Informal Settlement Agreements

Not to be confused with “mediated settlement agreements,” an “informal settlement agreement” is another avenue of resolution that can be used by parties in an effort to settle their disputes – in this case, without using a mediator.

An informal settlement conference may be held by agreement of the parties. There are very few formalities to it. In fact, if the parties agree, their attorneys don’t even have to be present, though settling a case without your attorney there to advise you can certainly be dangerous. We recommend retaining the services of an experienced informal settlement agreement lawyer before agreeing to anything on your own.

If the parties come to a resolution during their conference, the terms of that agreement may be put into an informal settlement agreement. Once papered, that agreement will be binding on the parties if it provides a prominently displayed statement that is in boldfaced type or in all-capital letters or underlined, that the agreement is not subject to revocation. It also must be signed by each party to the agreement and by the attorneys, if they are present.

The court does not have to accept the informal settlement agreement if it finds that the terms are not just and right (or fair). In that event, the court may request that the parties submit a revised agreement. If the parties don’t want to or can’t come to a different agreement, the court may set the case for a contested hearing. But if the court finds that the terms of the informal settlement agreement are fair, those terms will be binding. That means either party will be entitled to a court order that reflects the agreement.

A “Rule 11 agreement” is different than an agreement reached via an informal settlement conference. It is a shorthand version of the terms of settlement of part or all of the case. It must be in writing and signed by the parties. But unlike the agreement from an informal settlement  conference, either party may withdraw their consent to the agreement any time before the court has rendered a decision based on the Rule 11 language. If that happens, the other party is not completely out of remedies. They may enforce the Rule 11 as a contract, using contractual theories of law to do so. That might help in the division of assets and debts or in the payment of moneys, but it will have little, if any, effect on issues involving children.

Measures can be taken by your lawyer to avoid the traps and problems that can come up with such agreements. The attorneys at Orsinger, Nelson, Downing & Anderson are familiar with the many different types of informal settlement options in Texas.