How to Make a Settlement Offer in Your Family Law Case
Why Settlement Offers are Exchanged Prior to Trial (In Most Cases)
Written by: Stefano Ceroni
It is extremely likely that during your divorce, child custody or post-decree dispute with your ex, at least one offer of settlement will be exchanged prior to trial.
Well, for one thing, reaching a settlement prior to trial will almost always save both parties money. And secondly, any party with a good attorney will, at one time or another, be told that going to trial is little bit like rolling the dice at a craps table; there is just no way to predict exactly what will happen once you step into that courtroom. So, in order to save some money and avoid some risk, one party almost always extends an offer of settlement in the hopes of reaching a full agreement before going to court.
Unfortunately, just because one party makes an offer of settlement, doesn’t mean the case is any more likely to settle.
Well, unless the parties have already reached full agreements on all issues (which is rare), the party in receipt of the settlement offer will likely disagree with at least one or more of the offered terms. Generally, when this happens, the party in receipt of the offer will reply by presenting the other party with a counter-offer which has the legal effect of rejecting the previous offer and leaving the new offer open for acceptance.
As you can imagine, this back and forth exchange of offers and counter-offers can sometimes go on for several months without any actual agreements being reached.
Why does this happen?
Well, in my opinion, the reason most initial settlement negotiations fail is because the parties (and even some attorneys) completely ignore the true purpose of a settlement offer.
A Settlement Offer is not a Position Statement
Meaning, you should not offer an argumentative settlement offer that is completely synonymous with your initial pleadings, even if you think your initial formal requests to the court are completely reasonable and likely to be granted. (If they really were, then chances are your case would already be settled and there would be no need for any formal offers to be exchanged).
Look…from a practical standpoint, it makes zero sense to offer (and, of course accept) a settlement offer that proposes the exact same terms for acceptance that a party is asking to be awarded at trial. As you can already assume, this creates absolutely no incentive for the party receiving the offer to settle.
Well nobody actually does this, right?
I can’t tell you how many initial offers of settlement I receive that are a mirror image of the opposing parties’ positions at trial. From an attorney’s perspective, receiving these offers is extremely frustrating. From my clients’ perspectives, receiving these letters usually angers them and causes them to want to offer an equally ridiculous proposal in reply. As you can imagine, this type of exchange always starts a case off on the wrong foot, which is, in my experience, never a good thing to do.
What Should a Settlement Offer Look Like?
Well, first and foremost, a settlement offer should contain at least some sort of “compromise.” You know…”I’ll give you this, if you give me that.” Offering a compromise on some issue provides the opposing party with an incentive to settle; without incentive, your offer is nothing!
So, why do people still send offers without any built in compromises or incentives?
Well for one, people have a prolific tendency to overestimate the strengths of their own cases and underestimate the strengths of their opponent’s cases. When this happens, people incorrectly assume that they are compromising, when in fact they are just being unrealistic about their BATNA (best alternative to a negotiated agreement) and WATNA (worst alternative to a negotiated agreement).
For another thing, people are often afraid to offer too much of a compromise because of their fear that their offer will be used against them. The truth, however, is that settlement offers are protected by the rules of evidence and are almost always inadmissible in court. (In family law cases, settlement offers can be admitted to prove a party’s reasonableness when it comes to the issue of determining whether an award of attorney’s fees is justified).
This concern, however, isn’t always a bad thing.
Well, just because the terms of a settlement offer cannot be used against a party come time of trial doesn’t mean that the willingness to make such an offer won’t have some subconscious effect on the overall outcome of their case. Look, judges are humans, too. It would be impossible for a judge to analyze the subjective factors that are relevant in family law matters without implementing some of their own experiences, opinions and potential biases into their analyses and rulings. That being said, there is always a risk that if a party’s settlement offer is made known to the judge (even if only to prove some other issue), that it could play some role in the ultimate outcome of the case, even if it should not have. In general, however, people should not be afraid of making reasonable settlement offers because of their fear that it will be used against them, as the specific terms of their offers are rarely ever offered as evidence to the court.
What Makes a Good Settlement Offer?
Well, the truth is, there is no exact science or formula for drafting a good offer of settlement. What I can tell you, however, is that a good settlement offer should always take into consideration the motivations of the offering party.
If your motivation is to see where the other party stands when it comes to their positions and justifications, you may consider making an offer that is not too risky (i.e. something that you would settle for, but is not your best and final offer). If, however, your goal is to settle your case as quickly and amicably as possible, you should consider making an offer that at least leaves you with a slight amount of apprehension. (Remember the saying: a fair deal is one that leaves both parties feeling like they won something and lost something).
Also, you should consider whether it would be a good idea to defend your offer with justifications. For example, sometimes you may want to offer something without disclosing to the other party exactly why you feel you are entitled to that because you do not want to show your hand. This is sometimes a good strategy, especially when your hand may be weak. You see, if you justify your offer with a weak position, it may have the unwanted effect of giving the other party even more confidence when it comes to their case. This, of course, is not something that you would like to have happen.
If, however, you are making an offer that you feel you have a strong defensible position on, you may want to consider justifying that offer to the other party so that they can become aware of the difficulty they may face in having to defend against it. This, in turn, could cause the other party to accept the offer, especially if your justifications are based on information that they did not believe you had or were able to prove.
So, to recap, here is an abbreviated list of the top three (3) tips that I think everyone should know when it comes to making settlement offers in their cases:
1.) Give Incentive.
Do not offer the same thing that you are pursuing in court. Show the other party how you are willing to compromise. In order to effectively do this you need to have a accurate understanding of your BATNA and WATNA. Do not overestimate the strengths of your case and underestimate the strengths of the other party’s case.
2.) Understand the Effects of Your Offer.
Know the rules regarding its admissibility and how your offer could potentially be made known to the court and used against you.
3.) Consider Your Motivations.
Try to understand the primary purpose of your settlement offer and draft the offer accordingly. Consider whether or not a justification of your positions is something that could help or hurt your case.