Continuing Legal Education Program – 18 October 1999
Negotiating Settlements
Author: Robert McDougall QC, Michael Slattery QC
Professional Standards Committee
Over the years, there have been a number of complaints about barristers relating to the conduct of settlement
negotiations. The Professional Standards Committee has been authorised by Bar Council to develop a best
practice model for settlements. In response to that authority, a discussion draft of guidelines has been
produced.
The draft guidelines, whilst accepting and stressing that the primary duties of a barrister are to the Court and
to act in the best interests of the client, recommend that barristers give careful attention to all stages of the
settlement process including:
1.
preparing for settlement negotiations.
2.
assessing the client – with particular reference to the client’s ability to give fully informed
instructions and to cope with the pressure of settlement negotiations.
3.
Dealing with the opposing party;
4.
Dealing with and “managing” the client in the course of negotiations; and
5.
Concluding the settlement.
The purpose of the draft guidelines is to seek to ensure, so far as possible, that a barrister’s professional
obligations are satisfied in a way that advances the best interests of the client and the administration of
justice, and minimises the likelihood of complaints. Whilst it is not suggested that the guidelines should take
the form of a “checklist”, it is hoped that conscientious attention to both the letter and spirit of what is
suggested in the guidelines will help to achieve these aims.
GUIDELINES FOR BARRISTERS CONDUCTING NEGOTIATIONS
These guidelines are expressed for the assistance of Counsel in conducting settlement negotiations. The
overriding consideration in the conduct of negotiations should be a barrister’s duty to the Court and the
barrister’s judgment as to the best interests of the client in the circumstances. The barrister should sooner
abandon or modify any of the suggestions of these guidelines rather than do something which in the
barrister’s judgment will not be consistent with the barrister’s duties to the Court, or in the best interests of
the client.
1.
Preparation for Settlement Negotiations
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2.
3.
1.1
Try not to broach the issue of settlement only on the day of the hearing unless you are only
briefed to appear immediately before the hearing or only that day is the first occasion on
which an offer is made. In discussions with your instructing solicitor, brief yourself in any
settlement negotiations that have taken place even before you first meet the client.
1.2
Prepare the client for the possibility of settlement by discussing with the client the possibility
of making an offer at an early stage in the proceedings including an offer of compromise.
1.3
Make sure in the course of your advising the client that the client has a good appreciation of
both the benefits and the risks of the contemplated litigation at every stage of the proceedings
and so that the client has a good background with which to assess any offer which is made
even if time for consideration is limited.
1.4
Make it a general practice to suggest mediation or other means of alternative dispute
resolution at an early stage in the proceedings.
1.5
Ensure that at an early stage in proceedings and at the latest by the beginning of any
negotiations that you make full disclosure to the client of any factors in relation to your
practice, any associations with the party or Counsel on the other side of the case that may
lead to misunderstanding or suspicions by the client of a lack of objectivity on your part,
should they be discovered late in the course of negotiations or after a settlement has been
achieved.
Assessing the Client
2.1
Try and assess early in the negotiations, if not before negotiations commence, whether the
client has a capacity to cope with the pressure of settlement negotiations and assess whether
the client will be able to give adequate instructions in pressure negotiating circumstances.
2.2
Make an assessment as to whether interpreters are required to assist in the obtaining of
instructions from the client to take instructions in the course of negotiations, but beware of
using family members of the client or interpreters who may also be used for Court purposes
in the event of a failed negotiation.
2.3
Measure the degree of explanation to be afforded to the client in the course of negotiations by
reference to the client’s cultural background, commercial experience and knowledge of the
subject matter of the proceedings subject of the negotiations.
2.4
Where you have accepted a brief to appear in a jurisdiction where accepting more than one
brief to appear on the day is customary and where you have made appropriate disclosure
under Rule 90, warn the client in advance of that day that settlement negotiations may
possibly be disrupted by your commitments to other matters.
Dealing with the Other Negotiating Party
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4.
3.1
Do not spend too much time in the company of opposing negotiating Counsel or other legal
practitioners rather than with one’s own client as that may engender suspicion on the part of
some clients of collusion between both sets of lawyers against the interests of the client.
3.2
Particularly where the terms of the negotiations are complex, consider the desirability of
negotiating on the basis of the parties only being bound in the event that a signed written
document is created at the end of the negotiations and if not, warn one’s own client so that
the client appreciates at the time of each offer that the making of an offer may result upon its
acceptance by the other side of an immediately binding agreement to settle the proceedings.
Equally warn the client that rejection of an opponent’s offer by the client will result in it
lapsing and that such an offer may not be renewed in the future.
Dealings with the Client in the Course of Negotiations
4.1
Do all you can to allow reasonable time for the client to consider any offer that is put to the
client and to reduce the pressure to consider the offer on the client as much as possible
notwithstanding the fact that a limited amount of time may have been permitted for
acceptance of the offer and that the hearing may be about to resume if negotiations break
down.
4.2
Explain as plainly as you can the detail of the terms and conditions of the offer being made to
the client, or the effect of that detail if that is all the client appears capable of comprehending.
4.3
If the client is to receive money as a result of the settlement, the client should be advised of
the approximate net sum that the client will receive as a result of the settlement. In particular
the solicitor should be asked to give the client a reasonable estimate of:
4.3.1
Solicitor’s costs;
4.3.2
Barrister’s costs;
4.3.3
Expert’s costs;
4.3.4
General disbursements;
4.3.5
Special disbursements;
4.3.6
Deductions of any kind of repayment of medical, pension and the like.
4.4
If the client is to pay money as a result of the settlement the client should be advised of the
approximate gross sum that the client will have to pay as a result of the settlement.
4.5
At each stage of the negotiations explain the advantages and disadvantages of acceptance or
rejection of the offer and the putting of a counter offer.
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4.6
Explain to the client all the risks of the litigation.
4.7
Explain to the client both the gains of and what will be given up in the event of an offer being
accepted.
4.8
You may firmly give your opinion to the client as to what the client should do or what you
would do in the client’s circumstances but you not overbear the client.
4.9
Where there are difficulties in communication with the client and especially where the
subject matter of the negotiation is complex, you should have the client recite back to you the
client’s understanding of the proposed terms of settlement.
4.10
Before dispensing with an interpreter in the course of negotiation ensure that the client is able
to give adequate instructions in the absence of the interpreter.
4.11
If the client gives persistent or significant indications of disquiet about negotiation or the
circumstances in which the negotiation is taking place, then give serious consideration to
terminating the negotiation if that is practicable and in the client’s best interest.
4.12
Give consideration to including in the room with the client any person who the client regards
as desirable to have present to assist the client and do not exclude anyone who the client
wishes to have present unless there are strong reasons to believe that that person’s presence
will be detrimental to the client’s best interests or who may be a witness in the case and
whose position as a witness might be compromised by the contents of the settlement
discussions which are taking place.
4.13
Offer the client in the course of the negotiations both the opportunity to be able to discuss
any aspect of the offer privately with other personal advisers or family members and other
than in your presence if the client shows any interest in wishing to speak to such persons.
4.14
When explaining to a client in the course of negotiations that the outcome of the case is
dependent upon that client’s evidence being accepted, be careful to use neutral rather than
pejorative language about the possibility of the client’s version of events being disbelieved
and conduct the explanation in a way that does not cause the client to doubt your willingness
to present the case or otherwise to give the client cause not to have confidence in you as an
advocate of the client’s cause.
4.15
Where the negotiation is taking place in a context that you have conditional costs agreement
with the client you should warn the client where it appears that the client is likely to
unreasonably reject a reasonable offer of compromise contrary to your advice, that the
consequence of the client so acting will permit you under Rule 100 of the Rules of the New
South Wales Bar Association to return the brief, if that is a course which you are
contemplating as a possibility.
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4.16
5.
Particularly in the context of settlement negotiations be punctual so that any time constraints
on the negotiations may not be perceived to have been caused by you. Be courteous and try
to interrupt your advice to your client during negotiations as little as possible with telephone
calls and other matters.
Concluding the Settlement
5.1
Attempt so far as possible to get the written instructions of the client or ensure that your
solicitor has obtained the written instructions of the client approving a settlement before the
final offer is made on behalf of the client which is regarded as likely to result in an agreement
to settle proceedings.
5.2
Where a client declines to take the advice to settle proceedings on particular terms and where
you are of the view that it is in the client’s overall best interests to accept the offer in the
terms it is made, request the client to give written instructions of the fact of and reasons for
the client’s declining to accept the advice given or ensure that, if a solicitor is present, the
solicitor takes this course.
5.3
Unless there is very good reason not to do so, all settlements should be concluded in a written
form and judgment should be exercised as to whether the settlement needs to be signed by
the client or may be signed by a Counsel’s instructing solicitor or by Counsel.
5.4
Where you have on instructions concluded a settlement on behalf of your client with the
opposing party, and the client seeks to deny that you were instructed to so settle or otherwise
seeks to deny that there is a concluded settlement, you should:
5.4.1
take no further step to give effect to the settlement;
5.4.2
advise the client of the foreseeable consequences of the client continuing to take that
course; and
5.4.3
withdraw from the matter if the client does not change the client’s instructions.
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SETTLEMENTS – A note from the professional conduct committees
Extract from Stop Press, No. 66 September 1999
Advocating clear and effective communication
with clients
Happily, the levels of complaints about
settlements are not as high as they were in the
past. However, it appears to the professional
conduct committees that often the fundamental
cause of problems, and not only in relation to
settlements, is a communication failure between
lawyer and client.
Early consideration of briefed materials and
prospects of success
It is important to read and understand your brief
soon after it is delivered. It is equally important to
have early discussions with the client about the
possibility of settlement and the process involved.
In particular, where small amounts of money are
in dispute the client must be informed that it may
be necessary to incur large sums in legal expenses
in order to prepare the case to a desirable standard.
Furthermore, the client should be told where these
costs might render the running of the matter
financially unrealistic.
Irrespective of the client’s budget, the client is
entitled to know what they will get for their
money. It is important that the client understands
both what can, and cannot, be achieved within the
budget available.
Communication failure
Communication failure can be a failure to convey
to the client a sufficient understanding of the
options preceding settlement; the possible likely
outcome of the case (absent settlement); and the
process of settlement itself.
The expression ‘failure’ is used neutrally. The
failure to convey information is sometimes a
failure of the barrister and solicitor. Sometimes it
springs from a barrier to comprehension on the
part of the client that is not picked up by the
lawyers involved in the case.
Barriers to a client’s understanding of the court
system, and the place the settlement process plays
within it, are exacerbated in jurisdictions where
there are frequent language and cultural obstacles.
Sometimes, the expectations of clients with
respect to the outcome of their litigation do not
match the reality. The onus is on the barrister and
solicitor, jointly and separately, to ensure that this
does not occur.
Often clients are emotional and feel intimidated by
the power of the courts. Some also perceive the
legal profession to be surrounded in mystery. This
can result in misconceptions and a lack of
understanding of procedures and achievable
outcomes.
The use of plain English is very important to assist
understanding by the client. Interpreters should
not be dispensed with unless the client’s level of
English (both written and oral) is more than
adequate, even if the client agrees to, or wishes to,
dispense with the interpreter.
Barristers can assess their client’s comprehension
of a particular settlement, and the settlement
process generally, by asking their client to express
their understanding of the information given to
them. In this way, misapprehensions or
misconceptions can be picked up quickly.
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Raising levels of client understanding
The Bar can focus on a solution to communication
problems by looking at it from both sides. The
problem is not just one of improving barristers’
communication skills and standards of practice,
but of generally raising levels of client
understanding – particularly when it can be
reasonably anticipated that the understanding is
not adequate for whatever reason.
The best way to raise the Bar’s standards in this
area is to generate cooperative change from
within. The Bar’s system of discipline is not the
ideal agent of change. Better settlement practices
will not evolve without a clear commitment to the
objective of improved communications from
members of the Bar.
Clients are frequently confused about who is
responsible for what activity in the conduct of the
litigation and the role each lawyer will play in the
legal process.
A significant source of communication failure is a
barrister’s expectation of what the solicitor has
said to the client and vice versa.
Where these confusions, expectations and
assumptions occur, a client can often end up with
inadequate information leaving them ill equipped
to make the informed decisions required by their
lawyers and the courts.
Above all, clear and effective communication is
the key to good relations with instructing solicitors
and with clients.
Clients must ‘own’ the settlement
The fundamental aim of the barrister should be to
equip the client with all the information he or she
needs to make a decision about settlement of their
case.
The barrister must encourage the client to accept
control of the settlement process, even where the
barrister has a strong view about settlement.
Basic to this process is conveying information
about the best and worst dollar value offered by
each option; the possible outcomes of litigation;
explaining the advantages and disadvantages of
settlement versus running the case; and the
barrister’s assessment of the prospects of success.
Client’s knowledge of the legal process
It is important to remind oneself that many clients
are not knowledgeable about court and legal
process and are intimidated by the unfamiliar
surroundings and the language used by lawyers.
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