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Release Agreements

By Aaron Larson
March, 2005

Contents

When you settle a personal injury case, you will typically be expected to sign a release agreement as part of the settlement. The release agreement will typically be prepared by the defendant's insurance company, and will be worded in the broadest possible terms.

Read The Agreement Carefully

Frequently, the initial draft of a release agreement will be exceptionally broad. It is not unusual for a proposed release agreement to extend to any claims that the plaintiff may have against the defendant, even if those claims are not yet known (or are being intentionally concealed by the defendant). Similarly, it is not unusual for a proposed release agreement to extend to parties other than the defendant, such that any possible defendant, known or unknown is also released. There may be broad indemnification language requiring that the plaintiff compensate the defendant for costs and attorney fees associated with subsequent litigation, and sometimes that language is so broad as to include litigation which the plaintiff does not control and perhaps to which the plaintiff is not even a party.

A plaintiff should avoid agreeing to any terms which extend beyond the immediate parties to the agreement, and will sometimes benefit from an express limitation in the settlement agreement that the only party released by the agreement is the defendant. Similarly, a plaintiff should avoid providing a blanket release of "any and all claims" unless the plaintiff can be certain that no other claims exist. For example, a worker settling litigation over unpaid overtime shouldn't sign a release agreement that extinguishes the employer's right to bring an action over exposure to hazardous materials in the workplace - the ramifications of which may not be known or knowable for years. Similarly, a plaintiff should not sign an agreement which suggests that the plaintiff might be obligated to reimburse the defendant for a subsequent suit to which the plaintiff might unknowingly be made a party, such as a class action lawsuit.

"Meaningless" Language?

Sometimes the defense lawyer, or even the plaintiff's lawyer, will insist that extremely broad language is "meaningless", and that you shouldn't worry about signing an agreement because of clauses which "have no meaning" or "won't be enforced." First, in my experience, defense attorneys don't fight very hard to keep overbroad language in release agreements - typically, they will quickly consent to the striking of any such language from the agreement. Second, defense attorneys are not including the broad language because they find it to be fun to do so - they are anticipating the possibility that the language may in fact block a subsequent, unrelated lawsuit. Third, sometimes courts issue peculiar rulings, and release language which was formerly believed to be unenforceable or to have no legal significance can suddenly become very damaging.

Negotiating Changes

As was just suggested, defense attorneys are typically very receptive to the modification of release agreements to remove extraneous provisions and overbroad language. By the time a settlement agreement is being exchanged, the defense attorney has little incentive to draw out the case over a clause which he may be simultaenously representing as "insignificant", "meaningless" or "without effect." As a matter of routine, plaintiff's attorneys should seek to remove any such language from settlement agreements before their clients sign them.

About The Author
Aaron Larson is a Michigan lawyer whose practice emphasizes civil appeals and litigation consulting. Copyright © 2005, Aaron Larson, all rights reserved.
Disclaimer
As legal advice must be tailored to the specific facts and circumstances of your case, information cannot substitute for the advice of qualified legal counsel. All information on this website is believed to be accurate as of the time it was authored. However, due to the possibility of changes in the law since that time, and as personal injury laws can vary significantly from state to state, you should verify any information you find on this site with a licensed legal professional in your state. All information on this site is presented on an "as is" basis. Your use of this site does not create an attorney-client relationship.