Summary. The working documents of a settlement practice, annotated.

Template 1 — Valuation worksheet

Complete before the mediation. The party without a reservation price negotiates against itself.

SETTLEMENT VALUATION                              DATE: ______

LIABILITY
  Claim 1: ______   Probability plaintiff prevails: ____%
  Claim 2: ______   Probability: ____%
  Counterclaim:     Probability defendant prevails: ____%

DAMAGES IF LIABILITY
  Realistic verdict range:      $______ to $______
  Most likely:                  $______
  Fee award if applicable:      $______

STAGE PROBABILITIES (compound)
  Survive dispositive motions   ____%
  Survive certification         ____%
  Win at trial                  ____%
  Survive appeal                ____%
  COMPOUND                      ____%

EXPECTED VALUE                  $______

COSTS
  Remaining to judgment         $______
  Through appeal                $______
  Fee exposure if we lose       $______

COLLECTABILITY                  ____%  Basis: ______

NON-MONETARY
  Management distraction:       ______
  Publicity / trial exposure:   ______
  Relationship value:           ______
  Injunction risk:              ______

TIME VALUE  (money now vs. after appeal)  ______

** RESERVATION PRICE: $______ **
Approved by: ______   Date: ______

Template 2 — Authority confirmation

Memorandum to file — settlement authority

Client: [ ] · Matter: [ ] · Date: [ ]

  1. Authorized decision-maker: [name, title]. Confirmed by [email / resolution / engagement terms] dated [ ].
  2. Authority granted: to settle all claims and counterclaims for a payment [by / to] the Client of not more than / not less than $______, on the terms outlined in the attached parameters.
  3. Additional approvals required: [board / committee / member vote / none]. Obtained on [date] / required by [date].
  4. Insurer: [consent obtained / required / not applicable]. Contact: [ ]. Hammer clause: [yes/no].
  5. Non-monetary terms authorized: [confidentiality / non-disparagement / letter / license / termination of agreement].
  6. Terms NOT authorized without further approval: [admission of liability / consent decree / ongoing obligations beyond ___ / any public statement].
  7. Attendance: [name] will attend the mediation with authority as stated.

Obtain this in writing before the mediation. Settlements reached without authority are a recurring and expensive problem, and the law on apparent authority varies.

Template 3 — Term sheet

Signed before anyone leaves the room. Six lines is not enough.

BINDING SETTLEMENT TERM SHEET

This term sheet is binding and is enforceable notwithstanding that the parties intend to execute a more detailed agreement.

1. Payment. [Payor] will pay [Payee] $______, as follows: $____ within ____ days of execution of the definitive agreement; $____ on [date]; $____ on [date].

2. Releasing parties. [Plaintiff], and each of its parents, subsidiaries, affiliates, successors, assigns, and [name any individuals or entities with separate claims].

3. Released parties. [Defendant], and each of its past, present, and future parents, subsidiaries, affiliates, predecessors, successors, assigns, officers, directors, employees, agents, attorneys, and insurers.

4. Scope of release. All claims arising from or relating to [the Agreement / the parties' relationship / the subject matter of this action], whether known or unknown, arising on or before the Effective Date. Carve-outs: [claims arising from this term sheet; the pending ___ matter; workers' compensation; vested benefits].

5. Counterclaims. Released on the same terms.

6. Fees and costs. Each party bears its own. The payment in Paragraph 1 is inclusive of all fees and costs.

7. Dismissal. With prejudice, within ____ days of the final payment / of execution. The Court will be asked to retain jurisdiction to enforce the settlement.

8. Confidentiality. The amount and terms are confidential; the existence of the settlement is not. Carve-outs for compelled disclosure with notice, professional advisers, insurers and lenders, enforcement, and communications with government agencies.

9. Non-monetary terms. [Letter in the form attached as Exhibit 1 / inventory returned at Payor's expense within ___ days / agreement terminated effective ___].

10. Material to be returned. Each party will return or destroy the other's confidential material within ____ days and certify.

11. Definitive agreement. Within 21 days. If not executed, this term sheet governs.

12. Conditions. [Court approval / insurer consent / lien resolution], and what happens if not obtained.

Signed: ____________ (Plaintiff) ____________ (Defendant) Date: ______

Paragraph 11 is the safety net. Deals papered "next week" fall apart at a rate that surprises people who have not seen it.

Template 4 — Release language

4. Release by [Plaintiff Parties].

(a) Definitions. "Releasing Parties" means [Plaintiff] and each of its past, present, and future parents, subsidiaries, affiliates, divisions, predecessors, successors, assigns, and any person or entity claiming by, through, or under any of them, and [name individuals or entities with separate claims]. "Released Parties" means [Defendant] and each of its past, present, and future parents, subsidiaries, affiliates, divisions, predecessors, successors, assigns, officers, directors, shareholders, members, partners, employees, agents, attorneys, accountants, insurers, and representatives, in each case in their capacities as such.

(b) Release. The Releasing Parties fully and forever release and discharge the Released Parties from any and all claims, demands, causes of action, obligations, damages, and liabilities of any kind, whether known or unknown, suspected or unsuspected, whether at law or in equity, arising from or relating to [the Agreement / the parties' relationship / the matters alleged in the Action], from the beginning of time through the Effective Date.

(c) Unknown claims. The Releasing Parties acknowledge that they may later discover facts different from or in addition to those they now know or believe to be true, and expressly waive any statute, rule, or common law principle that would limit this release to claims known at the time of execution, including [applicable state provision], which provides: "[quote]."

(d) Exclusions. This release does not extend to: (i) claims arising from this Agreement; (ii) [the specific carve-out]; (iii) claims for workers' compensation benefits; (iv) vested benefits under any employee benefit plan; (v) the right to file a charge with or participate in an investigation by any government agency, provided that the Releasing Parties waive any monetary recovery in connection therewith to the extent permitted by law; and (vi) rights to indemnification or advancement under [governing documents / applicable law].

(e) No assignment. Each Releasing Party represents that it has not assigned or transferred any released claim.

Subsection (a) is where releases fail. A release of "Defendant" that omits its parent, its insurers, or its employees leaves them exposed.

Template 5 — Dismissal order with retained jurisdiction

This paragraph is the answer to Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375 (1994).

STIPULATION AND ORDER OF DISMISSAL

The parties, by their undersigned counsel, stipulate that this action is dismissed with prejudice, each party to bear its own costs and fees.

The Court retains jurisdiction to enforce the terms of the parties' Settlement Agreement dated [date], the terms of which are incorporated herein by reference. Any party may apply to this Court for enforcement of the Settlement Agreement.

SO ORDERED.

Alternative, where the terms should not be public:

The Court retains jurisdiction for [24] months to enforce the parties' Settlement Agreement dated [date], a copy of which has been provided to the Court [in camera / and which the parties will produce upon application to enforce].

Alternative — conditional dismissal:

This action is dismissed without prejudice, provided that any party may move to reopen within [60] days if the settlement is not consummated. Absent such a motion, the dismissal converts to one with prejudice.

Template 6 — Confession of judgment

Payment default. If [Payor] fails to make any payment when due and does not cure within [15] days of written notice, then:

(a) the entire unpaid balance becomes immediately due, together with interest at [rate] from the date of default and the costs and reasonable attorney fees of enforcement;

(b) [Payor] consents to entry of judgment against it in the Action in the amount of the unpaid balance, interest, costs, and fees, and waives any defense to entry of such judgment other than payment;

(c) [Payee] may submit to the Court the stipulated judgment attached as Exhibit B, together with an affidavit stating the amount unpaid, the date of the notice, and the failure to cure; and

(d) [Payor] waives notice of the submission beyond the notice required by subsection (a).

Note: confession of judgment provisions are restricted or prohibited in some jurisdictions and for some parties. Confirm enforceability before relying on one.

Alternatives where it is unavailable: an escrow funded at signing; a letter of credit; a guaranty from a creditworthy affiliate; or a security interest in identified collateral.

Template 7 — Confidentiality clause

8. Confidentiality.

(a) Confidential terms. The amount of the payment and the terms of this Agreement are confidential. The existence of this Agreement and the fact that the Action has been resolved are not confidential.

(b) Bound persons. The parties and their counsel. Each party will instruct its officers, directors, employees, and agents who have knowledge of the confidential terms not to disclose them.

(c) Permitted disclosures. A party may disclose the confidential terms: (i) as required by law, regulation, subpoena, or court order, provided that the party gives the other prompt written notice where permitted by law and a reasonable opportunity to seek protection; (ii) to its accountants, auditors, tax advisers, and attorneys, who are informed of the confidentiality obligation; (iii) to its insurers, lenders, and prospective acquirers under an obligation of confidentiality; (iv) as necessary to enforce this Agreement; (v) to any government agency, including in connection with any report, complaint, charge, or investigation — nothing in this Agreement limits or prohibits any communication with any government agency; and (vi) information that becomes public other than through a breach of this Section.

(d) Response to inquiries. A party asked about the Action may state only that "the matter has been resolved."

(e) Remedy. The parties acknowledge that the harm from a breach would be difficult to quantify and that liquidated damages of $[amount] per breach represent a reasonable estimate of that harm and are not a penalty. The non-breaching party is also entitled to injunctive relief without the necessity of posting a bond, and the parties stipulate that a breach would cause irreparable harm.

Subsection (c)(v) is not optional. A provision that appears to restrict communications with government agencies may be unenforceable and, in some contexts, unlawful.

Template 8 — Non-disparagement clause

9. Non-disparagement. Neither party will make, or cause to be made, any statement to any third party that disparages the other party or its [products, services, officers, directors, or employees], provided that:

(a) nothing herein restricts truthful testimony compelled by legal process, or truthful statements made in connection with any government investigation or proceeding;

(b) nothing herein restricts communications with any government agency;

(c) this Section does not apply to statements made in connection with enforcement of this Agreement;

(d) this Section does not restrict internal communications within a party's organization made for legitimate business purposes; and

(e) this Section binds the parties and, as to [Defendant], its officers and directors acting in their official capacities. Each party will instruct the individuals identified in [Schedule ___] accordingly.

Remedy: as provided in Section 8(e).

Drafting note: an unqualified non-disparagement clause binding an entity is unenforceable in practice and creates disputes about the conduct of people who never agreed to it. Name who is bound and limit it to statements about the matters at issue.

Template 9 — Rule 68 offer of judgment

Serve, do not file. More than 14 days before trial. The offeree has 14 days.

OFFER OF JUDGMENT PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 68

Defendant [ ] offers to allow judgment to be taken against it in this action as follows:

  1. Judgment in favor of Plaintiff [ ] and against Defendant [ ] in the amount of $[amount].

  2. This amount is inclusive of all claims asserted in the Complaint, and inclusive of all costs accrued to the date of this offer and all attorney fees to which Plaintiff may be entitled under any statute or otherwise through the date of this offer.

[OR, if the intent is different:]

  1. This amount is in addition to costs accrued to the date of this offer, and in addition to reasonable attorney fees through the date of this offer in an amount to be determined by the Court.

  2. This offer resolves all claims asserted against Defendant [ ] in this action. [Or specify which claims.]

  3. This offer is made under Federal Rule of Civil Procedure 68 and is not an admission of liability.

  4. This offer expires 14 days after service.

Paragraph 2 is the paragraph. An offer silent on costs and fees is construed against the offeror, and the offeree may recover them in addition.

Before serving, confirm: does the substantive statute define attorney fees as "costs"? If not, the cost-shifting under Marek v. Chesny, 473 U.S. 1 (1985) reaches only modest taxable costs and the offer is probably not worth the strategic disclosure.

Template 10 — Lien resolution worksheet

Interest Holder Amount claimed Statutory basis Reduction available? Payoff obtained Release received Disbursed
Medical provider
Health plan
Government payor
Workers' compensation
Prior counsel
Litigation funder
Judgment creditor
Child support

Process: ask the recipient in writing; search for recorded judgments; notify each holder; obtain payoffs with validity dates; negotiate reductions; condition disbursement on releases; use joint payee or escrow where disputed; obtain an indemnity for undisclosed interests.

Net recovery calculation to show the client:

Gross settlement                    $________
Less: attorney fees                 $________
Less: costs                         $________
Less: liens (itemized)              $________
Less: taxes (estimated)             $________
= NET TO CLIENT                     $________

Template 11 — Allocation and tax reporting

12. Allocation. The parties agree that the payment is allocated as follows, and that this allocation reflects the economic substance of the claims resolved:

Component Amount Claim
$ Breach of contract (Count I)
$ Defamation (Count II)
$ Attorney fees and costs

13. Tax matters. Each party is responsible for its own tax obligations. [Payor] will issue [Form 1099-MISC / 1099-NEC / W-2] to [recipients] for the amounts indicated, and the parties will exchange completed [Form W-9] within [10] days. Neither party makes any representation regarding the tax treatment of any amount, and each has relied on its own tax advisers.

Involve a tax adviser before signing. The allocation cannot be revised afterward, and it determines deductibility for the payer, inclusion for the recipient, and the treatment of the fee portion.

Template 12 — Motion to enforce

MOTION TO ENFORCE SETTLEMENT AGREEMENT

I.   JURISDICTION
     The Court retained jurisdiction by Order of [date],
     which incorporated the Settlement Agreement.
     [Kokkonen: without this paragraph, the motion fails.]

II.  THE AGREEMENT
     Executed [date]; material terms; Exhibit A.

III. THE BREACH
     A. What was required and when
     B. What occurred
     C. Notice given on [date]; cure period expired [date]
     D. Amount unpaid: $______

IV.  RELIEF REQUESTED
     A. Entry of judgment in the amount of $______
        [pursuant to the confession of judgment in § ___]
     B. Interest at [rate] from [date]
     C. Costs and attorney fees of enforcement per § ___
     D. [Specific performance of ___]

V.   [IF CONTEMPT IS AVAILABLE]
     The Agreement was incorporated into a consent judgment;
     contempt is available for non-compliance.

ATTACHMENTS: agreement; dismissal order; notice of default;
declaration establishing non-payment.

Send the cure notice on the day the payment was due. Parties that let two payments slip weaken every position, and courts ask why the movant waited.

Template 13 — Closing checklist

SETTLEMENT CLOSING                          MATTER: ______

SIGNATURES
  [ ] All releasing parties (list): ______
  [ ] All released parties named
  [ ] Entity authority confirmed
  [ ] Guardian / court approval where required
  [ ] Lienholder releases
  [ ] Insurer consent

MONEY
  [ ] Wire instructions verified by telephone to a known number
  [ ] Payment made / received on ______
  [ ] Lien payoffs disbursed; releases in hand
  [ ] Escrow closed
  [ ] Tax forms issued; W-9s exchanged

COURT
  [ ] Dismissal filed WITH retained-jurisdiction language
  [ ] Consent judgment entered (if used)
  [ ] Approval order entered (if required)
  [ ] Pending motions withdrawn; trial date vacated

MATERIALS
  [ ] Return / destruction certified by party, counsel, experts, vendors
  [ ] Trade secret or confidential material recovered
  [ ] Protective order disposal obligations satisfied
  [ ] Litigation hold released (except ______)

ONGOING OBLIGATIONS — ONE-PAGE SUMMARY TO CLIENT
  [ ] Confidentiality: what, who, until when
  [ ] Non-disparagement: what, who
  [ ] Payment dates and cure periods
  [ ] Conduct restrictions and expiration dates
  [ ] Cooperation or reporting obligations, with an owner
  [ ] Circulated internally to the people who must comply

CLOSED BY: ______   DATE: ______

The one-page summary is the most valuable item. In three years, nobody will read the agreement, and the obligations that get breached are the ones nobody remembered.

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