Reaching a settlement agreement is supposed to conclude litigation, right? Well the failure to draft a clear settlement agreement may result in serious repercussions for client and attorney. The Seventh Circuit Court of Appeals recently ruled that a plaintiff is entitled to attorneys’ fees and costs due to a vague offer of judgment.
Under Federal Rule of Civil Procedure 68, a defendant may serve an opposing party with “an offer to allow judgment on specified terms, with the costs then accrued.” If the offer is denied, and the resulting judgment is less than the offer, the defendant is entitled to recover the fees and costs incurred after the offer was made.
In Sanchez v. Prudential Pizza, the defendant submitted an offer of judgment to resolve the plaintiff’s claims of discrimination and harassment. The offer of judgment included “all of Plaintiff’s claims for relief” but made no specific mention of costs or attorney fees. On appeal, the Seventh Circuit held that any ambiguities in an offer “are resolved against the defendant,” the offerer. According to the court, since the offer of judgment was silent on this issue, a plaintiff would improperly be forced to “guess” at the meaning of the offer. As a result, the Seventh Circuit awarded the plaintiff attorneys’ fees and costs on top of the judgment.
The lesson is clear. An attorney must be specific and precise when drafting any type of settlement agreement. Relying upon vague and general terms in any form of a settlement communication is a recipe for malpractice. Here, the vague settlement language forced the defendant/client to pay more than it intended and has exposed the attorney to a malpractice claim. An attorney must sprint through the finish line; i.e. provide zealous and careful representation of all clients until the matter is fully and completely resolved.