Don’t settle for less: lessons in achieving successful settlement strategies for young litigators

Bart Jan Hermans
Florent, Amsterdam
bartjan.hermans@florent.nl

Session Chairs

• Akima Paul Lambert, Hogan Lovells, London; Co-Chair, IBA Young Litigators Forum
• Rocco Rondi, BMG Avocats, Geneva; Co-Chair, IBA Young Litigators Forum

Speakers

• Jacques Bouyssou, Alerion, Paris; Senior Vice Chair, IBA Litigation Committee
• Ilona Karppinen, Castren & Snellman, Helsinki; Communications Officer, IBA Litigation Committee
• Christopher Tahbaz, Debevoise & Plimpton, New York; Member, IBA Litigation Committee Advisory Board
• Isabella Wijnberg, Houthoff, Amsterdam

Introduction

Do litigation lawyers have to be tough, unyielding and ready to litigate until the very end? Clients prefer solutions that prioritise their business needs rather than prolonging the litigation process, which serves the lawyers’ business instead. In the end, clients will value a lawyer for their ability to reach a favourable settlement. Deciding when to settle versus when to litigate is crucial for any litigation lawyer, irrespective of their specialty.

The proper initiation of settlement talks and the common pitfalls involved were key topics discussed during a panel held on 17 April 2024 at Houthoff in Amsterdam, led by a distinguished group of litigators.

Discussion highlights

Settlement versus litigation

Ilona Karppinen began by emphasising that settlements often serve a client’s business interests, particularly when maintaining relationships. Christopher Tahbaz shared insights from cases where creative settlement terms provided solutions that litigation could not. In a product defect case, for example, claimants agreed to a repair mechanism for latent defects in exchange for releasing their claims. Settlements provide the option for a ‘transaction’. A dispute involves many underlying interests.

Jacques Bouyssou pointed out scenarios where settlements are less likely to be successful, such as in matters involving matters of principle or clear-cut legal rights. Akima Paul Lambert also noted that the likelihood of settling can vary by jurisdiction, influenced by the potential for punitive damages and other legal costs that may be claimed as a penalty.

The discussion also covered the emotional – or subjective – elements of litigation. Isabella Wijnberg spoke about the underlying complexities of disputes, including the human ego, which can affect settlement decisions. The legal arguments of the parties are just a small part of a more intricate situation. Rocco Rondi highlighted the importance of a lawyer's understanding of their client’s needs and expectations, which might not always align with pursuing a case in court.

Tricks of the trade

The session Chairs then asked the speakers to share their ‘tricks of the trade’ when settling a case.

Wijnberg emphasised the need for de-escalation, highlighting that parties can be in the green, orange or red zone of the ‘escalation’ ladder. In the red zone, parties do not act rationally and only want to drag the other party down with them. Lawyers should be aware of this and use neutral wording. Bouyssou also highlighted the importance of strategic relationships with opposing counsel and the speakers agreed that in some instances it may be better to discuss a settlement without a client present.

Optimal settlement timing was discussed, with Karppinen suggesting that while early settlements are ideal, litigation rounds can sometimes strengthen positions. It is never too late to settle as even after a judgment there can be a benefit to settling. The speakers agreed that sometimes the parties are not ready yet for a settlement and lawyers must be patient.

Wijnberg also pointed out that litigators need to consider all possible outcomes beyond a negotiated agreement. Identifying the best, most realistic and worst-case scenarios helps establish the parameters for potential settlements. Tahbaz emphasised the importance of having a clear end goal in mind for negotiations.

Panellists discussed strategies to initiate negotiations, which included keeping initial communications neutral and in some instances using direct phone calls to opposing counsel. Paul Lambert warned that litigators should avoid explaining why the client wishes to settle. Settling the matter is like a game of chess and considering the leverage your client has is key. Karppinen explained that if your client has low leverage, you can consider using time pressure to gain the upper hand in settlement negotiations.

During the negotiation process, parties must consider the confidentiality rules, which may vary across different jurisdictions. Bouyssou noted that while lawyers often use catch-all phrases such as 'privileged, confidential, attorney-client product, and without prejudice' in documents to ensure confidentiality, it is usually more effective to clearly state their intentions.

Finally, Karppinen stressed the importance of meticulously drafting settlement agreements, specifying claims covered, actions required from each party, the timing thereof and consequences of non-fulfillment.

Conclusion

Settlement can be very beneficial for a client’s business and creates room for creativity outside of the formal court process. Lawyers have to be aware of the objective and subjective factors behind a case, while they should also be patient and wait for the right moment to put an offer on the table. If the time is right, decide on the settlement parameters for your client, carefully consider the settlement process and reach out in a neutral manner. Maintain good relations with opposing counsel, and when the parties reach an agreement, make sure that you draft a detailed settlement agreement in order to prevent further disputes.

The session wrapped up with a practical exercise where attendees engaged in settlement negotiations using a hypothetical case. This dynamic discussion highlighted the complexities of settlements and equipped young litigators with strategies to navigate them effectively.