George nervously drummed his fingers on the desk. He was torn. On the one hand, he’d known this lawsuit ought to settle the moment Brad Givens retained him. The facts were weak, the law was unsettled, and Brad could make real money in partnership with the defendants, if they could stop shouting at each other.

But Brad was both rich and litigious. He liked his attorneys aggressive and bulldog stubborn. George had to act like a gladiator, or get fired. There was also a risk that seeking settlement now would project weakness to George’s opponents. He had a tough reputation and wanted to keep it that way. Finally, this case was worth a lot of money, but only if George worked the file; settle too soon, and his billable hours would suffer.

Litigation attorneys face a paradox. On one hand, they know that over 90% of their cases will settle, and that early settlement is generally better for their clients than the expense, risk, and pain of trial. But as George’s quandary shows, pushing for early settlement can negatively impact their reputations, their client’s opinion of them, and their bottom line. Further, in today’s deadline-driven litigation environment, finding time to properly address settlement may prove difficult when every minute seems absorbed by the demands of trial preparation.

One trend that can address these problems is the appointment of separate settlement counsel to work in conjunction with litigation attorneys. In April 2011, mediator Forrest “Woody” Mosten predicted that by 2030, settlement counsel would be the rule rather than the exception, and that law firms that failed to offer such services would be at a competitive disadvantage.1

By dividing advocacy and settlement functions, the settlement counsel model can eliminate the conflicts of interest exemplified above – the litigator’s financial and reputational interests would not tempt delay in settlement. There would also be no perception of weakness as a result of settlement efforts, since settlement counsel must by definition make them. Though the idea seems somewhat alien to litigators who believe that they can negotiate on behalf of their clients, it is not without precedent. In the Collaborative Law model popular in family law, the parties focus exclusively on settlement, with counsel agreeing to withdraw from representation if negotiations fail, leaving litigation to other attorneys. Further, in the British Commonwealth, settlement and other non-litigation functions are handled by solicitors, who oversee litigation specialists known as barristers.2

There are two models of the settlement counsel process. In the first, settlement is the initial stage, with counsel thoroughly exploring the possibilities, stepping back in favor of traditional litigators only when it becomes clear that resolution is not forthcoming. This model has the advantage of economy as there is no need to pay two lawyers at the same time. However, it ignores the reality that the litigation process generates incentives to settle – cost, inconvenience, invasion of privacy, anxiety, and so on. Cases often settle just as some significant stage in the case is reached, whether it is a motion for summary judgment, depositions, or trial. To limit settlement efforts to the pre-litigation phase misses many settlement opportunities. A compromise is less likely early than after a certain amount of mutual pain has been inflicted.

In the second model of the process, settlement efforts and litigation move forward simultaneously. Settlement counsel and her litigation counterpart must work closely together. A reasonable settlement falls somewhere between the “worst alternative to a negotiated agreement” (WATNA) and the “best alternative to a negotiated agreement,” or BATNA. The WATNA can be many things – unemployment, bankruptcy, litigation, loss of a business, or foreclosure – but the BATNA is most often a “home run” in litigation. Knowing what has happened, what is planned, and what is likely to occur in court helps settlement counsel evaluate settlement alternatives, highlight risks, make persuasive proposals, and decide on appropriate timing. So having settlement counsel who has some litigation experience is highly desirable.

But settlement counsel isn’t just second to a litigator. He or she is an advocate for settlement. Litigation is naturally antagonistic and competitive. Aggression is expected, even prized in trial attorneys. At times, counsel develop antipathy toward one another. Such feelings could be a bar to settlement.3 Pretrial posturing, rather than reasonable negotiation, is the order of the day.

Trial counsel will naturally see trial as the favored resolution. It’s what they know and what they do best –they will of course be confident of success. In fact, psychological studies have shown both that lawyers in general over-predict their chances of winning at trial, and that they evaluate available evidence to support their perspective.4

What this means is that trial counsel will often lobby for going to trial and discount the need for settlement. In contrast, settlement counsel will look at the same facts and see reasons and opportunities to settle a case, and advocate for that outcome. By having diverse opinions in the room, clients with separate settlement counsel reach decisions that take the full range of evidence and alternatives into account. Working with the feedback of others improves the quality of our present and future decisions.5

In addition to understanding litigation and advocating for settlement, ideal settlement counsel is an ADR process expert. She is a sophisticated practitioner of negotiation, and knows, for example, that the pace and size of concessions can send important unspoken messages about how far the offering party is willing to go (a slow series of very small concessions generally signals the offeror is nearly at his final position). She negotiates mindfully, intentionally, as attentive to her surroundings as a professional poker player looking for the twitches or “tells” that signal her opponent is bluffing. She actively searches for opportunities to create value for all, knowing that mutual benefit is the best incentive to settle.

As Don Philbin points out, ADR is no longer a one-size-fits-all proposition.6 Beyond the big three — negotiation, arbitration and mediation — there are less prevalent but still useful techniques like early neutral evaluation, mini-trials, med-arb, and arb-med. Each process has its benefits, drawbacks, and costs. Each can be customized to fit the needs of the parties for cost, speed, self-determination, and so on. Competent settlement counsel can explain these alternatives and advise on their use.

The main drawback of settlement counsel is the cost of a second professional. But this cost is only realized if the strategy is totally ineffective – if the case settles no more advantageously with separate counsel than without. To the extent that settlement counsel shortens the litigation process, increases recovery for plaintiffs (or decreases recovery for defendants), helps design a better resolution process, or even creates value, this cost is offset. So it seems likely that the use of settlement counsel is appropriate in more cases than it first appears, and should be considered routinely by those facing litigation.

by Scott Van Soye
1 Mosten, F. S. The Future of Collaborative Practice: A Vision for 2030, 49 FAMILY COURT REVIEW 282, 286 (2011).
2 Coyne, W. F. The Case for Settlement Counsel, 14 OHIO ST. J. ON DISP. RESOL. 367, 367 (1999).
3 Herr. D. F., Annotated Manual for Complex Litigation, section 13:13 (updated May 2011).
4 Richard Birke and Craig Fox, Psychological Principles in Negotiating Civil Settlements, 4 HARV. NEG. L. R. 1 (1999).
5 Klein, G. and Kahneman, D, Strategic decisions: When can you trust your gut? MCKINSEY QUARTERLY (2010).
6 Philbin, D. Litigators Needed to Advise Transaction Lawyers on Litigation Prenups 56 THE ADVOCATES (TEXAS) 36, 47 (2011).

Scott Van Soye is the managing editor of ADR Times. He is also a full-time mediator and arbitrator working with the Agency for Dispute Resolution with offices in Irvine, Beverly Hills and nationwide. He is a member of the California Bar, and practiced real estate, civil rights, and employment law for over twenty years. He holds an LL.M. in Dispute Resolution from Pepperdine University, where he is an adjunct professor of law. He welcomes your inquiries, and can be reached at scott.vansoye@agencydr.com or (800) 616-1202, Ext. 721. www.scottvansoye.agencydr.com