Settlement agreements have remained an essential component of organizations’ HR strategies since the foundation of modern-day capitalist industries. In litigation, “settlements” are documents that resolve a dispute between two parties. These legally-binding contracts settle claims against a business by offering monetary payments (in some cases), after which the claimant ceases pursuing the guilty party for further compensation.
These agreements may happen after or before the two parties have gone to court. We’re familiar with how several lawsuits are dismissed after the parties reach out-of-court settlements. But do you know the art of negotiating favorable conditions in a settlement agreement? Let’s find out!
Learning the art of negotiation
In 2014, studies revealed that some 50% of civil cases are settled without any trial ever taking place. But claimants are often concerned about being “bamboozled” in these agreements and deceiving to accept unfavorable conditions. How can you negotiate desirable conditions in a settlement? Everyone wants a fair deal in any settlement agreement.
Watching these agreements being negotiated on TV shows, people believe the employer will offer the employee some money and expect them to return with a counter-offer. However, the science of negotiation isn’t that simple! You must maximize the chances of getting favorable conditions in a settlement. Hence, here’s how you can make that possible:
1. Hire an expert lawyer
You cannot negotiate a favorable settlement without having experts there for consultation. Hence, you should contact legal firms for free-of-cost consultation. For example, some 3,000+ Americans lose their lives to mesothelioma caused by asbestos exposure at the workplace each year. These patients can reach out to the Simmons Firm for handling the case and help them receive the rightful compensation. Similarly, hiring legal professionals who have experience in your case can help you get a better bargain.
2. Reject the first offer
In The Office episode Broke, we learned an important lesson about dealing with your employer and negotiating a favorable settlement. “Never accept their first offer,” stated Michael Scott. Even if the guilty party claims that their first offer’s “non-negotiable,” it’s always open to change. You should at least push your opponent to make you a second offer. But don’t reject the first offer hastily as if you were always ready to refuse it. Take some time to deliberate and then reject the first offer.
3. Don’t ask too much
You may hear about people getting millions of dollars in settlement agreements. However, you must stay realistic about your condition. Your compensation relies upon several factors. For example, mesothelioma patients’ compensation depends on the duration of their employment, the intensity of their cancer, and the damages suffered. Your circumstances dictate how much you receive for your injury. So, neither ask too much nor too low. Make expectations as per realistic estimates.
4. Keep your request simple
Experts suggest claimants maintain simplicity while making their requests during negotiations. There have been instances where people influenced the audience by their simplicity since nobody wants to translate convoluted arguments. You can see how OJ Simpson’s dream team used the slogan about the glove (“if it doesn’t fit, you must acquit”) in their favor. So, you should simplify difficult concepts to generate a favorable settlement. Make your proposals straightforward and understandable.
5. Engage in a protected conversation
In organizations, employers make their first offers under the premises of protected conversations. As these discussions are off the record, one party can’t use the other party’s words against them. So, you should ask for a protected conversation with the opponent if they didn’t invite you to it. This tactic will demonstrate your seriousness and knowledge of how this procedure’s dealt with. So, read the ACAS Code of Practice on Settlement Agreements to learn about these conversations.
6. Deal with people courteously
We can’t stress this point enough! During negotiations, don’t lose your temper since calmness makes you closer to victory in such discussions. Manage the relationship between you and your opponents. Now, it doesn’t mean that anger’s not productive during an agreement; outbursts are harmful to the progress of any settlement. Outbursts cause breakdowns in negotiations, thereby stopping you from achieving your objectives. So, you should pursue this agreement courteously without softness.
7. Stay honest and consistent
Consistency helps you achieve the required conditions in a settlement agreement. You are expected to remain consistent with your previously-uttered positions. However, claimants must avoid holding steadfast positions since closing all doors to flexibility may compromise the settlement. Stay honest and leverage the need for consistency to emphasize your opponent’s opinions consistent with your opinions. Focus on finding solutions without appearing to become inconsistent about your views.
8. Consider other non-financial matters
Employees consider the termination payment as the most crucial aspect of any settlement. We think you should also consider the non-financial ramifications of this agreement. For instance, you can ask the employer to give you a positive reference for your next employment opportunity. Similarly, your employment agreement may contain a clause that stops you from working for competitors. You can have this clause revoked to search for alternative employment. Don’t forget about these issues.
9. Find out about payment taxes
Don’t forget about taxation while negotiating a favorable settlement. How much taxes shall you pay on the compensation? The nature of the payment decides the tax-related status of these amounts in any settlement agreement. Consult your attorney about how much you have to pay if you’re not getting as much as you’ve expected. We can read how the IRS describes every income as taxable despite its source, excluding exceptions made by another section of the code.
10. Check the terms carefully
When you’re offered the conditions of any settlement agreement, you must check them carefully. A person shouldn’t neglect to read the agreement thoroughly under the supervision of their lawyer. It ensures there’s nothing in this agreement that wasn’t unexpected. You have to establish what’s the final package being offered to you. Then you can make appropriate amendments before signing this document to reach a favorable settlement. Thus, review the terms cautiously before signing.
Conclusion
Whenever disputes happen in the business industry, someone attempts to keep everything out of court! Settlement agreements enable the parties to resolve their disputes cordially. It’s stated that almost 90% of lawsuits are settled out of court today. How can you negotiate a favorable settlement for yourself in a dispute?
You should hire an attorney to represent you in this case. Reject the first offer presented to you and consider your counter-offer properly. Engage in a protected conversation with the guilty party. You shouldn’t forget about resolving non-financial problems. Stay simple, relaxed, consistent, and courteous while arranging the terms of this agreement. And that’s how you can negotiate a favorable settlement.