Drafting settlement agreements in Mediation
Mediation is, as we know, throughout ultimately an entirely consensual process. The parties are free to halt the Mediation at any time during the Mediation or before. That said as part of the preparation for the Mediation and the “big day” it is very wise to consider the structure and features not only of any possible settlement but of the settlement documentation. Indeed preparing and discussing with your client and advisers draft settlement documentation in all but the simplest of disputes (and even then) is highly recommended and very informative.
Doing so will not only save perhaps precious and valuable time in the Mediation but will allow important perhaps side matters and details to be pre discussed with your client. These are very often matters that would not have been properly discussed with your client previously. These aspects can instead be pre discussed and advice given which will not only save time at the Mediation and ensure the advice is fully understood but will help channel the client and their experts’ views in advance.
An obvious starting position is to consider whether all the parties required to be joined in respect of the settlement documentation are willing to do so and can be bound. Quite often one or more of these may not be a party to the dispute or Mediation.
By way of further examples only common areas for consideration will also include the ambit of any mutual or other releases, the need to include affiliates, payment mechanisms and details, the need for and scope of any confidentiality agreements , further assurance clauses, warranties , indemnities and alike. However, particular to property litigation specific land related factors may also need to be considered and dealt with. Whilst in no way exhaustive, these may include security, finance and lending issues, issues concerning entries to be altered or made at the Land Registry (perhaps third party consents of say landlords or mortgagees are required, or priority periods, inhibitions or notices need to be dealt with), issues such as conditionality, satisfying section 2 of the Law of Property (Miscellaneous Provisions) Act 1989 and the like. There may be the need notwithstanding any Land Registry requirements for other third party consents from any landlords or mortgagees or other competent authorities (like planning or environmental bodies or other regulators) particularly where works are involved.
If proceedings have been issued consideration will need to be given to whether those are best dismissed or stayed (by a more usual tomlin order) and also to the best timing of that (before or after other matters like executing agreements as part of the proposed settlement or paying over settlement monies). Also provision and agreement in respect of the costs of the proceedings will also need to be expressly considered and dealt with.
Settlements at Mediation often occur relatively late in the day and clients can become restless, ready to leave for other engagements (or home commitments) at a time when you need their proper attention however their emotional investment in the Mediation process can have been discharged by the thought that terms have been agreed for the lawyers to document. Nevertheless, the lawyers job is to ensure the settlement encompasses all the best features that it would if a fuller consideration with all the necessary time was available. So this last hour or more at the Mediation can be very pressurised for the lawyers whilst clients are often distracted and distracting and even perhaps celebratory or dismissive. So if the majority of the issues can have been previously sorted in private discussions surrounding a draft settlement deed and its constituent parts have been pre-considered potential problems can be pre identified and properly dealt with.
Another area that can occur in property mediations is perhaps the need for a future valuation in the absence of agreement in the future between the parties. Likewise certain costs, say of works, may need to be determined which cannot be dealt with on the day of the Mediation. If this presents a difficulty and the possibility of a future dispute the normal third-party determination procedures might be included in the settlement. At times it might even be sensible and appropriate, to suggest that the Mediator act as a third-party independent expert or an arbitrator to ensure those or any future dispute or matters that need to be determined are capable of speedy and economic resolution.
As practitioners we know the importance of avoiding future disputes and not allowing parties to fall quickly into further dispute. Pre-planning the best settlement and having a draft settlement document ready is therefore a key investment for the parties and their advisors that will always pay significant dividends.
About the author: Keith Conway is a solicitor and accredited mediator with over 25 years’ experience of representing clients at mediations. He is a partner at Clyde&Co LLP where he heads the Real Estate Dispute Resolution team principally in London and Guildford. He is a former Chair of the Property Litigation Association and its Law Reform Committee.