Part III. Responding · Chapter 13
Settle or fight: how to decide
The settle-or-fight decision is made badly when it is made on feeling: anger at the sender, fear of the number, or the hope that silence will work. It is made well on four things that can be written on one page: what the claim is worth if it is right, what the sender is asking, what contesting costs, and what your evidence removes. This chapter sets out the method and what a settlement agreement contains.
13.1The four numbers
| Number | How to get it |
|---|---|
| Exposure if the claim is right | For statutory claims, count times the statutory figure; for contract and wage claims, the sum plus any multiplier and fees; for injunctive claims, the cost of the change demanded. Use the figures in the Part II chapters. |
| The demand | What the letter asks for, including non-monetary terms. |
| Cost of contesting | Ask a lawyer for an estimate per stage: advice, response and negotiation, a defended case. Add your own time. Remember that in most claims each side pays its own lawyer win or lose, and that some statutes award fees to a winning claimant but not to a winning defendant. |
| What the evidence removes | Item by item: which allegations your documents defeat. This is the number that moves the others. |
13.2Reading the page
If the evidence removes most of the claim, dispute with the evidence and propose to resolve the rest, if any. If the evidence removes little and the demand is below the exposure and below the cost of contesting, the demand is the lowest number on the page and the only one that comes with certainty; pay it, through a written agreement with a release. If the demand is above the exposure, which happens, counter with the arithmetic. If the cost of contesting is below the demand and the evidence is good, contesting is rational. If an individual is named, or the claim signals a wider pattern, weight the exposure number up, because the letter is a sample.
13.3The factors that are not numbers
- Publicity. A settlement is private. A filed case is on a docket and can appear in a search of your business name.
- Discovery. A contested case means producing records, which can reveal more than the letter alleged.
- Time. A contested matter takes months or years of the owner's attention.
- Precedent inside the business. Settling a wage claim for one employee without fixing the practice invites the next. The fix is part of the decision.
- Relationship. A supplier or customer you need to keep working with is a different counterparty from a stranger.
- Principle. Legitimate, and expensive. Price it honestly.
13.4Negotiating
In writing. With evidence. Item by item. A counter that says "we dispute rows 2, 5 and 7 for the attached reasons and propose a figure for the remainder" is a negotiation; a counter that is a lower number with no reason is a guess, and is treated as one. Ask for the release or agreement terms at the same time as proposing the figure, so that the money and the words are agreed together. If you need instalments, propose a schedule and the consequence of a missed payment. Do not negotiate by phone; if you must speak, confirm every term in writing the same day. How to respond to any demand letter sets out what the written reply contains.
13.5What a settlement agreement contains
- The parties, including affiliates, officers and any vendor you want covered.
- The claims released: specifically, the matters in the letter, by reference, number or period, and all claims arising from them under federal and state law.
- The consideration: the payment, or the conduct, or both, with dates.
- No admission of liability.
- Confidentiality, if wanted, and any carve-outs the law requires.
- Non-disparagement, sometimes, in both directions.
- What happens on default: a missed instalment, a breach of the conduct terms.
- Governing law and signatures.
Read every word before signing. A release that names only some of the claims leaves the rest alive. A broad release that covers claims you did not know about may be more than you want to give. For anything beyond a simple payment-for-release, have a lawyer read it; an hour here is cheap.
13.6If you fight
Fight with evidence, through a lawyer, on a budget agreed per stage, with a settlement number in mind from the start. Most contested matters settle before trial; the question is at what cost and after how much discovery. Revisit the four numbers at each stage, because they change as evidence emerges and costs accrue. Chapter 14 covers finding counsel and setting the budget.
Questions readers ask
Does settling mean admitting I did something wrong?
No. A settlement is a contract in which claims are released in exchange for something, with a standard clause that nothing in it is an admission. A judgment is a court’s public finding. They are different documents with different consequences.
If I settle one claim, will more follow?
The release covers the claims and parties it names. Other people with the same claim have their own. What brings more letters is the practice continuing, not the settlement. Fix the practice at the same time.
What if I cannot afford either?
Say so in writing with a proposal: a smaller sum, instalments, or non-monetary terms such as remediation. A sender who would otherwise have to sue a business that cannot pay often accepts a realistic plan. Get it in writing.
Can I settle after a lawsuit has been filed?
Yes, and most filed cases settle. The cost on both sides is higher by then, which is reflected in the figures, and the court will need to be told. The method in this chapter applies at every stage.