Understanding the meaning of settlement is essential to the civil lawsuit process. Here’s what you should know when you’re involved in civil legal proceedings.

A settlement is a formal out-of-court agreement between the parties that brings the dispute to a close.

Overview of a Legal Settlement

A legal settlement provides a resolution to a dispute between the parties. If the parties are able to successfully attend a settlement conference, the resolution provides more privacy than if the matter went to court trial. A settlement often means lower legal costs while taking away a portion of the uncertainty that would come with legal proceedings in front of a judge. Often, a financial settlement may not be subject to public record after being approved by the court. This may be available as part of the terms of the agreement in an effort to protect the privacy of the parties.

Depending on the type of dispute resolution used, the parties may likely be able to take no further action after the agreement is executed. This is because many of these agreements require that the party or parties receiving the settlement sign over their rights to any further legal proceedings related to the claim.

Key Terms in Settlement Agreements

There are many legal terms used to define settlement agreements. The purpose is to outline all of the terms fully. Although you should ask an attorney to review and explain any agreement or offer before you sign it, it’s essential to understand some of the most important key terms involved.

Settlement Agreement

“Settlement agreement” refers to the written document as a whole. The document details the resolution of the dispute. For example, it may include a clause of confidentiality that keeps one or more parties from discussing some or all of the terms of the agreement or the dispute. It may detail how the parties will split legal costs and how and when compensation will be paid out. 

Plaintiff and Defendant

“Plaintiff” and “defendant” are terms that may be used to refer to the parties involved in both the legal proceedings or litigation along with those attending a settlement conference. The plaintiff may be referred to in another way, such as the claimant or petitioner, depending on jurisdiction and other factors. The defendant could be known as the respondent. The terms used to describe the parties during negotiation will be defined within the agreement.

Damages and Compensation

Although “damages” and “compensation” will be specifically defined in a settlement agreement you sign, the words do have broad meaning.

“Damages” refers to the economic and non-economic losses of the plaintiff or claimant. Common types of damages include medical expenses, court fees, litigation, attendance fees for other legal proceedings, lost work, and property damage. A non-economic damage is a loss that cannot have a monetary value assigned, such as pain and suffering and loss of enjoyment.

“Compensation” refers to the financial settlement the plaintiff or claimant receives in exchange for agreeing to end the dispute. It will be defined and include an amount. For example, the document may list all medical expenses and the total amount due in compensation. Non-economic damages are also eligible for compensation. However, determining the amount can be complex.

Types of Legal Settlements

There are various types of legal settlement agreements. The most common types are:

  • Structured financial settlement;
  • A class-action settlement agreement;
  • A settlement conference ordered before a court trial;
  • An arbitration agreement;
  • Mediation;
  • Another form of alternate dispute resolution that keeps information out of public record.

Stages of the Settlement Process

The settlement process can occur before or during a civil lawsuit. It can even occur during court trials. Here are the stages:

  1. A settlement demand is sent. This letter informs the insurance company and/or other defendants of the written amount of compensation requested by the plaintiff or claimant.
  2. A settlement conference is scheduled.
  3. Parties attend the settlement conference. During this time, insurance adjusters and other parties will discuss the facts and evidence with the help of the mediator.
  4. Negotiation talks occur. Not only will the negotiation talks take place during the conference, a second date or a deadline to accept an out-of-court offer may be given. The parties and their attorneys may continue negotiation via email, traditional mail, or phone calls.
  5. If an agreement is reached, it is reviewed and approved. If the parties settle during a court trial, the agreement must be reviewed by the assigned judge. It is fully approved with the judge’s signature.

If an agreement isn’t reached, the parties may face the uncertainty of going to trial.

Importance of Legal Representation in Settlements

If you’re attending a settlement conference or otherwise involved in this sort of negotiation, having legal representation is essential to ensure you’re treated fairly. The insurance company has a team of attorneys looking out for their best interest. With an experienced attorney from Kermani LLP, you will have the insight you need to know you’re being treated with fairness and dignity.

Glossary References


Ray Kermani
Didn't find the answer to your question?

Contact our personal injury legal team for a free case evaluation.

Contact us now!
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Receive a FREE case assessment

Every case is unique, so we tailor our approach to meet your specific needs.

Due diligence got me only so far as I went through three seemingly great law firms before finding Kermani LLP right here on yelp. They were fantastic.

Testimonial Author Kermani LLP

Mary W.

Former Client

When I was hurt in a bike accident last year, a friend recommended I get a lawyer and sent me to Ray Kermani. Ray and his team knew exactly what needed to be done and took care of everything.

Testimonial Author Kermani LLP

Anna F.

Former Client

Ray is one of the easiest people to work with. His communication is great and he always walks you through the steps. I was little down after my accident. He got me paid quickly and way more than I thought was even possible. He goes the extra mile.

Testimonial Author Kermani LLP

Seema P.

Former Client

The staff is super friendly, approachable and responsive. They provide one on one attention, unless most law firms that just answer calls and want you money.

Testimonial Author Kermani LLP

Shobeir S.

Former Client

They took what was a complicated case that most law firms wouldn't touch, and turned it into a large six figure judgment.

Testimonial Author Kermani LLP

Sanaz A.

Former Client

Best law firm. They know how to win a case at trial, unlike most law firms that advertise as such. They will push every button that needs to be done to win your case. I was super satisfied.

Testimonial Author Kermani LLP

Adil L.

Former Client