Settlement Negotiation Toolkit: Case Valuation Worksheets, Concession Plans, and Offer Letters

Summary. This toolkit collects thirteen working templates for the negotiation phase of a civil case, from the first valuation through the term sheet signed at mediation. It includes a case valuation worksheet, a decision tree template, a BATNA and reservation price worksheet, an interest-mapping interview guide, a settlement authority memo, and a concession plan. It also provides an opening demand letter, a response to a lowball offer, a bracket proposal script, a mediator's proposal decision memo and response, a Rule 68 offer of judgment, scripts for answering common hardball tactics, and a negotiation term sheet. Each template states its purpose, owner, and timing, uses bracketed placeholders, and is followed by drafting commentary tied to the governing rules and cases. A running example, a patent dispute between a medical device maker and an accused infringer, shows how the templates fit together.

How to use this toolkit

These templates cover the negotiation itself: valuing the case, setting authority, planning the moves, communicating offers, and capturing the deal at the table. They do not cover the formal settlement agreement and release, which are in Settlement Toolkit: Term Sheets, Releases, Offers of Judgment, and Enforcement and Drafting a Settlement Agreement and Release: A Practical Guide.

Use them in the order the companion guide follows, Planning and Running a Litigation Settlement Negotiation: A Practical Guide, and track completion with Settlement Negotiation Preparation Checklist: A Practical Checklist. The reasoning behind the tactics (anchoring, reactive devaluation, brackets, the ethics of puffery) is in Settlement Negotiation Tactics: Principled Negotiation, Anchoring, and Handling Hardball in Litigation.

Templates 1 through 6 and 10 are internal work product and should be marked privileged and kept out of anything shared with the other side. Templates 7, 8, 9, 11, and 13 are communications to the other side or the mediator and should be labeled as settlement communications under Fed. R. Evid. 408, except the Rule 68 offer, which follows its own rule. Template 12 is a set of scripts for use in the room.

Template index

The running example

Vantor Medical Devices owns a patent on a locking mechanism used in surgical staplers. It sued Quillon Surgical for infringement in federal court, alleging that Quillon's stapler, which has generated about $41 million in U.S. sales over four years, infringes two claims. Vantor's damages expert puts a reasonable royalty at $6.2 million; Quillon's expert says $900,000. The court's claim construction ruling adopted Vantor's construction of one disputed term and Quillon's construction of another. Quillon filed an inter partes review petition within the one-year window of 35 U.S.C. § 315(b), and the institution decision is due in about three months. Vantor sent Quillon a notice letter two years before suing, and Quillon did not obtain an opinion of counsel, which gives Vantor a willfulness argument under Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016). The parties have agreed to mediate before the institution decision. Each template below shows how one side would fill it in.

Template 1: Case valuation worksheet

Purpose. Collect every input that affects what the case is worth to your client, in one place, with sources. Owner. Lead counsel, with input from the damages expert, the client's finance team, and (for defendants) the insurer. When to use. Before any negotiation, and again after every significant ruling.

CASE VALUATION WORKSHEET            PRIVILEGED AND CONFIDENTIAL / ATTORNEY WORK PRODUCT
Matter: [CASE NAME], No. [DOCKET]          Prepared by: [NAME]      Date: [DATE]
Client: [CLIENT]                           Side: [PLAINTIFF / DEFENDANT]

A. DAMAGES SCENARIOS (if liability established)
   Low:    $[AMOUNT]   Basis: [EXPERT/THEORY]       Probability given liability: [__]%
   Middle: $[AMOUNT]   Basis: [EXPERT/THEORY]       Probability given liability: [__]%
   High:   $[AMOUNT]   Basis: [EXPERT/THEORY]       Probability given liability: [__]%
   Enhancement or punitive multiplier: [NONE / UP TO __x]  Probability: [__]%  Authority: [CITE]
   Remedy limits checked: [ ] limitation periods  [ ] notice/marking  [ ] registration timing
                          [ ] contractual caps/exclusions  [ ] mitigation  [ ] apportionment

B. NON-MONETARY RELIEF
   Injunction / specific relief: [DESCRIBE]   Probability: [__]%   Value to client: $[AMOUNT]
   Other (license, phase-out, corrective statement): [DESCRIBE]   Value: $[AMOUNT]

C. FEES AND COSTS
   Client fees to date: $[AMOUNT]   (sunk; do not use to set reservation price)
   Client fees to trial: $[AMOUNT]  Through appeal: $[AMOUNT]
   Other side's estimated fees to trial: $[AMOUNT]
   Fee-shifting provisions: [STATUTE / CONTRACT / NONE]   Direction: [ONE-WAY / TWO-WAY]
   Probability of fee award for client: [__]%  Amount: $[AMOUNT]
   Probability of fee award against client: [__]%  Amount: $[AMOUNT]
   Taxable costs (28 U.S.C. § 1920) estimate: $[AMOUNT]

D. TIME AND INTEREST
   Expected judgment date: [DATE]   Expected payment date after appeal: [DATE]
   Prejudgment interest: [RATE/BASIS]   Post-judgment interest (28 U.S.C. § 1961): [RATE]
   Discount rate for present value: [__]%

E. COLLECTABILITY (plaintiff) / FUNDING (defendant)
   Insurance: carrier [NAME], limits $[AMOUNT], eroding? [Y/N], remaining $[AMOUNT]
   Reservation of rights: [Y/N; issues]
   Assets / financial condition: [SUMMARY]   Bankruptcy risk: [LOW/MED/HIGH]
   Security available (guaranty, escrow, stipulated judgment): [DESCRIBE]

F. TAXES, LIENS, AND THIRD PARTIES
   Tax character of recovery: [DESCRIBE; ADVISER CONSULTED Y/N]
   Liens / reimbursement claims: [MEDICARE / PLAN / HOSPITAL / OTHER]  Amount: $[AMOUNT]
   Funder or prior counsel interests: [DESCRIBE]

G. RESULTS (from Template 2)
   Pessimistic net EV: $[AMOUNT]   Middle net EV: $[AMOUNT]   Optimistic net EV: $[AMOUNT]

Running example (Quillon, defendant). Damages: low $900,000 (Quillon's expert, 2.2 percent royalty), middle $2.9 million, high $6.2 million (Vantor's expert), weighted 35, 45, and 20 percent given liability. Enhancement: a 15 percent chance of enhancement averaging 1.5 times if willfulness is found. Fees: Quillon will spend $2.4 million more through trial; Vantor's fee claim under 35 U.S.C. § 285 carries a 10 percent probability. Non-monetary: an injunction is unlikely after eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) because Vantor and Quillon compete only partly, but Quillon values freedom to operate for its next-generation product at several million dollars.

Drafting commentary. Section A should rest on the remedy statutes and the damages evidence, not on the pleadings. In patent cases, check 35 U.S.C. § 286 (six-year limit) and 35 U.S.C. § 287 (marking). In copyright cases, check registration timing under 17 U.S.C. § 412. Section C deliberately separates fees to date from fees to come. Section E should be filled in with the insurance information produced under Fed. R. Civ. P. 26(a)(1)(A)(iv). For a full damages framework, see Patent Damages: Reasonable Royalties, Lost Profits, Apportionment, and Enhancement.

Template 2: Decision tree template

Purpose. Convert the worksheet into an expected value by laying out each uncertain event with its probability. Owner. Lead counsel. When to use. With Template 1; rerun with pessimistic and optimistic inputs.

Running example (Vantor, plaintiff). Vantor's lawyers estimate a 55 percent chance the IPR is denied. If denied, they estimate a 75 percent chance of surviving summary judgment, a 65 percent chance of winning at trial, and damages of $900,000, $2.9 million, or $6.2 million (weighted 25, 45, and 30 percent, mean about $3.4 million). If instituted, they assume the district court case is stayed and the chance of the claims surviving the IPR is 40 percent, after which the trial branch applies with somewhat lower probabilities. The gross expected value comes to roughly $1.2 million; after $2.1 million in remaining fees, Vantor's net expected value from litigation is negative. That number matters: it means that Vantor's real alternative is not trial but a licensing program, and a settlement with Quillon that sets a strong royalty benchmark has value beyond the cash.

Drafting commentary. A tree is only as good as its probabilities. Have someone outside the trial team review them, because self-serving bias is strongest in the people closest to the case. Keep the tree simple enough to explain to the client in ten minutes; more than five or six nodes usually adds false precision. Patent settlements can also be relevant to later royalty determinations, though courts discount litigation-driven licenses, see ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860 (Fed. Cir. 2010) and LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51 (Fed. Cir. 2012); add that effect to the non-monetary value line when it applies.

Template 3: BATNA and reservation price worksheet

Purpose. Turn the valuation into the four numbers that govern the negotiation, and record the client's agreement. Owner. Lead counsel and the client decision maker. When to use. After Templates 1 and 2, at least a week before the session.

BATNA AND RESERVATION PRICE WORKSHEET     PRIVILEGED AND CONFIDENTIAL

1. BATNA (net expected value of continuing): $[AMOUNT]
   Range: pessimistic $[AMOUNT] to optimistic $[AMOUNT]
2. WATNA (plausible worst outcome): [DESCRIBE] = $[AMOUNT]
3. Non-monetary interests that adjust the number:
   [INTEREST]: worth $[AMOUNT] to client
   [INTEREST]: worth $[AMOUNT] to client
4. Risk tolerance adjustment: [RISK-AVERSE / NEUTRAL / RISK-SEEKING]; reason: [__]
5. RESERVATION PRICE (walk-away): $[AMOUNT] [plus/without] [NON-MONETARY TERMS]
6. TARGET (realistic best): $[AMOUNT] [plus] [TERMS]
7. OPENING (anchor): $[AMOUNT] [plus] [TERMS]   Justification: [SOURCES]

OTHER SIDE (estimate)
8. Their likely BATNA: $[AMOUNT]   Their fees to trial: $[AMOUNT]
9. Their pressures: [INSURANCE / BOARD / LAUNCH / FUNDER / FISCAL YEAR / OTHER]
10. Estimated ZOPA: $[LOW] to $[HIGH]
11. Information that would justify changing our reservation price: [LIST]

Client approval: ______________________  Name/title: [__]   Date: [__]

Running example (Quillon). BATNA: expected cost of continuing about $4.1 million, including $2.4 million in fees. WATNA: a $6.2 million verdict, enhanced, plus fees, with exposure on the next-generation product. Non-monetary interest: a license covering the next-generation product is worth at least $1.5 million to Quillon. Reservation price: $3.6 million for a paid-up license including the next-generation product, or $2.8 million for past damages and the current product only. Target: $1.8 million with the broader license. Opening: $600,000 and a covenant not to sue limited to the current product.

Drafting commentary. Item 5 must not be set by reference to fees already spent. Item 11 is the safeguard against moving the reservation price because the other side was persistent rather than persuasive. The client signs because Model Rule 1.2(a) gives the client the settlement decision; documenting it protects both the client and the lawyer.

Template 4: Interest-mapping interview guide

Purpose. Uncover the interests behind the client's positions, which is where creative deals come from. Owner. Lead counsel. When to use. At the first settlement-focused meeting with the actual decision maker; repeat before mediation.

Running example (Vantor). The interview reveals that Vantor's CEO cares more about establishing a 5 percent royalty benchmark for a licensing program aimed at three other manufacturers than about the size of Quillon's check, and that the board wants the case resolved before a planned financing round in two quarters.

Drafting commentary. Interests are what principled negotiation, as Fisher, Ury, and Patton describe it in Getting to Yes, means by "looking behind positions." The answers feed Template 6's list of trades. Keep the notes privileged; they reveal priorities the other side would exploit.

Template 5: Settlement authority memo

Purpose. Record who decides, what counsel may offer or accept, and how authority is expanded during the session. Owner. Lead counsel drafts; the client decision maker signs. When to use. Before the session; supplement by email on the day if authority changes.

SETTLEMENT AUTHORITY MEMORANDUM     PRIVILEGED AND CONFIDENTIAL / ATTORNEY-CLIENT COMMUNICATION

To: [CLIENT DECISION MAKER, TITLE]      From: [COUNSEL]      Date: [DATE]
Re: Settlement authority for [MEDIATION / SETTLEMENT CONFERENCE] on [DATE] in [CASE]

1. Decision maker. [NAME, TITLE] has final authority to approve any settlement on behalf of
   [CLIENT]. [Board/committee approval [IS / IS NOT] required; if required: [PROCESS, TIMING].]
2. Attendance. [NAME] will attend in person. [BACKUP NAME] will be reachable by phone at
   [NUMBER] from [TIME] until [TIME].
3. Monetary authority. Counsel may offer [or accept] up to $[AMOUNT] [inclusive of fees and costs].
   Any number beyond $[AMOUNT] requires express approval from [NAME].
4. Non-monetary terms. Counsel may agree to: [LIST]. Counsel may not agree to: [LIST]
   without express approval.
5. Insurer (if applicable). [CARRIER] has authorized up to $[AMOUNT]; adjuster [NAME] will
   [attend / be available]. [Coverage issues and reservation of rights: SUMMARY.]
6. Expansion protocol. Any change in authority will be confirmed by [EMAIL / TEXT] from [NAME]
   to counsel during the session.
7. Your decision. Under the rules of professional conduct, whether to settle is your decision.
   Counsel will advise you, communicate every offer to you, and follow your instructions.

Acknowledged: ______________________   [NAME, TITLE]   Date: [__]

Running example (Quillon). Quillon's general counsel attends; the CEO is reachable by phone; the board pre-approved up to $3.6 million for a license that includes the next-generation product; any no-challenge clause requires the CEO's approval.

Drafting commentary. Item 7 restates Model Rule 1.2(a) and the duty under Model Rule 1.4 to keep the client informed and communicate offers. Item 2 anticipates court orders requiring a representative with authority under Fed. R. Civ. P. 16(c)(1); see G. Heileman Brewing Co. v. Joseph Oat Corp., 871 F.2d 648 (7th Cir. 1989) (en banc). For multiple clients, add the disclosures and signed consent required for aggregate settlements under Model Rule 1.8(g). For conflicts and confidentiality issues generally, see Legal Ethics in Practice: Conflicts, Confidentiality, Fees, and the Duty of Technological Competence.

Template 6: Concession plan

Purpose. Plan the sequence of moves from opening to reservation price, with conditions and trades. Owner. Lead counsel with the client. When to use. One to two weeks before the session; update during the session.

Trades list.

Running example (Vantor). Opening $5.8 million for a running royalty license at 5 percent. Round 2: $4.6 million if Quillon moves at least $600,000. Round 3: $3.9 million. Round 4: $3.4 million. Bracket: $3.4 million to $2.8 million (midpoint $3.1 million). Floor: $2.4 million, provided the license states a 4 percent or higher effective royalty for the current product. Trades: Vantor will extend the license to the next-generation product (low cost to Vantor, high value to Quillon) in exchange for a higher payment and a clause permitting Vantor to terminate if Quillon challenges the patent's validity.

Drafting commentary. Shrinking increments signal an approaching limit; keep them shrinking. Every move is conditional. Whether a no-challenge or termination-on-challenge clause will be enforceable depends on context: Lear, Inc. v. Adkins, 395 U.S. 653 (1969) abolished licensee estoppel, and MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007) allows a licensee in good standing to challenge validity, although courts have been more receptive to such clauses in settlements of litigated disputes. Treat the plan as work product protected under Fed. R. Civ. P. 26(b)(3).

Template 7: Opening demand letter (plaintiff)

Purpose. Make a justified first number in writing, which anchors the negotiation before the session. Owner. Plaintiff's lead counsel. When to use. Before mediation, or before suit if the matter is pre-litigation.

[LETTERHEAD]
[DATE]

CONFIDENTIAL SETTLEMENT COMMUNICATION
SUBJECT TO FED. R. EVID. 408 [AND [STATE] EVIDENCE CODE § [__]]

[OPPOSING COUNSEL]
[ADDRESS]

Re: [CASE NAME], No. [DOCKET]

Dear [NAME]:

In advance of the [DATE] mediation with [MEDIATOR], we write to set out [PLAINTIFF]'s
settlement position and the basis for it.

1. Liability. [Two or three paragraphs: the strongest evidence, with exhibit references;
   the most important ruling to date; the anticipated ruling or event that will matter most.]

2. Damages. [PLAINTIFF]'s damages expert calculates [THEORY] of $[AMOUNT], based on
   [SOURCES]. [Summarize the model in a short table.] [If applicable: enhanced damages
   under [STATUTE] are available on a showing of [STANDARD], and the record includes [FACTS].]

3. Fees and costs. [If applicable: the case presents a substantial basis for a fee award under
   [STATUTE], and [PLAINTIFF]'s fees through trial are projected at $[AMOUNT].]

4. Demand. [PLAINTIFF] will resolve this matter for $[AMOUNT], together with [NON-MONETARY
   TERMS], in exchange for a [mutual] release and dismissal with prejudice.

5. Timing. This proposal reflects the current posture of the case. [It will be revisited after
   [EVENT, e.g., the institution decision expected on or about DATE].]

We look forward to a productive session.

Sincerely,
[NAME]

Running example (Vantor). The letter leads with the claim construction ruling on the term Vantor won, attaches the notice letter Quillon received two years before suit, sets out the expert's 5 percent royalty on $41 million in sales plus projected sales through trial, notes the willfulness record and the availability of enhancement under 35 U.S.C. § 284 and fees in exceptional cases under Octane Fitness, LLC v. ICON Health & Fitness, Inc., 572 U.S. 545 (2014), and demands $5.8 million with a running royalty license.

Drafting commentary. The label invokes Fed. R. Evid. 408, which bars use of offers and negotiation statements to prove or disprove the validity or amount of a disputed claim, but does not make facts in the letter privileged or bar other uses. Item 5 ties any time limit to a real event, which is more credible than an arbitrary deadline. Do not threaten criminal referral, regulatory complaints, or publicity as leverage; see 18 U.S.C. § 873 and state extortion and professional conduct rules. For pre-suit demands generally, see Drafting a Demand Letter: A Practical Checklist, and for willfulness-sensitive patent letters, see Willfulness Toolkit: Notice Letter Responses, Opinion of Counsel Engagements, and Read Factor Analyses.

Template 8: Response to a lowball offer

Purpose. Decline to negotiate from an unsupported number without ending the conversation. Owner. Lead counsel. When to use. When the other side's offer or demand is outside any range the evidence supports.

CONFIDENTIAL SETTLEMENT COMMUNICATION / FED. R. EVID. 408

Dear [NAME]:

Thank you for [DEFENDANT]'s offer of $[AMOUNT] dated [DATE].

We have considered it carefully. We are not able to respond with a counterproposal, because
the offer is not connected to the evidence in this case. Specifically:

  - [The offer assumes [ASSUMPTION], but [EVIDENCE/RULING] shows [FACT].]
  - [The offer does not account for [DAMAGES COMPONENT / FEE EXPOSURE / RULING].]
  - [The offer is below [OBJECTIVE BENCHMARK: comparable license, statutory minimum,
    defendant's own expert's figure].]

[PLAINTIFF] remains willing to negotiate in good faith. If [DEFENDANT] is prepared to make an
offer that reflects [the factors above / its own expert's analysis], we will respond promptly
and constructively. We are also open to [MEDIATION / A CALL BETWEEN DECISION MAKERS] on [DATES].

Sincerely,
[NAME]

Running example (Vantor). Quillon's pre-mediation offer of $250,000 is below its own expert's $900,000 royalty calculation. Vantor's letter points this out, notes that the offer ignores the willfulness record, and invites a number "at least consistent with Quillon's own expert."

Drafting commentary. Countering from an extreme anchor drags the midpoint toward it. This letter refuses to do that while signaling willingness to deal, and it uses an objective criterion (the other side's own expert) as the benchmark, which is the principled negotiation technique of insisting on objective standards. Defendants can adapt it to respond to an inflated demand. Keep the tone neutral; the decision maker on the other side will read it.

Template 9: Bracket proposal script

Purpose. Make a large conditional move that signals a target midpoint without committing to a number. Owner. Lead counsel, delivered through the mediator. When to use. When numbers have stalled with a wide gap.

To the mediator, in caucus:

"We are at $[OUR LAST NUMBER]; they are at $[THEIR LAST NUMBER]. We are prepared to move
to a range of $[OUR BRACKET HIGH] to $[OUR BRACKET LOW] if they will move to a range of
$[THEIR BRACKET LOW] to $[THEIR BRACKET HIGH].

[Optional:] For clarity, our bracket's midpoint is $[__]. We are not committing to any number
inside the bracket until they accept a bracket in return.

You may tell them [the bracket only / the bracket and that we see this as a serious move].
You may not tell them [our reservation price / anything about our authority]."

When receiving a bracket:
  1. Calculate its midpoint immediately. The midpoint is the message.
  2. Compare the midpoint to our target and reservation price, not to their last number.
  3. Respond with a counter-bracket whose midpoint reflects our target, or with a number.

Running example (Quillon). With Vantor at $3.9 million and Quillon at $1.2 million, Quillon proposes moving to $1.6 million to $2.2 million (midpoint $1.9 million) if Vantor will move to $2.6 million to $3.2 million (midpoint $2.9 million). Vantor counters with $2.4 million to $3.0 million (midpoint $2.7 million). The midpoints, $1.9 million and $2.7 million, now define the real gap.

Drafting commentary. A bracket conditions the move on reciprocity, which reduces the fear of bidding against oneself. Its midpoint, not its edges, is what the other side will treat as your position. Tell the mediator expressly what may be disclosed; mediators generally keep caucus communications confidential unless authorized.

Template 10: Mediator's proposal decision memo and response

Purpose. Evaluate a mediator's proposal against the client's numbers and record the decision. Owner. Lead counsel and client decision maker. When to use. When the mediator issues a proposal with a response deadline.

MEDIATOR'S PROPOSAL DECISION MEMO     PRIVILEGED AND CONFIDENTIAL

Proposal received: [DATE/TIME]     Response deadline: [DATE/TIME]
Terms: $[AMOUNT]; [PAYMENT TERMS]; [NON-MONETARY TERMS]; [RELEASE/DISMISSAL TERMS]

Comparison:
  Reservation price (Template 3): $[__] + [TERMS]   Proposal exceeds it? [Y/N]
  Target: $[__]                                      Gap to target: $[__]
  Net expected value of continuing (Template 2): $[__] (range $[__] to $[__])
  Non-monetary terms in proposal vs. our interests (Template 4): [ANALYSIS]
  Terms missing from proposal that we need: [LIST; are any deal-breakers?]
  Next case event and its likely effect: [EVENT; DATE; EFFECT]

Recommendation: [ACCEPT / DECLINE]   Reasons: [__]
Client decision: [ACCEPT / DECLINE]   By: [NAME]   Time: [__]

Response to mediator (private):

"[CLIENT] [accepts / does not accept] the mediator's proposal dated [DATE], on the terms
stated in the proposal. [If accepting:] We understand that a settlement exists only if all
parties accept, and that you will inform us only whether the proposal has been accepted
by all parties."

Running example (both sides). The mediator proposes $2.75 million for a paid-up license covering both the current and next-generation products, a termination right if Quillon challenges validity (with the IPR to be withdrawn or terminated by joint request), mutual releases, and confidentiality of the amount. Vantor compares it to its $2.4 million floor and the value of a 4 percent effective royalty benchmark and accepts. Quillon compares it to its $3.6 million reservation price for the broader license and accepts.

Drafting commentary. Answer the proposal as made. A "yes, if" is usually treated as a no and can reveal your flexibility. Before accepting, check that every term you need is in the proposal; a missing term (for example, how the parallel IPR will be handled under 35 U.S.C. § 317, which governs settlement of an inter partes review, and PTAB practice) should be raised with the mediator before the deadline, not after. Settlement of patent disputes can raise antitrust questions in some industries; reverse-payment settlements of pharmaceutical patent cases are subject to rule-of-reason review under FTC v. Actavis, Inc., 570 U.S. 136 (2013). For the related pharmaceutical context, see Hatch-Waxman Toolkit: Notice Letters, Complaints, and Settlement Considerations.

Template 11: Rule 68 offer of judgment (defendant)

Purpose. Shift post-offer costs (and, where the governing statute defines fees as costs, fees) to a plaintiff who rejects the offer and does no better. Owner. Defense counsel. When to use. At least 14 days before trial, when the offer is one a rational plaintiff should consider and the post-offer period will be expensive.

UNITED STATES DISTRICT COURT
[DISTRICT]

[PLAINTIFF],                     )
        Plaintiff,               )      Case No. [__]
    v.                           )
[DEFENDANT],                     )      DEFENDANT'S OFFER OF JUDGMENT
        Defendant.               )      PURSUANT TO FED. R. CIV. P. 68

Pursuant to Rule 68 of the Federal Rules of Civil Procedure, Defendant [NAME] offers to allow
judgment to be taken against it in this action [on all claims asserted by Plaintiff [NAME]]
on the following terms:

1. Judgment in favor of Plaintiff in the total amount of $[AMOUNT], [which amount is inclusive
   of all damages, interest, costs accrued to the date of this offer, and attorney's fees]
   [OR: plus costs accrued to the date of this offer, in an amount to be determined by the
   Court, [and reasonable attorney's fees accrued to the date of this offer, in an amount to
   be determined by the Court]].
2. [Any non-monetary relief, stated precisely, e.g., an injunction in the form attached.]
3. This offer is made solely for the purposes specified in Rule 68 and is not an admission of
   liability or of any fact.
4. This offer will be deemed withdrawn unless Plaintiff serves written notice of acceptance
   within 14 days after service of this offer.

Dated: [DATE]                      [COUNSEL SIGNATURE BLOCK]

[CERTIFICATE OF SERVICE]

Running example (Quillon). Quillon's counsel prepares a Rule 68 offer but recommends against serving it. Fees under 35 U.S.C. § 285 are awarded to a prevailing party in exceptional cases and are not defined as part of costs, so the offer would shift only taxable costs under 28 U.S.C. § 1920, which are modest. An accepted offer would also produce a judgment of liability that Vantor could cite in its licensing program. Quillon instead uses the economics in Template 1 and the IPR timing as leverage.

Drafting commentary. The rule is Fed. R. Civ. P. 68. Under Marek v. Chesny, 473 U.S. 1 (1985), "costs" include fees when the underlying statute defines fees as costs, as 42 U.S.C. § 1988 and 17 U.S.C. § 505 do. Whether a defendant can recover its own post-offer fees under § 505 divides the circuits: compare Jordan v. Time, Inc., 111 F.3d 102 (11th Cir. 1997) with Harbor Motor Co. v. Arnell Chevrolet-Geo, Inc., 265 F.3d 638 (7th Cir. 2001). The rule does not apply when the defendant wins outright, Delta Air Lines, Inc. v. August, 450 U.S. 346 (1981), and an unaccepted offer does not moot the claim, Campbell-Ewald Co. v. Gomez, 577 U.S. 153 (2016). Choose one of the bracketed alternatives in paragraph 1 and delete the other; courts generally construe ambiguity about fees and costs against the offeror, and an offer silent on fees may expose the defendant to a separate fee award on top of the offered amount. Comparing the judgment with the offer requires counting pre-offer costs (and fees, where applicable) on both sides of the comparison, so keep a record of costs at the date of the offer. For state-court cases, check the state offer statute, such as California Code of Civil Procedure § 998, which differs from the federal rule. For more forms in this area, see Fee Shifting and Litigation Cost Recovery Toolkit.

Template 12: Hardball response scripts

Purpose. Give counsel ready words for the pressure tactics that most often derail a session. Owner. Lead counsel. When to use. In the room, or through the mediator.

Running example (Vantor). At 4:00 p.m., Quillon announces that its $1.2 million offer "expires at 5:00, when our CEO leaves for the airport." Vantor's counsel uses the exploding-offer script; the mediator confirms the CEO will be reachable by phone; the deadline becomes irrelevant.

Drafting commentary. These scripts follow the method William Ury describes in Getting Past No (pause, acknowledge, reframe, build a bridge) and the labeling and calibrated-question techniques in Chris Voss's Never Split the Difference. They also keep counsel on the right side of the ethics rules: statements about a client's settlement intentions are generally puffery under Model Rule 4.1 comment [2] and ABA Formal Opinion 06-439, but misstating facts is not, see Fire Insurance Exchange v. Bell, 643 N.E.2d 310 (Ind. 1994). Threats of criminal prosecution to gain advantage in a civil matter can violate state ethics rules and criminal statutes; ABA Formal Opinion 92-363 addresses the limits. For conduct that crosses into sanctionable territory, see Litigation Sanctions and Professional Responsibility Toolkit.

Template 13: Negotiation term sheet

Purpose. Capture every material term, in a binding signed writing, before the parties leave the session. Owner. Both sides' counsel; signed by the parties or confirmed representatives. When to use. At the table, as soon as the parties agree.

BINDING SETTLEMENT TERM SHEET

Case: [CASE NAME], No. [DOCKET], [COURT]        Date: [DATE]     Mediator: [NAME]

1. Parties. [PARTY A] and [PARTY B], each on behalf of itself and [its affiliates,
   successors, and assigns / LIST].
2. Payment. [PAYOR] will pay [PAYEE] $[AMOUNT] by [WIRE] within [__] days after [EVENT].
   [Installments: $[__] on [DATE]; $[__] on [DATE].] [Security: [GUARANTY / ESCROW /
   STIPULATED JUDGMENT HELD IN ESCROW].] [Acceleration on default after [__]-day cure.]
3. Non-monetary terms. [LICENSE / PHASE-OUT / INJUNCTION / ESCROW / STATEMENT], with
   deadlines: [__].
4. Releases. [Mutual / one-way] release of [all claims arising out of / LIST], [known and
   unknown], excluding obligations under this term sheet and the final agreement [and LIST].
5. Dismissal. Within [__] days after [PAYMENT / EXECUTION], the parties will file a
   stipulation of dismissal with prejudice under Fed. R. Civ. P. 41(a)(1)(A)(ii), and will
   jointly request that the Court retain jurisdiction to enforce the settlement [OR: will
   submit a consent judgment].
6. Fees and costs. Each party bears its own [OR: SPECIFY].
7. Confidentiality. [Amount only / terms / none], with carve-outs for [legal, tax, regulatory,
   insurance, and enforcement purposes, and as required by law].
8. Other terms. [No admission of liability.] [Non-disparagement: SCOPE.] [Tax reporting.]
   [Lien resolution: RESPONSIBLE PARTY.] [Parallel proceedings: [IPR / TTAB / OTHER] to be
   [withdrawn / terminated by joint motion] within [__] days.]
9. Approvals. This term sheet is subject only to [NONE / BOARD APPROVAL BY DATE / COURT
   APPROVAL].
10. Binding effect. This term sheet is binding and enforceable. The parties will negotiate in
    good faith a formal settlement agreement consistent with it within [__] days; if they do
    not, this term sheet governs. This term sheet may be disclosed to a court to enforce it,
    notwithstanding any mediation confidentiality agreement or rule.
11. Authority. Each signatory represents that he or she is authorized to bind the party for
    which he or she signs.

[PARTY A] By: ________ Name/Title: ________     [PARTY B] By: ________ Name/Title: ________
Counsel: ________                                Counsel: ________

Running example (both sides). The parties sign a term sheet reflecting the mediator's proposal: $2.75 million paid within 30 days; a paid-up license for the current and next-generation products; termination of the license if Quillon or an affiliate challenges validity; a joint request to terminate the IPR; mutual releases; dismissal with prejudice with retained jurisdiction; confidentiality of the amount, with carve-outs for future licensing disclosures required in litigation; and each side bearing its own fees.

Drafting commentary. Paragraph 5 addresses Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375 (1994): without retained jurisdiction or incorporation of the terms, enforcement requires a new contract action. See Fed. R. Civ. P. 41. Paragraph 10 matters because strict mediation confidentiality rules can bar proof of an unsigned or non-binding agreement; see Cassel v. Superior Court, 51 Cal. 4th 113 (2011) for how strictly one state applies its statute. In fee-shifting cases, address whether fees are waived, which Evans v. Jeff D., 475 U.S. 717 (1986) permits, or reserved for the court, keeping in mind that a private settlement may not confer prevailing-party status under Buckhannon Board & Care Home, Inc. v. West Virginia Department of Health & Human Resources, 532 U.S. 598 (2001). Class settlements require court approval under Fed. R. Civ. P. 23(e). For the full release and agreement, move to Settlement Agreement Checklist: A Practical Checklist.

Common drafting mistakes

1. Valuation inputs without sources. Every damages and probability figure in Templates 1 and 2 should name its source, so that it can be defended to the client and updated.
2. A reservation price that is never signed. Template 3 without the client's signature is a guess about authority.
3. Concession plans with flat or growing increments. They send the wrong signal.
4. Demand letters with arbitrary deadlines. Tie time limits to real events.
5. Countering from a lowball number. Use Template 8 instead.
6. Conditional answers to a mediator's proposal. A "yes, if" is usually a no.
7. Rule 68 offers that are silent on fees. Pick one alternative in paragraph 1 and delete the other.
8. Term sheets that are "subject to" a formal agreement without a binding-effect clause. Use paragraph 10.
9. Forgetting parallel proceedings. In IP disputes, address the IPR, TTAB proceeding, or opposition in the term sheet.
10. Sharing work product. Templates 1 through 6 and the decision memo in Template 10 are internal.

Adapting the toolkit to other case types

The templates work across case types with small changes. In image copyright demands, Template 1's registration-timing line usually decides the case; see Image Rights Toolkit: Claim Evaluation Worksheets, Response Letters, and Image Licensing Records. In website accessibility claims, the non-monetary terms in Template 13 (a remediation schedule, an accessibility statement, monitoring) usually matter more than the payment; see Website Accessibility Defense Toolkit: Demand Responses, Privileged Audit Engagements, and Remediation Records. In insured cases, Template 5's insurer section and Template 1's policy-erosion line drive the economics; see Insurance Coverage Toolkit: Placing, Tendering, and Litigating Claims. In personal injury matters, Template 1's lien section, including Medicare reimbursement under 42 U.S.C. § 1395y(b), often determines the client's net; see Personal Injury Claim Toolkit: Liability, Damages, Liens, and Settlement.

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

Related Documents

Related Articles

• Settlement Negotiation Tactics: Principled Negotiation, Anchoring, and Handling Hardball in Litigation: the tactics and ethics behind these templates.
• Settlement Agreements, Releases, and Rule 68: Ending a Case on Terms That Hold: Rule 68 and release doctrine in depth.
• Patent Damages: Reasonable Royalties, Lost Profits, Apportionment, and Enhancement: the damages inputs in the running example.
• Policy-Limits Demands and Insurer Bad Faith: How Time-Limited Demands Set Up Excess Verdicts: time-limited policy-limits demands and the insurer bad-faith exposure they create.
• Trademark Coexistence and Consent Agreements: How Rivals Share a Name and Persuade the USPTO: coexistence and consent agreements that let rival brands share a name.

Related Guides

• Planning and Running a Litigation Settlement Negotiation: A Practical Guide: when and how each template is used.
• Drafting a Settlement Agreement and Release: A Practical Guide: the next step after Template 13.
• Filing or Defending an Inter Partes Review: A Practical Guide: the parallel proceeding that shapes patent settlement timing.
• Making or Responding to a Time-Limited Policy-Limits Demand: A Practical Guide: time-limited policy-limits demands and the insurer bad-faith exposure they create.
• Negotiating a Trademark Coexistence Agreement: A Practical Guide: coexistence and consent agreements that let rival brands share a name.

Related Checklists

• Settlement Negotiation Preparation Checklist: A Practical Checklist: the task list these templates support.
• Settlement Agreement Checklist: A Practical Checklist: final agreement terms.
• Drafting a Demand Letter: A Practical Checklist: companion to Template 7.
• Policy-Limits Demand Checklist: A Practical Checklist: time-limited policy-limits demands and the insurer bad-faith exposure they create.
• Trademark Coexistence and Consent Agreement Checklist: A Practical Checklist: coexistence and consent agreements that let rival brands share a name.

Related Toolkits

• Settlement Toolkit: Term Sheets, Releases, Offers of Judgment, and Enforcement: release, dismissal, and enforcement forms.
• Willfulness Toolkit: Notice Letter Responses, Opinion of Counsel Engagements, and Read Factor Analyses: the willfulness record that drives patent settlement values.
• Fee Shifting and Litigation Cost Recovery Toolkit: fee motions and records.
• Image Rights Toolkit: Claim Evaluation Worksheets, Response Letters, and Image Licensing Records: valuation and response templates for photo claims.
• Policy-Limits Demand Toolkit: Demand Letters, Insurer Responses, and Excess Exposure Letters: time-limited policy-limits demands and the insurer bad-faith exposure they create.
• Coexistence Agreement Toolkit: Term Sheets, Consent Agreements, and Field-of-Use Clauses: coexistence and consent agreements that let rival brands share a name.