Monday, June 07, 2010

Settlement Agreement (Litigation Checklist)

This settlement agreement checklist and list of best practices is part of my Colorado Litigation Checklist approach to litigation knowledge management and litigation strategy.
- All parties listed correctly with address and full legal name
- Recitals sufficient to identify nature and extent of claims
- Recitals identify consideration where necessary
- Payment:  agreement specifies amount, form, and timing of payment(s), and where necessary the categorization of the payment (e.g. "lost profits" vs. "pain and suffering").
- Dismissal:  agreement specifies nature, form, and timing of dismissal of claims
- Release language:  check that scope covers all intended past, present, and future claims; states that release covers all claims, whether known or unknown, arising out of any (actions/agreement) as of (date)
- Indemnity provision:  is one needed?  Check Colorado Uniform Contribution Among Tortfeasors Act, C.R.S. Section 13-50.5-105, which generally eliminates the need for indemnification provisions in settlement of tort claims.
- Integration clause:  e.g., "This agreement contains all agreements made between the parties.  No prior agreement, representation or understanding pertaining to the same shall be valid or of any force or effect."
- No oral modification clause:  e.g., "This agreement may not be supplemented or amended except in a subsequent writing signed by all parties."
- Voluntary and knowingly clause:, e.g., "The parties and each of them acknowledge that they have read this agreement and understand all of its terms, and that this agreement this agreement is executed voluntarily, without duress, and with full knowledge of its legal significance."
- Dispute resolution:  clause stating method of resolution of disputes arising out of agreement (timing, arbitration, litigation, etc.) and attorneys' fees provision (e.g., "each party shall bear its own attorneys' fees  with regard to the lawsuit and negotiation and preparation of this agreement; in any action to enforce or interpret this agreement, the party prevailing on the more substantial part of its claims or defenses, if any, shall be awarded its reasonable attorneys' fees and other costs and expenses arising from such action")
- Further assurances clause:  e.g, "each party shall execute and deliver such further documents another party from time to time reasonably requests, and shall cooperate in connection with further matters in the Lawsuit, to effect and confirm the purposes of this agreement."
- No admission of liability clause:  e.g., "Neither this agreement nor any of the terms or provisions hereof shall be construed as an acknowledgement or admission of wrongdoing or liability on the part of any party."
- Counterparts clause:  e.g., "This agreement may be executed in counterparts, each of which shall be deemed an original."
- Choice of law clause:  e.g., "The laws of the State of Colorado shall govern the validity, enforcement, and construction of this Agreement."
- Confidentiality clause:  e.g., "Each party to this agreement agrees that it is confidential.  Each party further agrees to maintain the terms and conditions of the agreement and the full contents thereof in confidence, and not to disclose or permit the disclosure of this agreement tor the terms and contents hereof to any third person or entity.  Notwithstanding the foregoing, a party may disclose the terms and conditions of this agreement to its bankers, auditors, affiliated companies and other third parties on a need-to-know basis.  A party to this agreement may also disclose the terms hereof if required by law to make such disclosure."
- Signature blocks for all settling parties
Thoughts & Best Practices:
- Consider whether the release language should/must include:  past, present and future constituents, shareholders, investors, affiliates, owners, officers, directors, employees, agents, successors and assigns, parent companies, subsidiaries, predecessors and successor corporations or entities.
- Consider the time-scope of the release:  e.g., "...whether known or unknown, now existing or arising at any time in the future, liquidated or unliquidated arising out of any and all agreements, events, acts, omissions or conduct occurring at any time prior to and including the date of this agreement."
- Does any party to the release require specific approval or authority to enter into release?  If so, ensure that a statement to that effect is included.
- Recitals:  look to the interface between the recitals and the release language--do the recitals adequately set forth the factual basis to define the scope of what is, and what is not being released?
- Consider whether there are tax implications for the payor or payee, and whether any payments should be categorized to address tax implications.
Example Form:
- Click Here for Template Settlement Agreement (Locked)
- Click Here for Publicly Editable Settlement Agreement (Please feel free to add improvements to this form, and comment below describing changes)
Jeff Vail is a business litigation attorney in Denver, Colorado.  Visit for more information.
This settlement agreement checklist and list of best practices is part of my Colorado Litigation Checklist approach to litigation knowledge management and litigation strategy.

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