Active Clients Benefit Greatly from Court-Ordered Settlement Conferences

As the client, your active involvement in the litigation process is important to achieving a favorable result. This is especially true during court-ordered settlement conferences--a form of mediation--particularly in Richmond's federal courts. Both of Richmond's federal magistrate judges require a high level of client participation. For example, a corporate representative must be present with full settlement authority throughout the settlement conference. That representative cannot be a member of the company's legal department unless the judge makes an exception.  At least one magistrate judge has specifically defined "full settlement authority" as authority up to the value of the last demand. Failure to follow this or any other requirement imposed by the magistrate judge may lead to penalties.

Rather than fear the settlement conference process, you should embrace it.  Richmond's federal magistrate judges have a settlement success rate of over 95%, in large part because they are actively involved in the process from beginning to end. The more you engage in the process, the more likely that your judge will incorporate your position when recommending terms of a settlement to your opponent. Conversely, if your opponent is actively involved but you are not, your opponent has the upper-hand.  Below are four recommendations for engaging in the mediation process:

1.     Get Involved Early.  Scheduling a settlement conference at the right stage of the case benefits your settlement position. Early in the process, you should work with counsel to decide when you will have the strongest bargaining power and attempt to schedule the mediation during that time, assuming that the Court's parameters and schedule can accommodate your request. If the parties understand the facts of the case well enough to have meaningful settlement discussions before discovery, you should consider scheduling the settlement conference to occur before the discovery process begins. Avoiding the expensive discovery process may also allow you to allocate some of those resources to a settlement offer.  If counsel advises that you could win your case with a motion, you may want to time the settlement conference so that it occurs while the motion is pending--forcing the opposition to weigh the risk of loss. Too often, a party will refuse to negotiate a settlement until after a ruling on a motion, only to lose the motion and the bargaining power that existed while it was pending. So, strategize with counsel early about the timing of the settlement conference and consider how timing may affect bargaining power.

2.     Participate in Drafting the Confidential Settlement Memorandum. Richmond's magistrate judges require that each party submit a "Confidential Settlement Memorandum" containing an objective overview of the case, an assessment of strengths and weaknesses, and a discussion of settlement expectations.  Be involved in the drafting of the memorandum and ensure that it succinctly explains why your settlement position is justified.  Unsupported posturing is looked upon with disfavor, but advocacy is welcome. If your position is well-reasoned, you may find the judge agreeing with your position and placing pressure on your opposition to justify why they reject your offer. Consider including a specific settlement figure--the judge may adopt it as his or her own.  However, if the judge believes that you are just posturing, you could lose control of the process to your opponent.

3.     Get Face Time with the Judge.  At the beginning of the settlement conference, the judge will normally meet privately with the lawyers. He or she may later ask to meet with you and your lawyer together.  Take this opportunity to convince the judge of the sincerity of your position and be prepared to explain in your own words why your settlement position is fair and reasonable.  At some point in the process, the judge may decide what he or she thinks are the appropriate terms of settlement.  To achieve a favorable outcome, you should take every opportunity to convince the judge that your position is appropriate.

4.    Be Ready to Sign.  Richmond's magistrate judges will memorialize the basic terms of the settlement in a memorandum of understanding ("MOU"), which may contemplate a more formal settlement agreement to be executed later.  Discuss with counsel whether there are any specific terms that you want included.  The judges have their own form of the MOU with certain terms already included.  For example, the standard MOU may include a term that requires the parties to consent to binding arbitration if either party breaches. Consider coming to the settlement conference with a draft settlement agreement and being prepared to edit onsite.  As long as you quickly iron out the details, the judge may allow you to use your own version.  This helps to avoid protracted negotiations over the details of a settlement agreement after the settlement conference ends.

In sum, early strategizing and active participation with your counsel can lead to a more successful settlement conference, both in terms of a smooth process and a favorable result.  The judge will appreciate that you are taking the matter seriously and, in turn, give careful consideration to your position.  When you and your counsel are on the same page and you gain the judge's confidence, you will have maximized the potential for a favorable settlement.


Spotts Fain publications are provided as an educational service and are not meant to be and should not be construed as legal advice. Readers with particular needs on specific issues should retain the services of competent counsel.

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