Agreeing About How to Disagree — Litigation Prenups
In the Wisconsin Law Journal, Jack Zemlicka comments on a so-called “litigation prenup” that aims to make litigation more efficient. These types of agreements may limit the amount or type of discovery, require pre-litigation dispute resolution techniques, both formal and informal, or identify particular issues or information that is off-limits in the event of a later dispute. As always, Zemlicka makes good points, but in this case he doesn’t discuss the risks of agreeing now on how to disagree later. 
Negotiating the agreement early in the relationship, when each party is anxious to do business with the other, carries both risks and benefits. One obvious benefit is that, during the honeymoon stage, neither party believes that the relationship will later sour, much less end in the courtroom — as a result, the negotiation of limits on future litigation is much easier than hammering the same agreements out between opposing counsel after the suit’s been filed. On the other hand, that same honeymoon stage feeling can cause a party to give away more than is prudent to get the deal done, perhaps negotiating away the one unforeseen advantage it may have when the process server comes knocking. As we trial lawyers are fond of saying (at least I am), you can plan for everything but what actually happens.
While the litigation prenup is based on a great theory — that everyone wants efficient litigation — it has its drawbacks, and should be entered into carefully, if at all. Many of the same benefits can be later realized by hiring reasonable counsel (as I’ve previously written about) without the risk of dealing away advantage.
Handshake courtesy AndyRob’s flickr gallery via this creative commons license.
