaint 35 U.S.C. § 315(b)
Bankruptcy preference look-back 90 days before petition (1 year for insiders) 11 U.S.C. § 547(b)
Fee motion after judgment 14 days after entry of judgment, unless a statute or order provides otherwise Fed. R. Civ. P. 54(d)(2)
Relief from judgment for mistake, new evidence, or fraud Within a reasonable time and no more than 1 year after judgment Fed. R. Civ. P. 60(c)(1)
Mediation statement Commonly 5 to 10 days before the session Mediator's or court's instructions
Mediator booking Commonly 4 to 8 weeks ahead Practice
Court approval of class settlement Before the settlement binds the class Fed. R. Civ. P. 23(e)

Worked example: catching the registration problem

Tessaro Photography, a two-person commercial studio, discovered that Bluefin Outdoor Supply had used one of its product photographs on a blog post for 18 months. Tessaro's lawyer, preparing for a pre-suit negotiation, began drafting a demand of $150,000, the statutory maximum for willful infringement under 17 U.S.C. § 504(c).

Working through Phase 3, the lawyer checked the registration date. The photograph had been registered eight months after Bluefin's use began, and more than three months after first publication. Under 17 U.S.C. § 412, that meant no statutory damages and no attorney's fees under § 505 for this infringement. Tessaro's realistic recovery was its actual damages, likely a licensing fee in the low four figures, plus any attributable profits, which were hard to prove.

The valuation changed the plan. Tessaro's lawyer replaced the $150,000 demand with a demand of $4,500, justified by Tessaro's published licensing rates for comparable commercial use and the length of the unlicensed use, and added a request that Bluefin remove the image and credit Tessaro in a corrected post. Bluefin's counsel, who had done the same registration check, answered at $1,500. After two exchanges, the parties settled at $3,200, removal, and a one-year paid license for a different image Bluefin wanted. A demand at the statutory maximum would have signaled that Tessaro's lawyer had not checked § 412 and would probably have ended the conversation.

For more on this kind of claim, see Image Copyright Demand Response Checklist: A Practical Checklist.

Common failure points

  1. Valuation done once and never refreshed. The case changes after every ruling; the numbers must too.
  2. Authority confirmed with the wrong person. The general counsel agrees, but the CFO or the carrier has the money.
  3. Remedy limits overlooked. Registration timing, marking, damages caps, and limitation periods reduce value and are easy to miss.
  4. Fee-shifting ignored on one side. A plaintiff who forgets that the defendant may recover fees under a two-way statute overvalues its case.
  5. Non-monetary terms raised after money is agreed. Late terms reopen the price.
  6. Confidentiality assumed rather than confirmed. Rule 408 and mediation privileges have gaps.
  7. Unprepared attendees. Anyone with influence over the decision must see the valuation before the session.
  8. No term sheet template on hand. Drafting from scratch at 9 p.m. leads to missed terms.
  9. Retained jurisdiction forgotten. Without it, enforcement goes to a new state court action.
  10. No follow-up after impasse. The days after an unsuccessful mediation are often the most productive.

This document is general information, not legal advice for any particular situation; the law changes, and the facts matter.

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