Mediator and firm co-founder Scott Baughan addresses the importance of properly memorializing your mediated settlement

Published in the Florida Justice Association Journal issue 642 (Nov/Dec, 2024) at page 86.

In this month’s Journal, the Alternative Dispute Resolution (ADR) section’s author is central Florida’s Scott Baughan. Scott had a very active 25-year civil trial practice before becoming a full-time mediator in 2017. This edition focuses on how important obtaining a signed mediation agreement is before concluding your session. Scott provides the most up-to-date case law and two practical scenarios showing what could happen if you don’t obtain a signed agreement. He then follows it up with a great discussion. I hope you enjoy it, and as promised I will continue to bring you current trends in the ADR world. — Steven R. Jaffe

The importance of properly documenting a mediated settlement agreement cannot be overstated. Quite often, a successful mediation takes several hours to produce an acceptable resolution. It is not unusual for the participants to experience frustration, and perhaps much stronger emotions, during the course of the process. At the conclusion of many mediations which produce settlement, the parties, their counsel, and even their fearless mediator may be left emotionally and intellectually exhausted. It is extremely tempting at 7:30 p.m., immediately after a successful resolution has been achieved over the course of a 10-hour mediation, to defer complete documentation of the settlement. There are many mediators who simply endorse an exchange of confirming emails between counsel in order to memorialize the terms of any settlement reached at mediation. Unfortunately, anything less than a properly signed formal settlement agreement is fraught with risk. 

Florida law is overwhelmingly clear that there is only one acceptable method by which to document a mediated settlement agreement in the context of a court-ordered mediation. Specifically, a mediated settlement agreement must contain a clear expression of the basic terms of the settlement and, moreover, must be signed by all counsel and the parties or their authorized representatives, such as an insurance claims professional. 

The necessity of a properly executed mediation agreement is well demonstrated in Florida case law. In Gordon v. Royal Caribbean, 641 So.2d 515 (Fla. 3rd DCA 1994), the court was presented with a review of an order compelling an evidentiary hearing in order to adjudicate Royal Caribbean’s motion to enforce a purported settlement reached at mediation. At the conclusion of mediation, Gordon’s counsel executed the settlement agreement in the presence of his client, but Gordon did not. The court granted Royal Caribbean’s motion to compel an evidentiary hearing to determine the enforceability of the settlement agreement. Gordon petitioned for certiorari review of the order compelling the evidentiary hearing, arguing that the hearing should not be permitted as it would be violative of privileged mediation confidentiality. The appellate court agreed and granted certiorari in favor of Gordon, thereby prohibiting the evidentiary hearing.

The court in Gordon essentially stated that unless there is a settlement agreement signed by all parties and their counsel, the court cannot even conduct a hearing on the matter as it would necessarily involve an impermissible disclosure of privileged mediation communications. In other words, at least in the context of a court ordered mediation, only a formal agreement will suffice to demonstrate an enforceable settlement, and anything less is not even allowed to proceed to an enforcement hearing. The court cited the clear language of Fla. Stat. 44.102(3), which indicates that absent a settlement agreement, all mediation communications are privileged and confidential. The court further noted that Fla. R. Civ. P. 1.730 clearly defines a mediated settlement agreement as a document which contains the terms of the settlement and is signed by the parties and their counsel.

The Fourth District Court of appeal endorsed and followed Gordon in conjunction with its decision in Dean v. Rutherford Mulhall, 16 So. 3d 284 (Fla. 4th DCA 2009). In Dean, the trial court not only conducted a hearing but granted plaintiff Rutherford Mulhall’s motion to enforce the settlement against defendant Dean, despite the absence of Dean’s signature. The trial court relied upon evidence that Dean had verbally expressed his agreement to the terms of the settlement coupled with the signature of Dean’s counsel. The Fourth District reversed, citing Gordon, and agreed that there is an absolute requirement that a mediated settlement agreement be signed by all parties and their counsel.

More recently, the Second District affirmed the rather binary rule set forth in Dean and Gordon when it affirmed a denial of a motion to enforce a settlement which lacked the requisite signatures called for by Fla. R. Civ. P. 1.730. The Second District’s opinion in Parkland Condo. v. Henderson, 350 So. 3d 484 (Fla. 2nd DCA 2022) was predicated upon facts which evidenced a continuing negotiation which took place after the actual mediation proceeding concluded without a formal impasse. The court noted that the purported settlement was unenforceable despite the fact that multiple emails were exchanged which, taken together, indicated a clear and unequivocal agreement to the subject settlement terms.

The Parkland Condo. court pointed out in its ruling that if the same communications were exchanged in a context other than a court-ordered mediation, that it would have been inclined to enforce the purported settlement. It should be noted that the rulings in the Gordon and Dean cases also leave open the possibility of a less stringent approach in the context of a mediation which is not court-ordered and certainly in the context of ordinary non-mediation communications between counsel. Nevertheless, these cases clearly demonstrate that the observance of best practices for documenting a settlement agreement in any mediation context requires the signatures of all parties and their counsel. Anything less invites overwhelming risk and uncertainty, not to mention the potential for client aggravation and expense.

There are occasions when counsel or the parties express the lack of a real need, and perhaps the patience, to complete a signed agreement. One common excuse to dispense with formal documentation prior to releasing the participants from the mediation is that counsel know and trust one another. Here is an evaluation of two scenarios that demonstrate the dangers of this approach.

We begin with a scenario wherein we have reached settlement in a tort case involving a catastrophic spinal cord injury. A settlement is reached in the amount of several million dollars and one of the factors which highly motivated the defendant’s insurer was the plaintiff’s development and presentation of a life care plan for the plaintiff which called for several million dollars of future care. Let us assume that the mediated settlement was simply memorialized by an exchange of emails between counsel. Then, let us assume that the plaintiff tragically dies in his sleep that night after the mediation.

Next, let us assume that the insurance carrier asks defense counsel to advise them if there are any available legal means by which they could avoid the mediated settlement agreement and re-negotiate the settlement with the plaintiff’s estate based upon the changed circumstances and the obvious absence of any need for future damages. We can even assume that defense counsel advises this important insurance carrier client that they are unwilling to advance any arguments to avoid the settlement because they feel that plaintiff’s counsel trusted them and they would not want to violate that trust. In this scenario, might the insurance company transfer the file to another law firm with the instructions for that firm to explore and advance all available legal arguments to avoid the enforcement of the settlement? One does not have to be overly cynical in order to envision the possibility that the improperly documented settlement may be very much at risk.

The second scenario is a simple case of settler’s remorse. Envision a long and arduous mediation which ultimately produces an agreed settlement. Once again, counsel trust one another and simply exchange emails to memorialize the settlement. The next morning, the plaintiff contacts their attorney and indicates that they have changed their mind. They instruct their attorney, as they are perfectly entitled to do, to advance any and all legal arguments available in order to avoid the enforcement of the settlement agreement. In this case, plaintiff’s counsel is certainly free to advise their client that they are unwilling to advance any such arguments against enforcement as they are morally certain that the individual plaintiff agreed with the terms of the settlement and clearly expressed that agreement at mediation. Considering the case law noted herein, however, is Plaintiff’s counsel ethically permitted to advise their client that there are no legal arguments available to avoid enforcement of the settlement agreement?

As in the scenario above, plaintiff’s counsel is free to terminate the representation, however, this leaves the case most likely unsettled and, at best, in an uncertain limbo while the individual plaintiff seeks out new counsel to advance their available arguments. If Plaintiff’s counsel elects to terminate the representation in this context, how does this impact fee entitlement given that the representation would effectively be terminated by the lawyer based upon their moral preferences? This undesirable situation exists simply as the result of failing to properly document the settlement which was reached at mediation.

Prior to the pandemic it was typical, upon reaching a successful resolution, that the mediation participants would simply write an agreement by hand, perhaps using elements of a pre-prepared form, which would then be signed by counsel and the respective parties. Since the onset of the pandemic, however, the vast majority of mediations in Florida are conducted via video conference. This development presents obvious logistical challenges to the documentation of a mediated settlement agreement. Nevertheless, a formal agreement is certainly not any less necessary under Florida law. Moreover, there are several technological solutions which are readily available to address these new documentation challenges.

Certainty and closure are two of the greatest selling points which mediation offers to the parties engaged in a dispute. Adherence to best practices regarding documentation of a settlement is the only way to reliably ensure that the parties receive the benefit of their hard work in sticking with the mediation process and reaching a resolution of their dispute. After all, the most challenging part of mediation is reaching settlement in the first place. Every settlement deserves proper documentation, even when it is late and even when we are all tired and ready to go home.