Drafting Mediation Settlement Agreements
Who Writes the Agreement?
If the parties reach agreement, the best practice is to put the agreement in writing to avoid future misunderstanding. When settlement occurs during the mediation, the mediator will ordinarily draft a
Mediation Settlement Agreement or
Memorandum of Understanding
that contains the terms of the parties’ agreement. The agreement may also be drafted by the parties themselves or by their attorneys.
Mediation Settlement Agreement Drafting Suggestions
To avoid problems, the mediator will take the time at the close of the mediation to ensure that the agreement is carefully drafted. When drafting, the mediator will be specific and address:
1.Who is agreeing to do something
2.What they are agreeing to do
3.What will be done
4.When it will be done/completed
5.Where it will be done
6.Why it will be done (e.g. in exchange for dismissal with prejudice of a court case)
7.Use words as well as numerals when specifying sums of money
8.Avoid terms that can cause confusion, e.g. "bi-weekly"
9.Consider including ADR provision in the event there is a future dispute about implementation of the agreement
Unauthorized Practice of Law
To avoid raising an issue regarding the unauthorized practice of law, the mediator will confirm her role in agreement writing to acting as a scribe for the parties, simply putting down on paper agreements the parties have reached without use of legal boilerplate.
Role of Attorneys in Formalizing Agreement
The mediation settlement agreement may constitute the final agreement between the parties, or its terms may be incorporated into formal settlement documents. In mediations involving pending court cases, the mediator drafts the agreement and there are attorneys involved, the attorneys will typically incorporate the terms of the Mediation Settlement Agreement into formal settlement documents that will be filed with the court.
Is the Mediation Agreement Binding?
The general rule is that when parties reach agreement, put the agreement in writing, and sign the agreement, it will be binding and enforceable as long as:
1.There is consideration
2.The parties are competent
3.The writing contains all the essential elements of the parties’ agreement
4.The agreement is not illegal nor against public policy
One of the items that should be addressed by the mediation is whether the parties intend to enter into an enforceable agreement at the conclusion of the mediation and whether the parties present at the mediation have authority to do so. The parties should not sign an agreement with which they do not intend to comply.
If the parties do not intend the Memorandum of Understanding to be binding, they may put a provision into it similar to the below:
This Memorandum of Understanding is not intended to be a binding contract and is, therefore, made specifically subject to the preparation of a formal settlement agreement acceptable to the parties hereto.
It should be noted, however, that there are some cases in which the parties were held to be bound to an agreement because of the actions that they took after its execution, even though it provided that the agreement was subject to formal documentation.
Mediation Settlement and Unrepresented Parties
Parties who are unrepresented may wish to have their mediation agreement reviewed by an attorney prior to the agreement becoming binding. In some court mandated mediation programs, the court rules provide that unrepresented parties will have 10 days to reconsider an agreement reached in mediation before such an agreement becomes final.
Judicial Review of a Mediation Settlement Agreement
Some mediation settlement agreements will need to be reviewed by the court before becoming final. For example, a settlement for personal injury involving a minor, or a divorce mediation agreement which provides for child support.