Pierringer Agreements

By some estimates, the cost of a three-day trial in civil court can amount to more than $60,000.

With costs in that range, it may be in your or opposing parties best interest to settle a civil suit before going to trial. But can you do that when you’re involved in a multi-party litigation?

In those situations, you might consider a Pierringer Agreement. These useful tools have benefits for both plaintiffs and defendants in multi-party suits, up to and including cost-effectiveness.

What Is a Pierringer Agreement?

A Pierringer Agreement is a type of settlement agreement that was originally developed in the United States. It was designed to address one of the more common issues that occur in multi-party actions. That is, it’s a tool that allows for partial settlement in actions that involve multiple defendants.

In an action with multiple defendants, it may happen that some of the defendants are willing to settle while others are not. Using a Pierringer Agreement, the plaintiff may settle with the defendants who are prepared to come to an agreement.

Those defendants are then dropped from the litigation and the remaining defendants proceed to trial. The non-settling defendants are only held responsible for the loss that they caused.

What Are the Benefits?

Pierringer Agreements offer a number of benefits for both the plaintiff and the defendants in multi-party actions. Beyond being user-friendly and helping to simplify the settlement process, they’re also cost and time effective.

1. User Friendly

A Pierringer agreement works as follows:

  1. The plaintiff and defendant come to a settlement that includes only the damages of that particular defendant.
  2. The plaintiff discontinues the action against that defendant and, as such, the claims against that defendant are extinguished.
  3. Formal amendments are made to the pleading and the defendant is removed from the action.
  4. The agreement is signed and the plaintiff immediately receives payment in full and final satisfaction.
  5. The action is continued against the non-settling defendant. Those defendants are responsible for only their share of the damages.

As you can see, Pierringer Agreements are user-friendly and straightforward. That’s especially true in comparison to similar tools such as Mary Carter agreements.


2. Simply the Settlement Process

Multi-party actions can be – and usually are – a lengthy and frustrating process. That’s true for both plaintiffs and defendants. Disagreements between the parties involved, different policies for settlements, and a variety of litigation practices are just some of the complications that arise during the settlement process.

But using a Pierringer Agreement to settle with some of the defendants means that these complications are somewhat minimized. It also means that you receive a guaranteed settlement amount, and you receive it right away.

3. Overcome Differences Between Defendants

In many cases, the plaintiff of a multi-party action isn’t the party complicating the settlement. Indeed, disputes between defendants are more likely to impede a resolution.

For example, some insurance companies have settlement policies that look for quick and fair resolutions. Other policies may take a hardline approach. These same issues might arise between the lawyers and adjusters involved.

When some defendants are willing to come to an agreement while others are not, a Pierringer Agreement helps plaintiffs overcome the differences between defendants.

4. Benefits for Defendants For Settling Defendants

A Pierringer Agreement helps avoid common complications in trying to reach a global resolution. Once they’ve settled, they no longer have stake in the action, saving them both the time and money involved in a prolonged case. That’s especially true if the action ends up going to trial, which can be costly.

For non-settling defendants, they’re only responsible for the damages they caused. They will not be held responsible for the loss of the settling defendants.

5. Settlement Privilege

Non-settling defendants are entitled to see all of the non-financial terms of the Pierringer Agreement. That includes any relevant documents as well as any evidence that the settling defendants has.

However, non-settling defendants are not allowed to see the amount of the settlement in the Pierringer Agreement. That’s because the financial terms of the agreement fall under settlement privilege. Therefore, plaintiffs need not be concerned that the Pierringer Agreement effects their settlement when the action goes to trial.

6. Cost-Effective

Perhaps one of the greatest benefits of a Pierringer Agreement is its cost-effectiveness. It’s true that a negotiated settlement is typically more desirable than trial, which carries both financial risk and expense.

When the agreement is signed, plaintiffs receive money upfront. They do so without having to prove their claim at trial. Those funds may also help them finance their lawsuit against the non-settling defendants, covering at least some of the costs of their trial.

When to Use a Pierringer Agreement?

Pierringer Agreements are designed for multi-party actions. This makes them a useful tool in class proceedings, for example. Class actions usually bring claims against a number of defendants and this is a method for settling with some of the defendants while the lengthy class action continues against the others.

Another situation in which Pierringer Agreements are helpful are in personal injury cases. Some personal injury cases involve holding more than one negligent party responsible for your damages. These cases can be lengthy and financially draining without Pierringer Agreements that allow for partial settlements before heading to trial.

However, in both cases, a very clear value of the case and the appropriate settlement amount must be worked out between plaintiffs and their lawyers. In the case that a plaintiff settles for less than what a trial finds they’re liable for, that amount can’t be recovered.

Involved in a Multi-Party Action?

If you’re involved in a multi-party class action suit or a personal injury case that involves more than one defendant, the process for receiving your damages may be long and financially risky. Using a Pierringer Agreement can help simply that process and guarantee you a settlement amount.

But before considering this option, it’s imperative that you work with a lawyer who understands the value of your case. Settling for less than what your case is worth will result in less compensation than you’re entitled to. Talk to Sharma Law before proceeding in your suit, and we’ll help you figure out the best way forward.

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