The Written Settlement: Don’t Leave Home without It!

Absent a written settlement agreement or term sheet signed by the parties or a settlement on the record transcribed by a court reporter, a settlement agreement reached in mediation is not enforceable under California law.  Hopefully, you have not had the experience of a long mediation ending late in the evening with an agreement to settle the case, but no signed settlement agreement or term sheet, and having the other side wake up the next morning with buyer’s or seller’s remorse and renege on the settlement.   This situation not only negatively affects the case itself, but also the attorney client relationship and can and should be avoided.

I have mediated quite a number of cases and despite the fact that I ask counsel to bring a written settlement agreement with them that reflects all of the terms that they desire in the settlement, very few do so.  It is common for issues like confidentiality of the settlement to arise late in the negotiating process or after the parties have reached agreement.  Absent inclusion of the issue in a settlement agreement or term sheet, it may not be possible to include such a term in the settlement.

So, again I cannot stress the point enough: Bring a draft settlement agreement with you to the mediation.  Not only will it legally seal the deal, but it will also help you identify issues that need to be negotiated in the mediation other than the settlement amount.  If nothing else, insist on the preparation of a written term sheet at the mediation that recites the terms of the settlement.  It may end up being the document that you use to enforce the settlement itself.

–Bruce