Clients often have the same concerns when reviewing the legal terms of a settlement agreement. Understanding these concerns early can help you to avoid future disputes and ensure both parties get to a fair and balanced agreement
This article outlines the top concerns clients have about settlement agreements, based on real project data on ContractsCounsel, when connecting with an experienced lawyer for contract review and negotiation.
Note: this analysis comes from thousands of anonymized settlement agreement review postings on ContractsCounsel.
| Concern | Why It Matters | How Lawyers Help |
| Release of Claims | Overly broad releases can waive important rights. | Lawyers narrow scope, add carveouts, and protect against future disputes. |
| Confidentiality & Indemnification | Vague terms can create unfair or risky obligations. | Lawyers clarify language and ensure fair protections. |
| Payment & Enforcement | Unclear payment or default terms cause disputes. | Lawyers confirm deadlines and strengthen enforcement clauses. |
| Clarity of Language | Dense legal terms can hide key obligations. | Lawyers simplify wording and ensure mutual understanding. |
| General Review | Clients want peace of mind their agreement is fair. | Lawyers review clauses, flag red flags, and explain implications. |
| Tax & Future Risks | Settlement payments may have tax or legal consequences. | Lawyers advise on tax treatment and prevent ongoing liabilities. |
Release of Claims and Coverage of Liabilities
Concern 1: By far, one of the most common client concerns is if the release of claims is too broad or fails to cover potential future liabilities. Release of claims refers to agreeing not to sue the other person because you've accepted the settlement. But this comes at a risk that clients want to avoid: waiving important rights without realizing it. That's where the keen eye of a professional can protect you!
How lawyers help: Attorneys review release clauses in the agreement to confirm they only cover intended claims, include proper carveouts (things that are not covered by a restriction or liability), and protect you against future or unrelated disputes.
Confidentiality and Indemnification
Concern 2: Confidentiality and non-disparagement provisions (which prevent someone from speaking negatively about another) are big concerns for clients, who might require some clarification of indemnification terms that could potentially lead to further issues.
How lawyers help: A lawyer will help you understand all these legal terms and jargon, as well as the clause implications. The goal is to protect you and prevent you from taking on obligations that aren't fair.
Payment and Enforcement
Concern 3: Payment is a common cause of misunderstandings and disputes between members, so you want crystal-clear clarity about payment issues in the agreement. It should also include what happens if a member fails to comply and there are delays.
How lawyers help: Your lawyer will clarify the payment deadlines along with default/enforcement provisions - such as terminating the contract - so that actions are legal and enforceable.
Clarity of Language
Concern 4: While they might be simple in theory, settlement agreements often contain dense legal language that’s difficult for non-lawyers to interpret. This could cause you to sign an agreement without fully understanding it, which can have a multitude of negative consequences.
How lawyers help: Clients want clear, straightforward terms that all parties can understand, and that's how lawyers can help. When everyone knows and understands their rights and obligations, this can prevent disputes.
Agreement Reviews
Concern 5: It could happen that you don't have any specific concern about your agreement. Maybe you just want a professional lawyer to check your document so that it's legal, fair, and will protect you in the case of something going wrong.
How lawyers help: Lawyers will be able to carefully read and review your settlement, alert you to any “red flags” in its clauses and help you understand all the terms and implications.
Tax Implications and Future Legal Risks
Concern 6: How does the settlement payment affect your taxes? This, and other tax-related concerns, can be overwhelming. You also want to know that when you sign the agreement, you're not putting yourself at legal risk in the future.
How lawyers help: Lawyers can advise on tax issues in settlement payments. Not only will they alert you to any ongoing responsibilities that fall on your shoulders, but they’ll identify potential ongoing obligations and clear any unintended future liabilities.
Key Takeaways
As a client, you might worry that settlement agreements will confuse you with legal jargon or feature payment timelines that won't meet your expectations. Understanding the tax implications and ongoing obligations is also critical. These are all valid concerns.
On ContractsCounsel, clients can post their project for free and connect with vetted lawyers who draft and review settlement agreements every day. Whether you want a lawyer to write up your settlement agreement or review it for any issues, you can use the services of an experienced professional who's well-versed in all your legal and tax concerns.
