LITIGATOR’S LIFELINES 1: PRUDENT STEPS TO TAKE WHEN ADVISING ON SETTLEMENT: LINKS AND GUIDANCE (FROM THROUGHOUT THE WORLD..)

1. ESTABLISH WHAT THE CLIENT WANTS—AND WHAT THEY UNDERSTAND SETTLEMENT WILL ACHIEVE

Before recommending a settlement, establish the client’s priorities. These may include an early payment, avoiding further expenditure, preserving a commercial relationship or bringing an emotionally exhausting dispute to an end.

Distinguish those priorities from assumptions about the agreement. A client who wants immediate payment may misunderstand a settlement which depends upon property transfers, financing or other preliminary steps.

Record the client’s objectives and explain any compromise between them. If the client prioritises speed over investigating a potentially higher recovery, explain what further investigation might establish, its likely cost and the risks of proceeding without it.

The Law Society’s guidance on engaging clients stresses the need to understand the client’s objectives, discuss whether outcomes justify the risks and costs, and retain a record of risk advice as the matter develops. The Law Society

Related CLB post: Suing your lawyer: solicitors not negligent in failing to pass on counsel’s views or advise on the risks of litigation.

2. REVIEW THE EVIDENCE AND IDENTIFY WHAT IS STILL MISSING

Settlement advice should rest on an examination of the evidence supporting liability, causation and quantum. Identify the documents, witnesses and expert evidence needed to establish the case. Consider the opponent’s evidence and the weaknesses they are likely to exploit.

Do not assume that a ledger proves a debt, a schedule proves a loss or a confident witness will withstand cross-examination. Establish the provenance of important documents and investigate inconsistencies.

Where evidence is missing, explain:

• What is missing and why it matters.
• Whether it can realistically be obtained.
• What obtaining it will cost and how long it will take.
• How its absence affects the recommendation.

Incomplete evidence does not automatically prevent sensible settlement advice. It does require the uncertainty to be recognised and explained.

Resolution’s Good Practice Guide for Family Lawyers Working with Clients specifically addresses proposals made without sufficient disclosure and cautions against treating a waiver as a comprehensive solution. Resolution

Related CLB post: Proving Things 248: Claimant fails to establish any case as to causation in a negligence case against solicitors.

3. GIVE A REASONED VALUATION AND A CLEAR RECOMMENDATION

A pleaded figure is a starting assertion. Settlement advice requires an assessment of what the client could establish and recover.

Explain the realistic range of outcomes, the principal uncertainties and the reasons for the recommended settlement range. Separate risks affecting liability from those affecting the amount recoverable. Consider counterclaims, limitation, enforceability and the opponent’s ability to pay.

Avoid unexplained percentages. If the advice is that a particular risk justifies a substantial discount, identify the risk and explain its practical significance. Equally, explain why a settlement below the headline valuation may nevertheless be reasonable.

The client should understand both what you recommend and why. Explaining that the final decision belongs to the client does not remove the need to give professional advice.

Related CLB posts: Professional Negligence News: A solicitor was not negligent in advising the claimant to settle: neither counsel’s advice nor an expert report were necessary and Proving Things 209: Solicitors negligence action dismissed because there was no loss.

4. SHOW THE CLIENT THE FINANCIAL CONSEQUENCES—INCLUDING THE NET RECOVERY

The settlement figure alone may give a misleading impression of the result.

Where relevant, provide a written calculation showing the settlement sum, credit for interim payments, legal costs, disbursements, insurance premiums and other deductions or repayments. Identify what remains uncertain.

Compare the likely net outcome of settlement with realistic trial outcomes. Explain future expenditure, the likely shortfall between costs incurred and costs recovered, adverse costs exposure and enforcement risks.

For a defendant, show the total likely outlay, including the settlement payment, any contribution to the opponent’s costs and the defendant’s own remaining costs.

LAWPRO’s Canadian Client Trial Preparation Checklist recommends working through possible outcomes and their financial consequences, including what the client will actually receive. Its guidance on contingency fee arrangements also recommends written settlement estimates identifying fees and deductions. The latter discusses Ontario-specific requirements. practicePRO

Related CLB post: Proving Things 147: Claim for not pursuing negligent solicitors leads to nominal damages only: no damages for “loss of chance”.

5. COMMUNICATE OFFERS PROMPTLY AND EXPLAIN THE CONSEQUENCES OF EACH RESPONSE

An offer should trigger an organised process: communication to the client, analysis, advice, instructions and a recorded response.

Identify applicable deadlines and explain the consequences of accepting, rejecting or delaying. Where Part 36 applies, address the relevant costs consequences, including any interaction with fixed recoverable costs, funding and insurance.

An early offer may require a decision before the evidence is complete. Consider whether further information, clarification or an extension can be sought, while making clear that the request itself does not necessarily suspend the relevant deadline.

Maintain a record of outstanding offers and review them when the case changes.

The British Columbia Lawyers Indemnity Fund’s Settlement Risks identifies claims arising from uncommunicated offers, delayed instructions and forgotten offers. Its procedural examples concern British Columbia, but the administrative lessons travel well. lif.ca

Related CLB post: What to do if the defendant makes an early Part 36 offer.

6. CONSIDER SPECIALIST ADVICE AND ENSURE THAT ADVISERS ARE FULLY INSTRUCTED

Consider whether counsel, an expert or another specialist is needed to resolve an uncertainty material to settlement.

The question is what advice this case requires. Counsel’s involvement is neither invariably necessary nor an automatic answer to a later allegation of negligence.

Provide advisers with the relevant evidence, offers, pleadings, calculations and client objectives. Ask focused questions. If an opinion appears to overlook a document or a material part of the claim, seek clarification.

Where advice concerns matters such as tax, pensions or financial implementation, identify the limits of the litigation team’s expertise and obtain appropriate assistance.

Resolution’s guide recommends considering relevant third-party advice at settlement and whether counsel’s second opinion would assist. Resolution

Related CLB post: Professional Negligence News: A solicitor was not negligent in advising the claimant to settle: neither counsel’s advice nor an expert report were necessary.

7. CHECK UNDERSTANDING, ALLOW TIME AND OBTAIN PRECISE AUTHORITY

Sending advice does not establish that the client has understood it.

Explain the recommendation in language suited to the client. Where necessary, arrange an interpreter, accessible documents or additional discussion. Ask the client to explain their understanding of the main choices and consequences.

Allow reasonable time for consideration where circumstances permit. At a mediation or outside court, record any deadline and the opportunity provided for discussion. Distinguish robust advice about litigation risks from pressure to settle.

Obtain clear authority for the actual terms. An instruction to negotiate, or to explore a particular figure, should not casually be treated as unrestricted authority to conclude an agreement.

The SRA’s claims management activity guidance expressly addresses confirming instructions when making, accepting or rejecting settlement offers. Solicitors Regulation Authority

Related CLB post: Letters of explanation not good enough: solicitor should have explained matters to the client: Court of Appeal uphold decision on solicitor’s negligence.

8. RECORD THE ADVICE, THE REASONS AND THE CLIENT’S DECISION

Make a contemporaneous record which explains the decision. “Discussed risks; client happy to settle” is unlikely to capture what mattered.

Record the material advice, the recommendation, unresolved uncertainties, questions asked and instructions received. Confirm important oral advice in writing. If the client decides against the recommendation, record the reasons they give without argumentative or defensive language.

Where the client chooses speed or certainty despite the possibility of a greater recovery, record the trade-off explained and the choice made.

Lawcover’s article in the New South Wales Law Society Journal, “Settlement perils and client regret”, specifically recommends contemporaneous notes, written confirmation of advice and instructions, and checking informed consent. Law Society Journal

Related CLB post: Professional Negligence News 3: Inadequate attendance note leads to woeful results: the appeal that should not have happened.

9. CHECK THE AGREEMENT AND ITS IMPLEMENTATION AS CAREFULLY AS THE FIGURE

Before commitment, check exactly what is being settled and how the bargain will operate.

Address the parties, claims and counterclaims released; payment dates; costs and interest; conditions; security; confidentiality; default provisions; and any necessary court approval. Explain the effect of a release on other potential claims.

Check that the written terms reflect the client’s instructions. If payment depends upon a sale or transfer, explain the resulting delay and risk. Allocate responsibility for implementation and diary the necessary steps.

The British Columbia Lawyers Indemnity Fund’s Settlement Risks gives examples of claims caused by ambiguous releases, omitted conditions and mistakes in accepting offers. lif.ca

Related CLB post: Proving Things 248: Claimant fails to establish any case as to causation in a negligence case against solicitors.

10. REASSESS THE ADVICE WHEN CIRCUMSTANCES CHANGE—AND RECOGNISE AN OWN-INTEREST CONFLICT

Revisit settlement advice after significant disclosure, an expert’s changed opinion, an adverse ruling or a substantial change in costs. Explain why the recommendation has changed.

A different issue arises where the firm’s own error has weakened the client’s position. Identify whether advising on settlement creates an own-interest conflict or a significant risk of one.

The SRA’s guidance on putting matters right and own-interest conflicts specifically considers settlement where the client’s negotiating position has been reduced by the firm’s error. It addresses independent advice, insurer involvement and recording the decision-making process. A client’s willingness for the firm to continue does not, by itself, resolve an own-interest conflict. Solicitors Regulation Authority

If an undersettlement allegation subsequently arrives, preserve the complete record, notify insurers as required and distinguish the original decision from hindsight. Examine the alleged breach, the alternative course and whether that course would actually have produced a better financial result.

Related CLB posts: Suing your lawyer: solicitors not negligent in failing to pass on counsel’s views or advise on the risks of litigation and Proving Things 141: Credibility was important in claim for damages against solicitors: Supreme Court restores decision of trial judge.