Ch 14 Settlements, Dismissals, and Alternative Dispute Resolution

Loan Receipt Agreement

- - A loan receipt agreement is a contract between a claimant and a settling tortfeasor by which they agree that one of them will prosecute the claim against another tortfeasor. This type of agreement gives the claimant the opportunity to recover additional damages and the settling tortfeasor may get some money back by pursuing the claim. The settling party, or his liability insurer, agrees to "loan" the claimant a specified amount of money, and the claimant agrees not to pursue the claim against the settling tortfeasor. The parties then agree on an allocation of any recovery from the nonsettling tortfeasor. If the claimant recovers nothing from the nonsettling tortfeasor, the "loan" does not have to be repaid. - Loan receipt agreements are court approved and often provide the best strategy for potential settlement. Generally, such agreements are used only where the lender has paid most (or perhaps all) of the claimant's damages. Most jurisdictions have upheld the validity of this settlement vehicle. However, courts often require disclosure of the existence and terms of the loan receipt to the other defendants.

Mary Carter Agreements

- A Mary Carter agreement (from the case Booth v. Mary Carter Paint Co., 202 So. 2d 8 [Fla. Dist. Ct. App. 1967]) is a secret or semisecret agreement between the claimant and one or more, but not all, the tortfeasors. There are several elements to this type of agreement: 1. The settling defendant guarantees the plaintiff a minimum amount of money even if the plaintiff loses the case or recovers less than the guaranteed amount. 2. The settling defendant agrees to remain in the lawsuit until a judgment is reached or the claimant consents to its dismissal. Its payment to plaintiff is reduced if money is recovered by settlement or judgment from the other defendants. 3. Plaintiff agrees not to enforce any subsequent judgment against the settling defendant. 4. The agreement is confidential and disclosed only as required by the rules of the court. - A few jurisdictions (including Texas) prohibit the use of Mary Carter agreements. Other jurisdictions require safeguards on their use to balance the public policy promoting settlements with a possible distortion of the adversarial process. Some jurisdictions require disclosure of this "secret" agreement.

Binding Arbitration

- A binding arbitration hearing resembles a nonbinding arbitration hearing. However, in addition to the binding nature of the decision, the preliminary steps in this procedure are substantially different. First, the parties must agree to binding arbitration. That is, the parties must agree to give up their right to sue and agree to accept the arbitrator's decision. This is often done before any dispute has arisen and is usually found in a written contract in a clause providing that "in the event of a dispute, the parties agree that it shall be resolved through arbitration." Such provisions are becoming common in business and commercial transactions. Arbitration clauses are also frequently found in automobile insurance policies under the uninsured motorist provisions. Also, many health care providers are asking their patients to sign such agreements. - A second difference between binding and nonbinding arbitration is the way the hearing is set up. In binding arbitration, one of the disputing parties usually requests in writing that the dispute be arbitrated. This writing may loosely resemble a complaint. Because the court is not a party to binding arbitration, the parties must formulate the details of the arbitration hearing, including selection of the arbitrator, on their own. For parties who are already disputing, this can be a major problem. Various organizations exist that can help the parties with this. One of the most popular is the American Arbitration Association, which has adopted a set of rules to be followed for maintaining the arbitration if the parties agree. Those rules are available at the American Arbitration Association's Web site, <http://www.adr.org/>. Once a binding arbitration award is made, it is usually final. - The paralegal should also be familiar with the Uniform Arbitration Act of 2000 (UAA), which has been adopted by a significant number of states. Check <http://www.law.cornell.edu/> to determine whether Ohio has adopted the Uniform Arbitration Act. Note any differences between the Federal Arbitration Act and the UAA.

14-3b Covenant Not to Sue

- A covenant not to sue is a type of settlement agreement in which the plaintiff agrees not to commence or maintain an action against the defendant, but does not release the defendant from liability arising from the incident. The nonsettling tortfeasor may bring a third-party action against the settling tortfeasor for contribution.

General Release

- A general release is used for full and final settlements. In a general release, all possible claims against all possible persons who might be liable for the plaintiff's injuries are settled. This type of release is advantageous for the defendant because the defendant can rest assured that the plaintiff will take no further action in relation to the subject matter of the lawsuit. In the Kowalski case, for example, a general release would cancel all claims that Dr. Kowalski has or may have relating to the explosion at the Cuyahoga Valley Nuclear Power Plant

High-Low Agreements

- A high-low agreement is an agreement in which the parties agree that the outcome of the case will be no less than "X" dollars (the low) and no more than "Y" dollars (the high). Such agreements often are used in cases in which the damages are high and the liability is uncertain. For example, medical malpractice cases are expensive to litigate. In the event that a plaintiff is particularly sympathetic to jurors, the defendant might decide that a high-low settlement agreement is preferable to taking his chances with a jury verdict. If the verdict returned is in favor of the plaintiff and exceeds the "Y" dollars, the plaintiff will receive only the "Y" dollars. If the verdict is in favor of the defendant, and lower than "X" dollars, the plaintiff is still guaranteed the "X" dollars. - High-low agreements may be entered into before or during a trial, prior to the jury verdict. These agreements are viable in all types of cases. Court approval of a high-low agreement is required in cases involving minors to prevent the possibility of a reversal by a higher court. A guardian ad litem, a person who has the legal authority (and the corresponding duty) to care for the personal and property interest of a child or incapacitated person for the purposes of a legal procedure, will then be appointed to approve or disapprove the proposed high-low settlement agreement.

Mediation Statement

- A mediation statement is a statement of facts and legal argument for your case. It should contain information as to what you anticipate the opposing party believes its key supporting facts and legal arguments are, and why they are not supported by the evidence. - This position paper is intended to give the mediator some perspective on any settlement history. It should include information about any underlying personal or emotional issues. For example, assume that a family member of one party was formerly in a partnership with the other party, and the partnership ended on a sour note, financially and personally. That information might reflect a personal reason that one party will be reluctant to settle with the other, unless it is a settlement favorable to the party who perceives himself as having been hurt by the other party. - If there are written documents or pleadings that would be helpful to the mediator, attach them to your mediation statement. In addition, you should either highlight or summarize them to indicate their significance in your view of the case.

Arb-Med

- A recent development in the world of ADR is the arb-med, in which an arbitrator is allowed to act as a mediator after hearing the arbitration. At the end of the arbitration, the arbitrator makes a binding decision that is memorialized, but not disclosed to the parties. The parties then mediate. If not successful in mediation, the arbitrator announces a decision and the parties are bound by the decision. One difficulty inherent in the use of a hybrid type of mediation, either med-arb or arb-med, is the different approach and skills required for each. Not every mediator is qualified to be a good arbitrator, and the reverse is also true. Both parties need to have confidence that the individual they select for the mediation and/or arbitration process has the requisite skills for both.

14-3a Settlement Agreements

- A settlement agreement is actually a contract between the parties. As such, it must meet all the legal requirements of a contract. This means that it must involve the voluntary, mutual assent of the parties. It must include the give-and-take element of consideration. Also, to be legal and binding, the agreement must be made by parties with the capacity to contract.

14-2c Settlement Conference

- A settlement conference is a meeting of the parties to discuss settlement of the case. It might be part of the pretrial conference procedures under Rule 16 of the Federal Rules of Civil Procedure or it may arise after the pretrial conference. The court may order a settlement conference or a party may request such a conference. - The paralegal's role in preparing for the settlement conference mirrors preparation for the pretrial conference. Employ your organizational skills so that all materials needed for or during the settlement conference are readily available for the attorney's review.

14-1 The Settlement

- A settlement is an agreement or a contract between parties that terminates their civil dispute. Many civil cases end in a settlement. Often settlement negotiations are conducted simultaneously with active preparation of the lawsuit. In fact, the preparation of the lawsuit may actually lead to the settlement. As the attorney gathers information about the suit, she may decide that a settlement is in the client's best interests. In such a case, the lawsuit is settled quickly. If, however, the attorney, with the client's concurrence, decides not to settle, no time has been lost in the litigation process. To be an effective paralegal, you must understand the factors in a settlement decision. It is also very helpful for you to know how to conduct a preliminary investigation.

Summary Bench Trial

- A summary bench trial resembles a summary jury trial except that the case is tried before a judge rather than a jury. Again, evidence often is introduced in a condensed manner so as to avoid the lengthy process of an actual trial.

High-Low Arbitration

- Also known as bracketed arbitration, this is an arbitration in which the parties agree in advance on "high-low" parameters within which the arbitrator may render an award. An arbitrator may or may not be advised of the amounts of the parameters, or even the fact that the parameters exist.

14-5 Alternative Dispute Resolution

- Although negotiated settlements are the most desirable way of resolving civil disputes, parties often lack the objectivity needed to reach reasonable compromises. In the past few years the legal community has adopted a number of different methods to help parties properly evaluate their cases for settlement purposes. Usually these procedures use the services of a neutral person or group of people who try to bring the parties to an agreement or who give the parties their independent evaluation of the case. These methods or procedures are collectively referred to as alternative dispute resolution (ADR). This process is facilitated by the active and early involvement of the paralegal in tasks that are quite similar to those required for trial preparation or settlement. The paralegal may be asked to research potential mediators or arbitrators, prepare a summary of the evidence in the case, which is similar to the preparation of a settlement package, draft documents for filing the ADR request, and ultimately, documents to be used at the ADR hearing. - The various methods of ADR have proved to be an effective means of resolving civil disputes. This has benefited not only the parties to a civil dispute but also the court system. ADR occurring during the course of litigation and required by the courts is referred to as court-related alternative dispute resolution. If court-related ADR does not produce a mutually agreeable result, the parties resume litigation. - In some instances, the parties, rather than the court, initiate ADR. They can do this prior to filing a lawsuit or even during the course of litigation. Furthermore, the parties can agree to be bound by any result, giving up their right to litigate. Of course, they also can agree that the ADR procedure will not be binding. ADR voluntarily undertaken by the parties is sometimes referred to as private or voluntary alternative dispute resolution.

14-1a Initial Factors Involved in the Settlement Decision

- An attorney must consider a number of factors before deciding to settle a case. The two most obvious factors are time and money. Because the legal system is overburdened with a heavy case load, it is not uncommon for a court's calendar to be backed up for months. Some courts in large metropolitan areas have dockets that are backed up for years. This type of overcrowding may mean that a trial date cannot be set for months or even years after the original complaint has been filed. If your client cannot afford to wait that long for a judgment, then your attorney may elect to settle the case without going to trial. - Also recall that a lengthy and involved discovery procedure may be needed to gather the facts required to prove your client's case at trial. The more involved the discovery process, the more expensive the lawsuit becomes. For example, in the Kowalski case, discovery may be necessary to uncover not only the facts surrounding the explosion itself, but also the circumstances leading to the explosion. In addition, discovery will be needed to uncover whether the defendants had any knowledge of similar incidents involving the type of pump that exploded and harmed Dr. Kowalski. This will mean taking multiple depositions and serving interrogatories, requests for production of documents, requests for disclosure, and requests for admissions. Your client may have to undergo a physical examination, and your attorney will probably want to inspect the site of the explosion. All of this costs money, which will erode the value of any final judgment rendered by the court. - Another settlement factor may be the particular court's decisions in similar cases. In the Kowalski case, for example, you may find that the court recently rendered a judgment favorable to a utility company in a case with facts very similar to the facts in your case. In such a situation, it may be in your client's best interest to engage in settlement negotiations. - Finally, the subsequent tactics of the other party's attorney may motivate a client to seriously consider a settlement. Recall, for example, that the defendant, in responding to a lawsuit, may elect to file a counterclaim against the plaintiff. The legitimacy of the counterclaim and the degree to which the defendant may succeed in presenting that counterclaim would be critical factors to consider in making any settlement decision. In the Kowalski case, for instance, Everett-Stimson has filed a counterclaim for libel against Dr. Kowalski. Such an event may motivate your attorney to consider the possibility of settling the case without proceeding to trial.

Discovery in Arbitration

- Arbitration is less costly, both in terms of money and time, because it normally has less extensive discovery than traditional litigation. However, virtually all institutional arbitration rules, such as the commercial rules of the American Arbitration Association (AAA) and the Federal Arbitration Act (FAA), permit sufficient discovery for purposes of a fair decision from the arbitrator or arbitrators. The determining factor as to how extensive the discovery process will be in any arbitration is the arbitration agreement itself.

14-2 Settlement Offer

- As a paralegal, your talents may be used in a number of ways as your attorney prepares a settlement offer. Often the paralegal will be asked to draft a settlement summary, a settlement letter, or a settlement brochure. The complexity of the lawsuit and the amount of money involved will be primary factors in determining which of the three will be used in a given case.

14-4b Consent Decree

- As an alternative to a dismissal, the parties may elect to use a consent decree. A consent decree outlines the details of the settlement agreed upon by the parties. The parties file the decree with the court, requesting that the judge examine the agreement and either approve or disapprove the terms that they have set forth. Generally, the judge will have no hesitation in rendering approval. Once it has been approved by the court, the consent decree is just as effective as a judgment would have been had the case gone to trial. Unlike the terms of a stipulated dismissal, the settlement terms of a consent decree become a public record. Because of the official nature of the consent decree, should one of the parties violate the terms of a decree, that party may be held in contempt of court.

Voluntary, Mutual Assent

- Because a settlement agreement is a contract, it must be made with the voluntary, mutual assent of both parties. If the client is against the settlement, the attorney cannot agree to it no matter how lucrative and beneficial it may appear to be. In fact, the rules of ethical conduct that guide attorneys specify this limitation on the attorney's power to represent a client in settlement negotiations. Similarly, to be voluntary, the settlement agreement must not result from duress or undue influence. Threats of bodily harm or threats to property would constitute duress.

Consideration

- Because the settlement agreement is a contract, it will not be valid unless each side gains something and each side gives up something. This exchange of values is called consideration. Money is the most common form of consideration. In the Kowalski case, for example, your attorney may decide to ask Everett-Stimson for a $400,000 settlement to compensate your client for the injuries he suffered as a result of the explosion of the hydraulic pump used in the Cuyahoga Valley Nuclear Power Plant. Money, however, is not the only form of consideration. A promise to act or not to act may also be consideration. In the Kowalski case, for example, the consideration offered by Dr. Kowalski is his agreement to drop the lawsuit. Once the settlement has been agreed to, it is binding even if Dr. Kowalski later finds out that he had no legal basis for bringing the suit against Everett-Stimson.

Investigating Collateral Matters

- Before your attorney can make an informed decision regarding the potential of settlement, she must take into consideration certain collateral matters. Collateral matters are considerations that go beyond the facts and the merits of the case but that, nevertheless, have a definite impact on the decision to settle or to proceed with the suit. The attitude of the trial judge assigned to the case may play an important part in the decision. In the Kowalski case, for example, if you learn that the trial judge tends to rule in favor of utility companies in tort suits of this nature, your attorney may decide that a settlement would be in your client's best interest. - Another collateral area to look at is the experience or inexperience of the opposing attorney. For example, in the Kowalski case, if you are dealing with an opposing attorney who has a strong record representing utility companies in this type of suit, your attorney will approach her with a different strategy than if the opposing attorney were inexperienced. - Recent statutes and court rulings involving this area of the law also must be researched to help your attorney determine if any recent trends in the law make it advisable to settle the suit. For example, in the Kowalski case, it would be essential for your attorney to know whether there have been any changes in the law of Ohio that would affect the outcome of your case. This information will be helpful to your attorney when she negotiates for a settlement with Everett-Stimson.

Settlement Letter

- Cases that involve complex issues and an extensive list of damages may require the writing of a settlement letter. The settlement letter is a much more detailed account of the essential information needed to determine the benefit of settling a case. - The settlement letter begins with a statement of the facts involved in the case and is written from the perspective of the defendant's potential liability. The letter also includes a detailed assessment of your client's injuries, medical history, present medical condition, and future medical prognosis. To be persuasive, the letter should reveal the plaintiff's legal theory or theories of recovery. The amount of money spent by your client because of his injuries should be included as well as the amount of any wages he has lost or anticipates losing because of those injuries. Finally, the settlement letter should present to the defendant a statement of the amount that your client is prepared to seek as a reasonable settlement.

Discovery under the American Arbitration Association Rules

- Discovery under the American Arbitration Association commercial rules is referred to as an "Exchange of Information" and is governed by Rule 21 of AAA. Parties or the arbitrator may request discovery, but the arbitrator must approve any requests by the parties. The arbitrator may subpoena witnesses or documents at the request of a party, or independently. A "person who is authorized by law to subpoena witnesses or documents may sign a subpoena in an arbitration," under the AAA rules. In the case of an arbitration panel, the majority of the panel makes the decision on whether to issue a subpoena. The parties to the arbitration are responsible for preparing the subpoena, serving it, and having it enforced. Enforcement is governed by an appropriate court of competent jurisdiction.

14-4c Distribution of Settlement Funds

- Distribution of funds normally occurs when the stipulated dismissal is signed or when the court has approved of the consent decree. A settlement proceeds statement should be prepared, similar to a closing statement in a real estate transaction, to account for the receipt of all proceeds. Such an accounting avoids later problems or questions by a party as to the payment of any expense involved in the settlement.

14-1b Preliminary Investigative Work

- Generally, a settlement offer originates with the plaintiff because the plaintiff's attorney is in the best position to assess the injuries to the client and can therefore set a reasonable figure as the basis for the settlement. Naturally, this means that some preliminary assessment work is in order. Usually this preliminary investigative work is the responsibility of the paralegal. During this stage, you will have to obtain a personal history of the client, a preliminary assessment of the client's present health, and the client's medical history. You may also be required to calculate the damages in the case. Additionally, you may be asked to assist your attorney with the probe of some collateral areas to get an accurate picture of the probability of your client prevailing should the case go to trial.

Mutual Release

- If the defendant in a lawsuit has filed a counterclaim against the plaintiff, then both parties in the case may find themselves in the position of relinquishing part or all of their claims in the suit. If this is the case, then a mutual release would be used. In a mutual release, each party relinquishes its claims against the other party. This type of release benefits both parties because each of them can be assured that all potential liability in regard to this particular lawsuit has been eliminated. For example, in the Kowalski case, Everett-Stimson filed a counterclaim against Dr. Kowalski for libel, claiming that he made false statements to a newspaper reporter about certain inadequate safety procedures followed at the plant. If both Dr. Kowalski and Everett-Stimson agree to release each other, they would use a mutual release.

14-3c Releases

- If the facts and the legal issues involved in the lawsuit are not overly complex, the parties may be satisfied to settle the case by using a release rather than a settlement agreement. Although a release is also a contract and, as such, accomplishes essentially the same thing as a settlement agreement, the release is simpler and shorter than the settlement agreement and, therefore, much more efficient. The two most common releases are the general release and the partial release. If both parties have agreed to release each other from any and all claims, then a mutual release is appropriate.

14-3 Settlement Agreement and Release

- If the parties reach an agreement based on the settlement offer, then it will be necessary to put the details of that settlement into a permanent written form. The complexity of the case and the settlement arrangement will determine whether the parties will use a settlement agreement or a release.

Calculating Damages

- If, as the paralegal, you are asked to calculate the damages in the case, make sure to organize and review all checks, receipts, income tax returns, and paycheck stubs furnished by the client. This will ensure that you have presented a concise and accurate picture of the damages. Extreme care should be exercised in this calculation because damages are often a substantial part of any settlement agreement.

14-5a Court-Related ADR

- In 1990 Congress passed the Civil Justice Reform Act of 1990 (28 U.S.C. § 1). This statute required every federal district court to develop a plan to resolve civil disputes more smoothly and swiftly. To accomplish this goal, federal trial courts either require or encourage most litigants to attempt some method of ADR as provided for in the Alternative Dispute Resolution Act of 1998 before the case can be tried. Unless the parties agree otherwise, these ADR procedures are not binding on the parties. If either side is not satisfied with the suggested method of resolving the case, that party has the right to proceed to trial. The various methods of court-related ADR include early neutral evaluation, mediation, nonbinding arbitration, summary jury trials, and summary bench trial.

Partial Release

- In a complex lawsuit involving multiple claims, a party may elect to relinquish some claims while retaining others. In such a situation a partial release would be appropriate. This type of release is advantageous to the plaintiff because it preserves some of the grounds that he has for bringing a subsequent lawsuit against the defendant. However, the defendant also benefits because at least a portion of its potential liability has been eliminated. For example, in the Kowalski case, in addition to the negligence suit for the injuries suffered as a result of the explosion at the power plant, your client may have filed an invasion of privacy suit against Everett-Stimson for making illegal tapes of his private phone conversations. Should Dr. Kowalski decide to settle the negligence suit against Everett-Stimson while maintaining the invasion of privacy suit, he would use a partial release.

Damages, Evaluation, and Settlement

- In a separate section devoted to damages, the amount of money spent by your client because of his injuries should be included as well as the amount of any wages he has lost or anticipates losing because of those injuries. All checks, receipts, income tax returns, and pay stubs furnished by the client must be organized and totaled to present a precise and accurate picture of the damages. Finally, the settlement brochure should include an evaluation of the claim and present to the defendant a statement of the settlement that your client believes is reasonable.

Summary Jury Trial

- In a summary jury trial, the parties present their evidence before a six-person or eight-person jury, which renders a nonbinding decision. This format typically includes opening and closing statements by counsel for each party and a short narrative of each party's position. There is generally no live testimony in this proceeding. Because of the summary nature of the trial, the jury is given a limited amount of time in which to deliberate. Jury members are encouraged to come to a consensus, but if they cannot, their opinions and findings are relayed to the attorneys trying the case. A summary jury trial requires more time and expense than the other methods of ADR and thus is not favored, except in extraordinary cases.

Baseball Arbitration

- In baseball arbitration (also known as final offer arbitration), after each side presents its evidence to the arbitrator, each party informs the arbitrator what one number it believes the award should be. The arbitrator must choose one of those proposed awards, based on the evidence heard. The arbitrator does not have the authority to select another figure. As reflected in the name, this concept originated in Major League Baseball when a club and player could not agree on a salary figure and under certain circumstances could submit their respective figures to a sole arbitrator who was bound to pick one of the submitted figures. This type of arbitration is attractive to companies or parties who have a long-term relationship, and who anticipate continuing that relationship.

Early Neutral Evaluation

- In early neutral evaluation, an ADR technique developed by the courts and led by the U.S. District Courts for the Southern and Northern Districts of California, litigants meet with an outside neutral person who is an expert in the subject matter of the case. The expert selected is likely to be an attorney. During this procedure, the parties and their counsel exchange information and position statements. They can then make brief oral presentations to the evaluator. The evaluator provides a nonbinding evaluation of the merits and value of the case in an effort to facilitate settlement. All written and oral communication in connection with this type of proceeding is confidential, and the parties and their attorneys might be asked to sign a confidentiality agreement.

Med-Arb

- In med-arb, the dispute is mediated first, and if the dispute is not settled, the parties move into the arbitration phase, which would generally be binding. This process offers two benefits—the opportunity for a negotiated resolution through mediation and the finality of arbitration. Med-arb begins with a written agreement from both parties to participate in and be bound by the med-arb process through either a mediated or an arbitrated outcome. If the dispute is successfully mediated, it is then reduced to writing. If there is an impasse in the mediation, the mediator changes roles and becomes an arbitrator. Either at the end of the mediation or at an agreed later date, the arbitrator receives evidence from the parties and renders a binding arbitration decision. In some instances, the parties stipulate in advance that the arbitrator's decision cannot exceed the high-low parameters discussed previously. A principal advantage of med-arb is that it reduces both the delay and the cost involved in retaining a second neutral person to resolve the dispute. Because the neutral person has conducted the mediation, he is better equipped to render a cost-effective, expeditious decision.

Night Baseball Arbitration

- In night baseball arbitration, the parties submit their proposals in confidence to the arbitrator, in a sealed envelope or otherwise, after evidence is presented. The arbitrator then assigns a value to the case, and the parties agree to accept the high or low figure closest to the arbitrator's value.

Capacity and Legality

- In order for the settlement to be enforceable in court, it must be made by parties who have the legal capacity to enter into a contract. If one of the parties is a minor or under a mental disability, the parent or the guardian enters into the settlement agreement and obtains the court's approval on behalf of that party. Additionally, court approval is required for attorney fees and court costs incurred. Naturally, the terms of the settlement must not require either party to do something that is illegal.

Private Judging

- In recent years, especially in areas where the courts are very congested, parties have resorted to hiring their own private judge to try the case. A trial occurs in much the same way as it does in formal litigation. The major advantage to the parties is that they are not restricted by the court calendar. Trial can be scheduled at a time convenient for the parties and the judge. In most instances, these private judges are retired trial and appellate court judges. The parties can agree to be bound by the judge's decision, excluding all rights of appeal, if they want to make the process completely final. Absent such an agreement, the parties have limited rights to appeal this judge's decision directly to the higher court.

Mediation

- Like early neutral evaluation, mediation is a nonbinding, confidential process in which a neutral mediator (usually an attorney) tries to facilitate settlement negotiations between the parties. Unlike an early neutral evaluator, the mediator does not give an opinion regarding the case, but rather attempts to strengthen the communication between the parties. The mediator also tries to get the parties to examine the strengths and weaknesses of their sides of the case.

Statement of the Facts

- Like the settlement letter, the settlement brochure begins with a statement of the facts involved in the case. Again, this statement of the facts must be written from the perspective of the defendant's potential liability. The use of newspaper articles and photographs can be an especially effective way of creating a vivid effect. Consider, for example, the dramatic impact in the Kowalski case of including in your settlement brochure a front-page news story of an accident at the Cuyahoga Valley Plant and color photographs of the accident site and the injuries to Dr. Kowalski. Such a package can be very sobering to the defendant, who realizes that these same photographs may be presented to jury members who live near the Cuyahoga Valley Plant.

Client's Medical History and Medical Condition

- Like the settlement letter, the settlement brochure includes a detailed assessment of your client's medical history and medical condition. Again, this should include the injuries suffered by the client as well as any future medical prognosis. To be convincing, this section of the settlement brochure can include the hospital records and the reports filed by any physicians and therapists involved in the case, as well as the client's medical diary. Photographs of the plaintiff's injuries are a very effective supplement in this section of the brochure.

Mediation

- Mediation voluntarily undertaken by the parties resembles mediation proceedings that are ordered by the court as part of its ADR procedures. The only difference is in the selection of the mediator. In private mediation, the mediator is selected without the assistance of the court. Parties generally tend to use mediation in a case in which they believe they can reach an agreement with the assistance of a neutral third party, or when there will be a relationship between the parties that continues after resolution of the conflict. Another positive factor in the choice of mediation to resolve a dispute is that it is available earlier than traditional litigation, in which a trial setting may be several years after the filing of a lawsuit. Inherent with the potential time saved by choosing mediation over litigation is the resulting money saved by the potentially shorter time period required to resolve a dispute. The American Arbitration Association Web site offers an online mediation process for disputes involving only two parties, where neither the claim nor the counterclaim exceeds .$10,000 The total cost for the online mediation is $200, including the mediator's charge. Most online mediations are concluded within 30 days.

Minitrial

- Minitrial are proceedings in which high-level executives of all the parties are brought together to hear a summary version of each other's case as presented by its lawyers and presided over by a neutral party (often a retired judge). The presentation is generally outside the courtroom. After hearing the evidence, the executives are encouraged to engage in settlement discussion. This is a nonbinding type of proceeding.

Nonbinding Arbitration

- Nonbinding arbitration is an adversarial hearing before a neutral party or arbitrator who listens to each side and then makes a decision (an award) regarding the dispute. The arbitrator is selected by the parties from a list of candidates provided by the court. Most cases have one arbitrator, but sometimes a case is heard by a three-person panel. Prior to the hearing, each party may submit written statements summarizing its case, identifying significant factual and legal issues, and listing proposed witnesses. At the arbitration hearing, each side puts on evidence. Based on the evidence, the arbitrator or arbitration panel makes an award or judgment. Either party can then reject the award and demand a trial in court. If neither party rejects the award, it becomes a final judgment in the case.

14-4 Dismissal, Consent Decree, and Distribution of Funds

- Once a lawsuit has been settled, an order for dismissal is drawn up. As an alternative to a dismissal, the parties may prefer to file a consent decree with the court. Finally, a statement outlining how the settlement funds will be distributed should be drawn up and delivered to the client.

14-2a Settlement Summary and Settlement Letter

- Once the preliminary investigative work has been completed, the information should be organized into a useful report format. This report must convince the defendant that a settlement would be in its best interests. Depending on the situation, you may be charged with writing a settlement summary or a settlement letter. The objective of each is to persuade your opponent to agree to your settlement terms. The choice of which format to use is based on the complexity of the case and the amount of money involved. Drafting settlement summaries and settlement letters is an important part of the paralegal's role in the overall settlement process. The law firm's forms files and personal injury form books should be used to prepare the initial draft of a settlement summary or settlement letter.

The Client's Personal History

- One of the preliminary steps in the settlement investigation is to obtain an accurate personal and financial history of the client. This would include the client's family information, education, employment record, earnings records for several previous years, and religious, professional, and civic organization memberships. It might also be helpful to determine whether your client has any hobbies or participates in sports. For example, in the Kowalski case, it would help your attorney calculate damages if she knew that Dr. Kowalski was an avid tennis player prior to sustaining the injuries caused by the explosion in the power plant.

14-5b Private ADR

- Parties often wish to avoid the court process in its entirety and look to ADR as a means to accomplish this. In many instances, the parties agree to be bound by alternative dispute resolution, although in some cases they do not. Methods of private ADR include negotiation, mediation, binding arbitration, minitrial, and private judging.

Negotiation

- Probably the most common method of resolving disputes is negotiation. Negotiation involves the disputing parties' discussing their problems with one another. If an agreement is reached, then the negotiation results in a settlement. In most cases, negotiation starts before the parties file any lawsuit in court. If the parties are able to reach an agreement at an early stage in the negotiations, a lawsuit may never be filed. However, if the parties are unable to reach an early settlement, they often continue their informal negotiations even though one party has filed a lawsuit.

Form of the Release

- Regardless of the type of release needed in a given case, it should include the identities of the parties, the action that gave rise to the claim, the consideration given for the release, and a specifically worded explanation of the claim that has been relinquished. The release should be signed by all parties. As in the case of the settlement agreement, if the court finds that a term of the release is vague or ambiguous, it may seek additional testimony or evidence to determine the intent of the parties at the time that they negotiated the release.

Voluntary Dismissal on Notice

- Rule 41 of the Federal Rules of Civil Procedure permits a plaintiff to voluntarily dismiss a claim without order of the court by filing a motion of dismissal "at any time before service by the adverse party of an answer or of a motion for summary judgment, whichever comes first." Although not required under the terms of Rule 41, the plaintiff should serve a copy of the dismissal upon the defendant. As in the case of the stipulated dismissal, this dismissal can be with prejudice or without prejudice. The presumption is that the dismissal is without prejudice unless the court order of dismissal specifically states that it is with prejudice.

Court-Ordered Involuntary Dismissal

- Rule 41(a)(2) of the Federal Rules of Civil Procedure renders to the court the authority to dismiss an action if a party has failed to proceed with an action or if the party has failed to comply with a court order, stating, "unless the order states otherwise, a dismissal under this paragraph 2 is without prejudice." For example, in the Kowalski case, if your client fails to comply with a court order compelling him to respond to repeated discovery requests from Everett-Stimson, the case may be dismissed by the court. In addition, the court may dismiss if the plaintiff's evidence is insufficient to establish liability against the defendant. Normally, it does not result in the court's entry of a judgment.

Settlement Summary

- Simple cases involving relatively small claims may be settled early, primarily because the cost of litigation outweighs the benefit of a long and expensive suit. In such a case a short settlement summary may be drafted by the paralegal. The settlement summary compiles all essential information outlining the benefits of settling the case at an early stage in the litigation. Settlement summaries are usually not much longer than one page

Discovery under the Federal Arbitration Act

- The FAA rules may apply to arbitration in the following instances: The arbitration agreement specified such discovery. If the contract did not specify the applicable law and the contract involved commerce and did not implicate one of the exclusions listed in FAA § 1. Section 7 of the FAA governs discovery. It also permits arbitrators to punish those who fail to obey a discovery directive.

The Client's Present Health and Medical History

- The client's medical history before and after the accident are key factors in the case. You will have to determine the nature and the extent of the injuries the client has suffered. You will also need to find out what treatment he has undergone and will be compelled to undergo in the future. It is helpful to know what diagnostic tests were performed on the client and what therapy, if any, was performed. Furthermore, your attorney will want to know whether the client was disfigured and whether he has suffered any temporary or permanent disability as a result of the accident. Do not overlook any psychiatric or psychological damage that may have resulted from the accident. It is advisable to have the client keep a medical diary on a daily or a weekly basis. Instruct the client to record any symptoms related to the accident and any medical visits to physicians, chiropractors, psychologists, and physical therapists. A video diary of a typical day in the life of your client would be very persuasive in settlement negotiations. You might be asked to work with a family member to prepare the video.

Client's Personal History

- The client's personal history should be included in the settlement brochure. To complete this section of the settlement brochure, you should review the preliminary investigative work that you did in the case. The personal history includes the client's family information, education, employment record, and religious, professional, and civic organization memberships. It might also be helpful to include information about your client's hobbies or participation in sports. As in the case of the facts, photographs can be used here. Photographs may be helpful later in calculating the damages that your attorney will seek on behalf of Dr. Kowalski.

Stipulated Dismissal

- The parties to a lawsuit may stipulate to a dismissal at any time and on any terms. A stipulated dismissal may be either with prejudice or without prejudice. A stipulated dismissal with prejudice means that the claim cannot be brought to court again at any time in the future. In contrast, a stipulated dismissal without prejudice means that the lawsuit can be brought at another time in any court that has jurisdiction to hear the case. If the parties fail to stipulate the form of the dismissal, the court presumes that the dismissal is without prejudice. In a stipulated dismissal, it is not necessary to state the terms and the conditions of the settlement. This type of dismissal avoids having to disclose, in public records, the amount of the settlement. It also preserves the confidentiality of the terms surrounding the settlement.

Form of the Settlement Agreement

- The settlement agreement should specify the identities of the parties, the action that gave rise to the claim, the type and extent of the injuries caused, the consideration given for the settlement, the time and circumstances under which any and all payments will be made, and any special conditions that have been agreed to by the parties. If a dispute arises over any part of the agreement, a court will interpret the provision in question. In the event that the court finds that a term of the agreement is vague or ambiguous, it may seek additional testimony or evidence to determine the intent of the parties at the time they entered into the agreement.

14-2b Settlement Brochure

- The settlement brochure is a summary of facts designed to persuade the other side to settle a case. The objective and the basic content of a settlement summary, a settlement letter, and a settlement brochure are the same. They differ, however, in the amount of the material presented and in the format used. The settlement brochure tends to be more elaborate, in that it includes photographs, charts, graphs, newspaper articles, witness statements, medical reports, and the like. It is frequently made more striking by its use of multicolored graphs and charts. A settlement brochure can be a very persuasive settlement tool. However, it is also expensive and is thus used most effectively in lawsuits seeking fairly large settlements. The individual parts of a settlement brochure should include a statement of the facts, the client's personal history, the client's medical history and medical condition, the damages suffered by the client, and an evaluation of the case and statement of the settlement

14-4a Dismissals

- There are three major types of dismissals: a stipulated dismissal, a voluntary dismissal on notice, and a court-ordered involuntary dismissal.