Friday, January 10, 2014

How do You Manage Multiple Defendants?

I was up late last night mediating a challenging case where an employee sued her former company after it had been sold to another Company.  Though the first company had sold all of it's assets, there was a contract that specifically stated that the successor company did not purchase or assume any of it's liabilities.  Luckily, there was some insurance coverage for the old company, since it no longer had any assets and was defunct. 

After a full day of negotiation, the Plaintiff and defendants collectively agreed to my mediators proposal.  Then the real drama began.  Although the defendants had spent a full 8 hours together in a single conference room, the dynamic suddenly shifted when the standard terms appeared on the short-form agreement:  "each party to bear its own costs and fees".  Though all of the defendants were delighted to settle the case against Plaintiff, there was an express indemnity agreement which legally gave rights to the new company to look to the selling company, Plaintiff's former employer, for indemnity.  And their costs were huge!

At 9:30 P.M., after Plaintiff had signed the agreement and left the office, I found myself looking at faces like those above.  While I was circling between rooms and mobile phones, discussing the ramifications of holding up the settlement to pursue recovery of costs with out of state clients and senior partners, the mood was getting darker and the other participants angrier.

After a relatively sleepless night, I did get confirmation that it had worked out and there was a full release made.  Still, I clearly could have and should have raised this dark issue as a potentiality long before the final agreement was being signed.  I guess the lesson is not to make any assumptions that standard terms will be agreeable in any settlement agreement.  Everything is subject to negotiation.  I just wish those negotiations could be conducted before sundown.