Friday, July 29, 2005

Enforcing Settlement Agreement v. Attorney-Client Privilege

According to this article in the New York Law Journal, a Federal Court judge in the Southern District of New York has ruled in G-I Holdings, Inc. v. Baron & Budd, et al., 2005 U.S. Dist. LEXIS 14128 [S.D.N.Y. July 13, 2005] that a party may not pierce the attorney-client privilege to discover what advice the attorneys gave to the clients about complying with a settlement agreement which provided, “Plaintiff’s Counsel . . . agrees, unless in the exercise of its independent professional judgment it determines otherwise, to recommend that its clients seriously consider [the] alternative dispute resolution procedure [described in paragraph 7. . .]”. Is this enforceable? How?

The judge ruled that “The problem of how to enforce [the above paragraph] was foreseeable, and [the] failure to insist on contractual terms that specified an enforcement mechanism does not justify the invasion into the privilege that [the party] now seeks.”

What would you do to stimulate the parties’ thinking during mediation as to how a breach of such a provision could be managed?

Have a pleasant weekend!

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