Ah, the dust of conflict is settling. As Hollywood finds its path to resolution after the riveting 2023 Writers Guild of America strike, the talk of the town is now: “What goes into that final, critical document that will seal the deal?”
Whether you’re a writer, a studio boss, or just someone who wants to be prepared for the future, understanding the nuances of a good settlement agreement is vital. Let’s break down the essential elements every effective settlement agreement should have and why they’re so darn important.
1. The Parties Involved:
Why it’s important: Knowing who’s bound by the agreement ensures clarity.
Pro Tip: Always use full legal names and addresses, so there’s no room for ambiguity.
2. The Recitals:
Why it’s important: This section provides context. For instance, referencing the WGA strike helps set the stage for what’s being resolved.
Pro Tip: Though not legally binding, a well-drafted recital section can guide interpretation of the document.
3. The Settlement Amount or Consideration:
Why it’s important: Money talks! But it’s not always about cash. Maybe it’s a change in working conditions or other non-monetary perks.
Pro Tip: Be specific about amounts, dates, or any metrics. Clarity now avoids disputes later.
4. Release of Claims:
Why it’s important: This ensures both parties won’t later re-litigate or re-open the same issue.
Pro Tip: Make sure to include language that covers both known and unknown claims to really close the chapter.
Why it’s important: Maybe Warner Bros. doesn’t want the world to know every behind-the-scenes deal. Confidentiality keeps secrets, well, secret.
Pro Tip: Set clear parameters. Who can’t speak about it? For how long? Are there penalties for breaches?
6. Non-Disparagement Clause:
Why it’s important: No one wants bad press. This clause prevents parties from bad-mouthing each other post-agreement.
Pro Tip: Be careful with the wording. You want to prevent unnecessary harm without infringing on freedom of speech.
7. Governing Law and Jurisdiction:
Why it’s important: If there’s a dispute about the agreement, where and under which laws will it be settled?
Pro Tip: Choose a jurisdiction familiar to both parties and where the dispute arose, like California for our Hollywood friends.
8. Dispute Resolution:
Why it’s important: Sometimes, disputes arise even after a settlement. This provision dictates how those are handled, often via mediation or arbitration.
Pro Tip: Detail the process. Who chooses the mediator? Who pays? Setting this out in advance can save a lot of headaches.
9. Breach and Remedies:
Why it’s important: This sets out the consequences if someone doesn’t hold up their end of the deal. This often includes a hold harmless, defend, reimburse and indemnification provision. For instance, if the Writers Guild faced a lawsuit due to actions by one of its members, this clause ensures the individual member, not the Guild, bears the responsibility.
Pro Tip: Ensure the remedies are proportionate and fair, or a court might find them unenforceable.
10. Representations and Warranties:
Why it’s important: These are the promises each party makes to the other. They’re assurances that underpin the agreement.
Pro Tip: Make sure these aren’t just empty words. If one side promises something, ensure they can and will deliver.
11. Waiver of Section 1542 of the Civil Code of the State of California:
Why it’s important: To put it simply, the fog of conflict can sometimes hide certain issues. Section 1542 aims to protect parties from unknown claims that might have changed their decision to settle. By waiving this provision, parties agree that the deal they’ve struck stands, even if new facts come to light later.
Pro Tip: Before deciding to waive these rights, it’s paramount to weigh the risks. If you’re uncertain about potential undiscovered claims, consider consulting a legal expert. Remember, once waived, even if the Hollywood spotlight reveals new twists in the plot, the story of the agreement remains unchanged.
12. Entire Agreement and Amendment Clauses:
Why it’s important: This confirms that the written agreement is the complete understanding between the parties. Any changes must be in writing and agreed upon by all.
Pro Tip: Even if oral promises were made during negotiations (say, during the strike discussions), if they aren’t in the final document, they’re typically not enforceable.
13. Termination Provisions:
Why it’s important: Just in case things go south, know how to legally end the agreement.
Pro Tip: Specify the conditions under which the agreement can be ended and the process for doing so.
Though the Writers Guild of America strike serves as our backdrop, the lessons here are universal. Settlement agreements are pivotal in ensuring that once the storm of a dispute is over, the skies remain clear. By understanding and including these essential elements, you’re not just signing a piece of paper; you’re crafting peace of mind. So, next time you’re brokering peace, whether in Hollywood or your hometown, make sure your inked deal is as stellar as a blockbuster script.
Mitch Jackson | Private Mediator
Last July I wrote, “The Hollywood Strike: Solutions from a Private Mediator with the help of AI.” In my article I shared an AI assisted issue resolution settlement memorandum generated from the hundreds of pages of articles, positions and arguments of both sides added to our AI dataset. I then forwarded it to friends in the industry.
If the strike is settled, I’m curious to see the actual settlement terms and conditions to see how close my earlier memorandum came to identifying the issues and proposed solutions and compromises.