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The Anatomy of a California Early Settlement Conference

August 23, 2013

Posted in Business Litigation, Litigation Strategies

Early Settlement ConferenceEarly Settlement Conferences can be requested in any general civil case – limited or unlimited – that is brought before the California courts. Although they are not mandatory, they can be a critical component of the business litigation process, saving you the cost and time of a lengthy discovery phase and trial.

Recall that in your Case Management Conference you and your opposition will have the opportunity to discuss the possibility of settlement by eliminating items that aren’t truly at issue or dispute and focusing only on those matters that are genuinely in legal debate. If you, the judge and the opposing party determine that settlement is a realistic possibility at your CMC, the judge will then give you instructions on how to sign up for an Early Settlement Conference. The Superior Court of California offers a very robust and comprehensive Civil Early Settlement Conference Program.

Early Settlement Conferences are facilitated by what’s known as a ‘neutral.’ A neutral is an experienced attorney with knowledge of the laws surrounding your case who will help you and your attorney to have a constructive conversation with the opposing party and their own legal representatives – hopefully resulting in an agreement that meets the needs of all involved.

It’s important to note that an Early Settlement Conference differs quite a bit from a Mandatory Settlement Conference or even ADR. The most notable difference is that an Early Settlement Conference is voluntary – entered into by both parties willingly with a genuine belief that issues can be resolved without the high costs and publicity of a full-blow trial. Often the element of ‘volunteering’ can make all the difference in the world. The other major distinction is the timing. Early Settlement Conferences are named so because they generally occur early on in the litigation process – typically within 6 months after the initial filing. This can often be advantageous, as well, because it allows you to settle differences before they escalate any further.

That said there are some pitfalls to avoid if you enter into an Early Settlement Conference. If either you or the opposing party goes into a settlement conference with the wrong information, misinformed ideas or selfish expectations, it can backfire on you both.

First of all, an early settlement requires a ‘meeting of the minds.’ And a genuine meeting of the minds requires careful planning, detailed conversations and very specific arrangements and agreements. For example, if you and your opposing party meet at your Early Settlement Conference and agree that insurance coverage will be provided by each party, then you need to specify what type of coverage, how much, what forms of proof will be acceptable, if there’s a statute of limitations of when coverage has to be implemented, and any other details you can think of. Otherwise, your ‘agreement’ is abstruse and a true ‘meeting of the minds’ has not taken place. Down the road, one party or the other is likely to be disappointed again, possibly resulting in a whole new case.

Additionally, Early Settlement Conference agreements can later be nullified by the courts because of ‘changed circumstances.’ For example, if you voluntarily settle with your opposition based on the promise of a refund at tax time, look far enough ahead to make sure that’s even realistic. Perhaps the opposing party is simply buying time before they file bankruptcy or restructure. Or, it may not be practical for you to wait for the next tax season if your settlement is being made in June. In other words, not only should your settlement be as specific as possible, but it also needs to be realistic and agreed upon only with careful foresight and thoughtful planning of the details.

Finally, in some cases, an Early Settlement Conference is simply not what’s best. Sometimes the factual and legal issues are so complex that a discovery phase is required to ensure that both parties have a full understanding of the issues and can make a better argument or settlement at a later date. Remember, you’ll always have your Mandatory Settlement Conference, which is generally scheduled just weeks before your trial.

If you’re in the midst of a business dispute or litigation, you should gather as much information about the litigation process as possible and seek the advice of an experienced attorney who understands every phase of the game. A business litigation specialist can help you to determine if settlement is best, how to structure discovery and when to move forward with trial. Contact The Law Offices of Tony T. Liu for guidance on the full spectrum of the business litigation process.