In House - The FindLaw Corporate Counsel Blog

Getting Your Settlement Recommendation Approved by the Board

Whether you represent a corporation, or private or public entity, chances are you'll need to get some board or council to approve any settlement offer or demand you make or receive. Typically, when you go to the board, you not only need to present the demand or offer, you also need to provide a recommendation.

Although the entity client may have provided an acceptable range at the outset, rarely will settlement negotiations actually be in that range. However, there are some entities that do have clear policies and a generous settlement budget, where a GC can act without board approval within a certain range, like the University of California.

Here are three tips to help you get your settlement recommendations approved by the board:

1. Prep the Board for the Worst

Even if you think a case is defensible (or winnable), making sure you don't infect the board with your overconfidence is very important. Along those same lines, a board that understands the worst case scenario is more likely to accept your recommendation if it can mitigate or avoid the worst case. This means showing up to every board meeting where your case is on the agenda, and providing updates about how well the other side is doing (and not just you) so that it will motivate the board to give you the money you need, when you need it.

2. Stress Economic Value of Settlement

If you have a case that is unlikely to win, getting the board to settle can be much more economical that fighting out a losing case. The more extreme the case, the more value a board can get out of settling early.

Hit the board members over the head with the obvious fact that reaching a settlement will help reduce the cost of a case for a losing party, as courts cannot really award attorneys fees and costs to a prevailing party when there's a settlement (though it's not out of the question, depending on the specific type of case and settlement).

3. Stress Intangible Value

Nearly every case that gets filed against a public entity will see some sort of media coverage. However, many cases will fly under the radar until they are getting close to trial.

To this end, getting a matter settled early can result in significant cost savings and intangible value as well. For businesses, a pending lawsuit could lead to negative publicity, and the longer the lawsuit is out there, the higher the likelihood for it to result in media and public backlash. But a settlement agreement with a confidentiality clause could put a stop to that publicity.

Conversely, admitting wrongdoing and making amends can also help refurbish a tarnished public image. While getting a board to go along with that might be like pulling teeth from a chicken, it could be the red herring you throw at the board to loosen their coffers after years of defending a case that should have been settled to begin with.

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