Originally published in The Colorado Journal, July 21,1999--Reprinted with Permission

It is often the case that settlement negotiations in litigation arise by happenstance and are conducted merely as an adjunct to trial preparation. However, a thoughtful and deliberate approach to settlement suggests that the information, planning and decision-making required for negotiations are far different than trial preparation. In order for settlement negotiations to reach their fullest potential, parties should approach settlement and alternative dispute resolution options used for settlement, thoughtfully and deliberately.

In order to undertake a thoughtful and deliberate approach to settlement negotiations and the planning of ADR processes, business representatives and legal counsel need to devote attention to the settlement tasks. This undertaking can be accomplished best through a phased approach to settlement and consideration of ADR, as shown on the exhibit and described below.

Phase 1: Strategy development. The persons involved in developing the strategy should be the client's key decision-makers and legal counsel. These decision-makers should gather in a session aimed at building a consensus concerning a settlement strategy that serves the client's objectives.

The decision-makers should identify the client's goals, identify the "success criteria" by which potential settlements can be evaluated, assess the existing conflicts in the litigation, and evaluate the litigation opponent. They may assess the conflict by asking questions aimed at fully identifying the causes of the conflict and resulting litigation. In evaluating the litigation opponent the decision-makers should try to evaluate their opponents' views of both the litigation and settlement (e.g., their motivations, interests, needs and objectives). Such an assessment would clarify the settlement decisions to be made and criteria by which settlement initiatives could be evaluated. The decision-makers should also evaluate the various ADR options that are available to settle the conflict

Depending on whether settlement negotiations will be conducted directly or via a neutral, the decision-makers should also identify the information needed to thoroughly participate and evaluate settlement options. In large and complex litigation, this may require the establishment of "work teams" necessary to collect and evaluate settlement tasks. In many complex commercial disputes the collection and assessment may include developing spreadsheet models to look at differing settlement options.

Where the dispute is substantial and corporate entities are involved, it may be appropriate to form a settlement or mediation team that can make recommendations to client's decision-makers. When such a team is used, it is helpful to have a good combination of legal and business expertise represented by the team to ensure the most thoughtful evaluation of settlement options.

Phase 2: Design and preparation for either direct settlement negotiations for the use of an ADR option take place here. If a settlement or mediation team has been formed, the team's duties should include the design of any settlement negotiation or ADR option and assisting the client prepare for the selected ADR alternative. In a corporate structure, the second phase may include preparing settlement-process recommendations for senior management.

Once a settlement process has been selected or an ADR option chosen, the settlement team then begins negotiations with the opposing parties (either directly or through legal counsel) to design suitable settlement negotiations or ADR options. If an ADR option appears useful, the disputants can jointly investigate and attempt to select qualified neutrals to facilitate the ADR process.

Phase 3: Implementation and decision-making may be the point at which the mediation or team works with the senior decision-makers to prepare for and participate in the selected ADR option. In complex commercial litigation, it may also be appropriate to have technical- or financial-support staff available to help with preparations for and participation in the ADR option. The goal of the implementation and decision-making phase is to move through the agreed-upon settlement process in ways that permit the client to assess how the various settlement options serve the client's business interests.

In representing individuals or small corporations, the settlement team may include the client and trial counsel. In more complicated commercial ventures, the settlement team may include general counsel, one or more business representatives, outside legal counsel and technical support personnel. The larger settlement team will interact with senior management. This effort is designed to ensure that the key business executives responsible for final choices are given the best available information to decide whether to abandon negotiations and proceed to trial; accept the best available settlement options; or continue negotiations to determine whether an improved resolution is available.

By breaking the settlement preparations and implementation into distinct phases, legal counsel can encourage more complete and thoughtful participation by the client. Where appropriate, experience shows the creation of a settlement or mediation team can help focus the corporate client's settlement efforts without unnecessarily diverting attention from the team preparing for trial.

Legal counsel can play a tremendously helpful role in this process by encouraging an approach to settlement with distinct, well-defined phases, accompanied by specific goals for each phase and ensuring that legal counsel and business decision-makers continue to compare options for resolution with the client's defined business objectives. By using this type of phased approach to settlement, legal counsel ensures that settlement is undertaken to meet the client's interests, rather than permitting settlement to be merely collateral to the ongoing litigation.