Mediated Settlement Agreements Explained: Samples & What to Consider

Mediated Settlement Agreements Defined

A mediated settlement agreement (often referred to as a MSA) is the final agreement that occurs after, and as a direct result of, a court-annexed or private mediation. This binding agreement can address many different issues, including property division, spousal and/or child support, and child custody. Within family law contexts, a mediated settlement agreement comes after various other dispute resolution methods have been tried, namely negotiation, until a final resolution has been reached.
As a general matter, a mediated settlement agreement will follow the same general guidelines as any other legal agreement. A MSA will include several different clauses that encompass the entirety of a given issue, such as a parenting plan, for instance. For parents, their parenting plan (as contained in their MSA) will include a detailed breakdown of visitation, parenting time schedules, and even provisions on how to handle parenting topics such as healthcare and school choice—even if it has never been discussed before and therefore may be seen as unnecessary by one or both parties. The fundamental purpose, however , is to provide a complete picture of a given topic so that the parties create a roadmap that all parties can rely on should they need to return to court and cite the MSA in order to enforce certain obligations.
Some additional clauses that are typically contained in MSAs include provisions for the eventuality that a party becomes unable to fulfill their obligations, which may exist in terms of healthcare and its corresponding costs, or the process through which a material change of circumstances may allow either party to modify their obligations. These clauses, however, are just a few of the many that can be included and customized.
Pursuant to Title 71, Rule 11 of the Texas Rules of Civil Procedure, all mediated settlement agreements are enforceable, if they contain the following elements:
Whether a MSA is entered into without formal mediation or during mediation efforts between the parties, they are generally always enforceable by the courts so long as they are clear, concise, and completed in compliance with law. Reflecting the good faith of the mediator(s) ability to customize a private agreement or of the parties themselves who are able to independently come to an agreement, a MSA can be a great way to move on with life for those who wish to avoid costly and lengthy litigation.

Components of a Mediated Settlement Agreement

A mediated settlement agreement (MSA) should contain all the necessary information for both parties to understand and agree on. At a minimum, it should identify the parties, set out the terms of the settlement, include a confidentiality clause, and include signature blocks for all necessary parties. Let’s go over each of these components in more detail.
Parties
The identity of the parties is vital in the MSA. Even if it wasn’t important in the past, there is no guarantee that the parties won’t have a change of heart before they sign. It is vital to include the name of the individual and, if applicable, their business/organization name. It may also be helpful to include their phone number and address for easier contact if need be.
Terms
The terms are, naturally, the most important part of the MSA. If there are payment terms, such as installments or interest, it is best to write the specific amounts, any associated deadlines, and late fees. When establishing the terms, any both parties should consider the state laws and their respective financial situations.
Confidentiality Clause
Sometimes, parties are comfortable continuing to go through mediation, but don’t want the terms to be known by anyone else. Including a clause in the MSA to that end may help the joint discussions come to a closure. Again, both parties should pay attention to state law, as some states require certain disclosures that can’t be avoided.
Signatures
Finally, all the necessary parties should sign the MSA in order for it to take effect. Any amendment, however, does not necessarily need to be signed until all parties have transitioned to a formal contract, based on state law.

Advantages of a Mediated Settlement Agreement

Mediated settlement agreements draw from an age-old custom of peacefully resolving differences. The wisdom of this approach is apparent when analyzing its practical advantages over adversarial litigation. When a mediated settlement agreement is reached, financial and mental resources are preserved, and control over desired outcomes is maintained by the parties.
Consider just a few of the scenarios that explain why mediated settlement agreements are often preferred to litigated agreements:
Cost-Effective For most people, one of the primary advantages of a mediated settlement is the potential for cost savings. When financial resources are spent in litigation, less is available for settlement. In contrast, mediators often save the costs of the adversarial process. This enables parties to spend more of their resources on settlement creativity. Without the expense of separate fact investigation and expert fee expenditures, matching reasonable expectations with compromise can work wonders in a well-prepared mediation.
The Reality: If you have personal knowledge of private litigated settlements or mediated settlements, you know too well that some civil cases continue for long periods of time, adding to the total expense of the case. No party is immune to paying another to conclude a matter, except those parties willing or able to maintain the status quo as long as it takes to wear down an opponent to pay more or accept less. Personal and business interests are too valuable to allow cost of litigation to stall resolution.
Quick Resolution Mediated settlements tend to be accomplished within a matter of weeks or months after the date of a first meeting, providing (a) justice sooner; (b) cashflow sooner; (c) less stress over continued uncertainty; and (d) a road map moving forward that will guide decisions more consistently.
Parties Control Final Outcomes Unlike the traditional litigation model, (a) there is no jury or judge to impose a decision on the parties; (b) there is no court order to include terms not acceptable to the parties; and (c) there is no winner or loser to suffer from having the best deal withdrawn because an appeals court interfered. Instead, the parties address each other with candor and sincerity to explore if what may appear impossible is achievable because it is important to healing or to a needed fresh start. Behind closed doors, substantial matters that would not achieve settlement through opening statements and cross-examination may be settled through simple, direct discussion. Mediators know how to open dialogues that aid in resolving critical issues and that meet underlying interests.
Confidentiality In the absence of an opposing lawyer or a court reporter, a private mediator protects a party’s interests in a way not possible through normal communication tools. The parties are active participants in exploring and discussing opportunities to maximize the benefits of settlement without adverse results. Mediators also know how to ensure that any resulting mediated settlement agreement is final under the laws of the state where it is signed and will be enforced in the future. Such a document contains much more than index number references and property descriptions.
An effective mediator can be a master at finding ways to get past the impasse created by lawyers who put clients into a win/lose mode. Just as a mediator should keep the lawyers out of a substantive negotiating role, the mediator should keep the lawyers out of the settlement process. The more the mediator can keep lawyers out of the settling parties’ way, the more likely it is that significant progress will be made toward concluding the matter.
Most often, the best settlement agreements are the result of creative ideas that come from the parties themselves with the incentive to settle on terms that work for them. Rather than allowing a lawyer to place self-imposed limits on a party’s ability to explore possibilities (the win/lose rigid structure), mediators often find creative negotiated settlements that exceed the limits imposed by the adversarial approach. While most litigants will insist on legal review of the settlement agreement, it is the creativity of the parties that often unlocks the door to settlement.

Mediated Settlement Agreements Sample Template

Below is a sample of a typical mediated settlement agreement, which is provided here for illustrative purposes only. Each case is different, and your attorney will know what to include in order to make sure your agreement meets the requirements of your situation and applicable law.
In this sample, you will see the usual elements outlined and described separately, followed by enough space in between each item so that you can jot down very specific details unique to your personal situation. Use the same approximate format, but be ready to do some additional research on some topics for which there are no standard agreements. This package is a good start, but it doesn’t cover everything, and it won’t cover everything in your case, either.
"There are many sections and sections are often further subdivided. For example, you should not divide property into two categories, marital and separate, because of possible subsequent disputes as to whether an asset was separate or marital. It is recommended that property be described with all of its identifying characteristics. Upon review by the Judge/Commissioner, the district court can then determine which property is subject to distribution and the value associated with each item. Most importantly, this type of approach ensures that there is no ambiguity as to what was agreed to by the parties.
Mediated Settlement Agreement
"This will serve as a sample template to be used in the preparation of your mediated settlement agreement. This is simply a guide to give you an idea of the type of information to be included and the subject matter to be addressed in order to make sure that the agreement is truly reflective of your intent and hopefully will answer questions that might be asked at a later date between you and your spouse.
(This is where you insert the names of the parties, the date and the jurisdiction. Some people prefer to include an attorney/co-counsel for either or both parties to be copied on the package.)
(This is where the first paragraph would go. You should start with something simple like:
This settlement agreement incorporates the results as contained in the parties’ comprehensive spreadsheet prepared at mediation and incorporated herein. The parties hisby acknowledge that they have each had this spreadsheet carefully reviewed by their respective counsel and have fully considered the ramifications of their complete agreement. There are no other agreements, promises or representations other than those contained in this agreement and attached spreadsheet."
Item #1 (Your description of first item of property – for example this could be the spouse’s car, such as their current car, and outlines the vehicle make and model, as well as any liens or loans on the car, and information on how that remaining loan will be divided among the parties.)
Item #2 (Same as above, but for wife’s car and any other property item of interest.)
Notes/Comments (This is an example of the types of notes, comments, and other details you may wish to include throughout your agreement. See more examples in the "Sample Mediated Settlement Agreement Template" section of the article.)

Ensuring Enforceability of Agreement

Any mediated settlement agreement is not automatically legally enforceable. You will want to observe the following steps in order to assure enforceability. It should be clear in, or readily deducible from, the agreement what each party is to do to fully perform its obligations under the agreement. The terms of the agreement should evidence that there was a meeting of the minds between the parties as to what each of them is to do. Each party may be considered to have necessary contractual capacity, except in very limited instances. A parent incapable of giving consent to a divorce may have a judgment in his or her favor claiming that because of a disability that even the parent was incompetent to consent to a divorce, grounds under the circumstances may be said to exist. A minor or incapacitated adult may similarly claim that the existence of the disability makes a judgment against him erroneous, even under those circumstances where a disability may exist, such as being a minor. The parties will want to be forever released from any further obligation between themselves; for example, as to periodic payments of alimony or child support and to be able to guarantee that one of the parties will not seek more money from the other . In other words, you want to accomplish the goal that each could ever successfully sue the other, except as to the performance of that which is mandated under and by the terms of the agreement. If the agreement is placed in a judgment form and that judgment is merged into the court record, one party could sue the other only for that which is not performed under the specific and express terms of that agreement. By having a judgment entered in the pendente lite divorce, each party would be subject to contempt allegations by the other and could be sanctioned. Conciliation conference office statements are automatically incorporated into judgments of divorce as per HOFFMAN v. ACCUOSTIC STUCCO SYSTEMS, INC., 328 N.J. Super. 51, 58, 743 A.2d 871 (App. Div. 2000) and claims could be made in that court based upon a conciliation conference office statement. Ordinary negotiations could take years with the attending costs and risks, and if the original settlement agreement falls apart for any reason you would want the ability to bring it into court and seek a protected judgment. The language in a judgment will be binding on the court and hence is perpetually applicable to enforcement.

Pitfalls to Avoid

Common mistakes to avoid when drafting a mediated settlement agreement can mirror those made with any other settlement agreement; however, the nature and timing of mediation make these mistakes particularly troublesome. Since a mediated settlement agreement is typically reached within very tight time constraints, mistakes are not easily correctable. The parties must be careful to draft clear, concise, and complete agreements to avoid complications after a settlement has been reached.
The first mistake commonly made is the use of language that is vague or ambiguous. Such language can cause a settlement to be rejected or may lead to old arguments resurfacing after a settlement has been reached. A mediated settlement agreement should specify the terms of the settlement clearly so as to not leave room for confusion, assumptions, or #interpretation.
A second mistake is the failure to address all of the issues involved in the case. If all issues are not addressed, there is a chance that some unresolved issue will come back to haunt the parties later. Failure to consider all issues may lead to one party coming to court months after a settlement is reached, seeking to enforce or litigate an issue covered by the settlement only to have a judge reject the request as outside the bounds of what had been agreed to in the settlement.
Another common mistake is that the mediated settlement agreement does not properly reflect the requirements of state law for such an agreement to be enforceable. Some states require a judicial order, a notarized signature, or the presence of witnesses during the execution of an agreement for the document to be legally binding. Failure to comply with such requirements may result in the settlement being unenforceable. If, for example, a party fails to properly sign a mediated settlement agreement, the case may need to go back to the judge to ensure that the required signatures are on the agreement.

Obtaining Assistance in Preparing the Agreement

While an attorney does not need to prepare the mediated settlement agreement, it’s highly advisable to consult with legal counsel. Attorneys have the experience, knowledge, and skills that come from having drafted hundreds, if not thousands of contracts, so mediating parties should take advantage of that experience. Attorneys understand the law, and they know what constitutes a valid agreement. They can guide parties through the process and make sure the agreement is legally sound. Parties should also consider that if they do not hire attorneys, they are dedicating themselves to learn the law in a number of different areas, as the entire agreement must be legal on its face.
Furthermore, simply because parties "talked a good deal" doesn’t mean they’ve thought of everything. An attorney knows what provisions are standard, what are non-negotiable, and what are considered out of the box. For instance, some parties such as are certain that their divorce will be granted at the first opportunity or are comfortable anticipating the outcome of a contested matter, and are perfectly happy to have a provision in an agreement that says if XYZ occurs, then ABC is the result . A party may have a sense that there is something special about his or her house, business or retirement benefits but not appreciate how those assets are valued. Another party may know only that the other drove a BMW and think that means he or she is wealthy, without appreciating the extent of that party’s assets.
Parties can always modify a boilerplate (i.e., standard) provision to fit their situation or eliminate it if it doesn’t apply. In other words, a party need not keep a provision just because it’s standard. That said, parties should be well aware of why they are eliminating that provision or modifying it. A less common occurrence, but still relevant, is when parties want to include something that’s not considered boilerplate or standard, or unrelated to a specific event that may occur in the future. Even if there is no boilerplate that draftsmen of settlement agreements would ever draft, a knowledgeable attorney can suggest how to create it legally, who has what obligations, and how the parties can enforce it. These agreements can also create rights of first refusal for real estate or businesses among other things.