Settlements have always been common in the legal world, and they’ve arguably become even more widely used during the pandemic due to delays in court proceedings. Most civil practitioners at some point in their career will have a client who later questions their decision to settle. Unfortunately, some of these clients sue for malpractice, believing they could have achieved a better settlement or a better result had they moved forward with litigation.
Common Causes of Settler’s Remorse
- Lack of Understanding. Despite agreeing to a settlement, clients don’t always understand the terms or ramifications.
- Post-Settlement Discovery. Clients sometimes learn of information after the settlement that they believe would have affected the terms or influenced their decision to settle.
- Third-Party Influence. After agreeing to a settlement, clients may hear the experiences or opinions of their family or friends and begin to question their result.
- Post-Settlement “Pro Se.” Clients might conduct independent research after agreeing to a settlement and find articles or blogs discussing other people’s experiences or settlement results. Without the full context or complete information, clients may see (or believe they see) certain similarities and think their own settlement was unfair.
Tips for Preventing and Responding to Settler’s Remorse
- Establish Settlement Goals Early. Clarify in the engagement letter that your goal isn’t necessarily to obtain the highest dollar amount possible, if money is involved, but to reach a settlement that makes the most sense for your client, both financially and otherwise.
- Communication Is Key. Communicate regularly with your client in writing about their feelings and expectations throughout the case and seek their input. If your client expresses unrealistic expectations about their goals for the case, document your discussions with them about establishing more realistic expectations. Also explain to them the settlement process, especially if they will be participating in more formal negotiations such as a mediation. Discuss who will be present, what will be covered, and how long the process will take, as well as the strengths and weaknesses of your client’s case. This conversation will help to prepare your client for the process and avoid misunderstandings.
- Fulfill Your Ethical Duties of Diligence and Competence. Don’t feel compelled to advise your client to settle just because an offer is on the table. Various factors may impel you to move too hastily toward settlement ─ pressure from opposing counsel, the cost of litigation, a heavy caseload, or even the desire to avoid trial. Resist the urge for a quick resolution and make sure the terms are in your client’s best interest.
- Give Your Client Time and Space. You never want your client to feel rushed or pressured into settling. They may need time to review and reflect on the terms. Also, make sure your client is in a good state of mind before entering into an agreement. If you’re participating in mediation or a settlement conference, consider providing breaks throughout and ending after a certain period of time so your client isn’t too tired or stressed to make an informed decision.
- Explain the Terms and Ramifications in Writing. It can be tempting, after long and stressful negotiations, to simply sign the agreement and close the file. But many clients don’t understand the terms or ramifications of a settlement. Consider including the following items in a letter to your client before entering into a settlement agreement:
- Each term of the agreement and how it will affect the client, now and in the future, including tax ramifications if applicable.
- Documentation that you explained the terms to your client, that they were given sufficient opportunity to ask questions, and that they understood the terms before signing the agreement.
- Alternatives to settlement, including the advantages, disadvantages, estimated timelines, and possible outcomes.
- The difference between settlement and collection. If money is part of the agreement, your client needs to understand that a promise to pay does not assure actual payment. For example, the settlement proceeds may not be paid for a certain period of time, if at all. Creditors’ liens may apply, and attorney fees will reduce the amount prior to distribution.
- The finality of the settlement, aside from a modification or appeals process, which are not guaranteed.
- Be Available for Your Client. Make yourself accessible after the agreement is signed. Allow the client to ask questions, and provide reassurance that the settlement was a good decision.
See this article for more guidance on avoiding settler’s remorse before, during, and after a settlement conference.