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Mediation Settlement Agreements: What You Should Know.

January 18, 2012

After a stressful mediation-negotiation conference and with everyone packing up and anxious to leave, it is easy to understand why careful drafting of your formal mediation settlement agreement can often get so little thought.  And, rarely will there be any real problem if it should not be done with the care it should demand.

But, that is the problem:  mediation settlement agreements don’t get publicly challenged enough to give the subject the notice and weight it deserves.

But, if yours IS one of those being sought to be defeated because of either buyer’s or sellers “remorse”, you will truly wish you had given more time and effort upon your agreement.  And you will remember for the next time, as I always recommend,  to have a draft agreement prepared for use well in advance.

(Note:  Many mediators, as an accommodation, will provide fill-in settlement agreement “forms” that can be used for any number of stock agreements.  However, it is almost never a “stock” agreement that becomes the issue.  More importantly, such fill-in forms are of very little use in the majority of non-personal injury matters. )

Mediation settlement agreements should be to mediating parties the best thing since sliced bread.  You have reached resolution by planning, preparation and effort and now it remains only for you to properly protect that hard-won agreement by your precision in draftsmanship.

And, what protections!  Consider the Florida Rules of Procedure regarding mediation agreements.

Rule 1.730, Florida Rules of Civil Procedure, section (c), Imposition of Sanctions“, states that “in the event of breach, or failure to perform under the (mediation settlement) agreement, the court upon motion may impose sanctions, including costs, attorneys fees, or other appropriate remedies, including entry of judgment on the agreement”.  

And both the trial and appellate courts consistently place their weight behind mediation and particularly these agreements (that incidentally take a substantial load off their own work loads).

A properly executed mediation settlement agreement is almost always totally enforceable.  And it has the added advantage of being subject to sanctions, including attorneys fees and costs, if not honored as written.  Something most “complete” releases and many contracts do not contain!  Further, the appellate courts have stated that “there is a more stringent standard of review…when (it involves) a mediated settlement agreement”.  Tilden Groves Holding Corp. V. Orlando/Orange County Expy. Author, 816 So. @nd 658 (Fla. 5th DCA 2002).

But even this powerful procedural rule first requires that your mediation settlement  agreement be enforceable.  Yet, many mediating parties will still treat placing their settlement agreement in writing with little concern or respect about enforceability.

And, consider your risk.  You have just completed hours of grueling negotiation with success thought to finally be in hand, only to find that the hard-fought verbal agreement you had yesterday and thought you had properly recorded to protect it, has legally vanished today. 

What are the enforceable concerns?  Many, but they begin with something as simple as full attendance at your mediation.  See, “Mediation Tip:  Successful Mediation Requires All Participants Attend” March 21, 2011.  Are the correct persons in attendance to make the agreement enforceable?

Read section (b), Agreement, of the same rule, quite closely.  In short, it provides that any agreement reached, “shall be reduced to writing and and signed by the parties  and their counsel

Although a few appellate decisions have left the door open for enforcement even with the failure of  a counsel’s signatures (presumptively someone running to catch a plane?), I think you will find that none have upheld an agreement where the party against whom the agreement was to be enforced did not sign.

How often have you excused a party from attendance “because they were not necessary to the negotiation” because they had others paying the monies being requested?  How are you then to obtain a valid non-attending party’s signature?

And it is  not completely clear that if ALL of the parties do not sign, whether the agreement is valid even as to those who do? (On the other hand, why would you want YOUR client bound by signing, but not have your opponent bound?)

But, Florida’s appellate decisions also include enforcement issues arising from settlement agreements far beyond the single issue of who signed or who didn’t. 

The commonly used phrase, “full settlement of all claims of the Plaintiff”, became an issue where later it was contended that all claims should have included others not specifically named!  See, Tilden Groves Holding Corp., Supra, above.  And, even poor wording of the total amount to be paid became a substantial subsequent issue because it omitted reference to prior payments.  See, Feldman v. Kritch et. al., 824 So. 2nd 274 (Fla. 4th DCA 2002).

( My thanks to Michael S. Orfinger, of the Upchurch, Watson, et. al., mediation group, for his appellate insight on these and other interests of mine.  Michael often presents  on the latest appellate decisions arising from mediation;  a worthwhile educational event for anyone.)

In the current litigious climate, including issues of potentially large governmental liens, just how can you not be concerned?

But, in short, why would you want to work so hard and have even a possibility of having your work overturned?   The money and time you saved in mediation may be totally lost and more with the headaches of not having a valid, signed mediation agreement setting forth all of the terms your client required for the resolution.

And, it all could have been avoided by just a little more advance preparation. 

How long would it have taken to anticipate resolution and have drafted a proposal to give to the opposition.  Or, at the least, used that draft as an outline for your mediation effort.  I also often recommend this as one of my standard pre-mediation preparations to those engaged in complex commercial mediations.

At worst, such an advance draft of your settlement agreement is a time-saver.  At best, it is a road-map to precisely where you want to end up with a successful mediation.

Mediators are taught and cautioned not to participate in drafting the mediation agreement.  It is felt to be peculiarly the province of the respective party’s counsel.  And the appellate decisions give real meaning as to why mediators should not be engaged in drafting the settlement agreement:  it is not their job!   But, even if local practice occasionally provides forms that can be guidelines, ultimately, the final agreement must be as determined by opposing counsel. 

Give consideration to gathering agreements and forms that you can use generically.  However, better practice will always be to have your specific draft easily available to you, your client, and your mediator.

You will be glad you did.  Someday.  Or, if not, the next time you read an appellate decision about someone else, you will be doubly glad it was not you!

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