Things to Know When Reviewing a Settlement Agreement


A settlement is an agreement between disputing parties that is reached either before or after court action begins, and essentially marks the conclusion of your civil claim. The settlement agreement is a document that memorializes the terms and conditions the parties have agreed upon, and if breached there could be legal consequences. The terms in an agreement can include monetary compensation, a listing of services to be performed, or obligations of confidentiality. In employment cases, the settlement agreement includes a release of claims in exchange for monetary compensation.


Structured Settlement Agreements
You receive a payment within a set time or set intervals of time. In the case of a large sum of money, the opposing party may offer to pay you in installments. The payment schedule for a structured settlement is decided upon between you and the other party. It can be paid monthly, yearly, or over a few years. If you want immediate payment in full, this is not the settlement type we would suggest.

Lump-Sum Settlement Agreements
You receive payment in full and at once. If you decide to take a lump-sum settlement, you must consult with a tax advisor or your accountant on what taxes you may need to declare in the future as a result of this lump-sum settlement.

Temporary Life/Joint Survivor Annuity Agreements
Temporary life and joint survivor annuities are similar in that they both pay you a set settlement over the course of your lifetime. The difference between the two is that a joint survivor annuity continues to pay a previously selected designated individual after you die. Unlike a temporary life annuity, that simply ends when you die.


Regardless of what type of settlement agreement you are entering into, or have already received, there are a few things that apply to all settlement agreements and are very important to be aware of:

  • Be sure to look for any release of claims clauses within your settlement agreement. Release of claims clauses restrict an individual’s ability to file subsequent litigation on any current or present claims, and inadvertently signing one could significantly limit your ability to pursue legal action with respect to this matter, or these parties.

  • Be sure to review the confidentiality clauses carefully. Your settlement agreement may contain a confidentiality clause, which guarantees what both parties are able to discuss, as far as reasons for having a case, the service, and any good or dollar amount received from the case.
  • Be sure to double-check the amounts and dates in which you will receive the settlement proceeds and whether they will be monetary, material goods, or services.

  • Be sure to review any revocation and/or consideration periods to ensure no deadlines are missed. A settlement has a period of time, usually in days, that you have to review and sign the agreement. That time is called a consideration period. If you happen to sign the agreement and decide, later on, that this is not what you wanted. A settlement agreement will also contain a revocation period, which is a period of time during which you can revoke, or cancel, the agreement.


Settlement agreements can be very complex agreements and since they are binding contracts with significant financial and legal implications, it is a good idea to have an attorney review your settlement agreement prior to signing it. Please be sure to contact the attorney before the expiration date of any consideration period, or revocation period if signed.


If you have questions regarding a settlement agreement that you have received or have general questions regarding settlements and where they fall in the civil litigation or non-litigation processes, please contact our firm here. Someone from our firm will contact you shortly to discuss your case.

Reviewing a Federal Settlement Agreement Checklist