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Settlement Process

It has been reported that 95% of all lawsuits settle before trial. The settlement process is complicated and an experienced negotiator is essential to obtaining maximum compensation. Maximum compensation isn’t just about money; it is about good terms. A settlement allows both sides to control the terms of settling the issue. There are many positive terms in an agreement that can be helpful to an employee in a sexual harassment case. For example, asking for a neutral job reference letter, or asking that the terms of the agreement remain confidential. Other important terms include addressing what happens if the terms are violated and addressing how any inquiry by a third party will be handled. And it is very important that an attorney reviews any agreement you will sign because once it is signed, you can’t undo it. Sometimes the language can get tricky and the employee may misunderstand want a paragraph really means.

The alternative is to allow a judge or jury determine the outcome and thus terms of settling the issue. By having a judge or jury determine the outcome, both sides take risks and the process takes a longer period of time. A jury may not like something about you and may not wish to compensate you adequately. Or perhaps the jury feels bad for the business owner and thinks a large amount will put the business, out of business. Additionally, both sides incur legal fees, which could become excessive. It is incumbent upon an employee to ensure favorable terms are reached because the employee will have the case follow her around for the rest of her working career. The money received is nice, but the other issues that can be addressed during settlement are just as important. Don’t get so focused on the money that you lose sight of the other important items.

Settling a lawsuit is usually in the best interest of both parties. The other side doesn’t want the negative publicity and doesn’t want to pay legal fees. Additionally, the other side will have to devote manpower resources to continue with a lawsuit and that is both expensive and diverting of the business focus. It is my experience that the company ends up firing employees during discrimination investigations because all sorts of unprofessional conduct gets uncovered. This plays nicely into the hands of the employee who has been fired and is filing a complaint.

The most important point in the settlement process is to get the attorney involved early. Making sure the proper evidence and witness statements are obtained is very important. Along with a demand letter, I always send out a preservation of evidence letter. This puts the pressure on the company to save evidence and not allow it to be destroyed. This evidence includes text messages, emails and any paper items like calendar entries. Once the company knows they are not going to be allowed to sweep the entire matter under the rug, they are more likely to settle the case.

The cardinal rule for settling is to settle from a position of strength. The more facts you have and can show the other side, the larger the settlement. It isn’t enough to just allege facts, you must have some proof of the facts. This is where my office can help maximize your potential settlement. A well written demand letter with supporting exhibits will maximize your claim and be in your best interest.

Another issue involving settlements are taxes. Whether you settle your case or get award money from a Judge or Jury, you have to pay taxes on the money. Depending on the claim some or all of the money may be paid using form 1099 as opposed to being paid as income. When paid as income, social security and medicare taxes are taken out of the proceeds. However, getting paid via 1099 increases how much money you take home as there are no social security or medicare taxes taken out. Of course either way, at the end of the year you must pay federal and state income tax on the money you receive. An experienced lawyer can explain that too you and navigate how best to proceed.

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