Add Your PerspectiveOctober 10, 2008

You Can Win By Settling Halfway: Settlement Structures Part I

“If you are going to do a half-ass job, don’t do it at all.”  My dad gave me that advice years ago, and I never forgot it.  But if you have an important dispute, settling it halfway may be a victory in itself.

“Settling halfway” isn’t complicated; it’s just what the name implies.  In disputes where you aren’t ready — or able — to settle the entire case, look for ways to eliminate parts of it to streamline the matter, limit expenses, and refocus the parties on resolving what’s left.

The Idea Behind Settling Halfway

After several years of defending what was then KPMG Consulting, I had one of those “aha” conversations with an outside counsel I really respect.  As we brainstormed on how to eliminate some of the inefficiencies inherent to litigation, he reminded me of a difference between our perspectives:  in-house litigators are free to ignore “unnecessary rabbit trails,” skip secondary witnesses, and forego tactics that have little likelihood of success, while most outside counsel feel compelled to leave no stone unturned — and they usually need written confirmation for the file when they abandon anything.

I knew immediately that this inefficiency could be exploited.  Since “unnecessary rabbit trails” end up costing everyone money, all parties could save if they would streamline their cases to what’s really important to the dispute.  “Faster, better, cheaper” would be more than the slogan that precedes a layoff.

Faster, Better, Cheaper:  The Practical Side of Settling Halfway

The Low-Hanging Fruit. Your case is different than mine, but all parties have non-core claims, less-critical discovery requests and venturesome defenses that can be traded away.  A few examples to get you started:

• I won’t depose Mr. Smith if you won’t depose Ms. Jones;
• I’ll drop my laches defense and my subpoena for your bank records if you will drop your claim against my CFO; and
• I’ll agree that California law applies if you agree not to bring a Section 17200 unfair competition claim.

This isn’t the time to argue about whether any of these trades is a good deal, tempting as that may be.  The point is that there are more bargaining chips at your disposal than you might have realized.  If you can’t settle your case, is there a way to make it smaller?

Don’t Stop with the Easy Stuff. Think for a moment about what the other side might want or need beyond the boundaries of your dispute.  Do they need to have the case resolved before the end of their fiscal year?  To pay the settlement or the judgment over time?  To have a confidential proceeding?  Then leverage those needs for mutual gain.  In addition to agreeing not to depose Mr. Smith and Ms. Jones:

• I’ll give you a release on my trade secret claim if you will pay the special master’s fees in our case;
• I’ll agree to a confidential arbitration hearing before year’s end if you’ll agree to waive your limitations defense;
• I’ll agree to a damage cap of $200,000 if you will agree to cancel the deposition in Phoenix and pay my client’s back pay now;
• I’ll agree to a bench trial if you will stipulate to the admissibility of my client’s expert report; or
• I’ll agree to a damage cap of $50,000 if you will agree not to appeal and pay within 10 days of the judgment.

Again, whatever works for your case.

How Small Can You Make Your Case?

Whoever it was that said “[l]et’s not go trying to boil the ocean” was on to something.  If you carefully consider what motivates the other party (and their lawyers), you just might find a way to limit your dispute to what’s actually in dispute.

You’ll be glad you did.

[UPDATE:  For more on how to settle halfway, see How Do You Settle Halfway?  Settlement Structures Part II, as well as the rest of the Settlement Structures Series.]

Categories: Arbitration,Negotiation,Settlement,Strategy,Structures,Tactics

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