What is it?
There is an extremely dangerous animal that prowls our halls of justice. It preys exclusively upon unsuspecting litigants, catching them when they are most vulnerable. In fact, your own lawyer, who should be protecting you from this predator, may very well make sure you become its next prey.
We lawyers call this predator a “stipulation of settlement put on the record.” If you succumb to its bite, you may call it an injustice.
What is a “stipulation of settlement put on the record”, and why should you avoid it? Simply put, it is a verbal and binding contract, the terms of which you will likely not understand or appreciate until it is too late, and which you will be pressured and coerced to agree to in court.
Not all contracts need to be in writing
What you need to know is that not all contracts need to be “read” and “signed” by you in order to be binding and enforceable. A “stipulation of settlement put on the record” is one such contract. Unlike written contracts, stipulations of settlement put on the record do not provide you with enough time to review and understand matters that will affect your financial future and the future of your children.
By understanding early on what a stipulation of settlement put on the record is and how it arises, you will be better able to protect yourself from it later on.
Let’s warm up with a little thought experiment
To better appreciate how this dangerous type of contract comes about, let us do a little thought experiment and pretend to buy a car. After shopping around, you walk into the salesperson’s office to purchase a car. While being audio taped, the salesperson verbally informs you of all the detailed costs, payment schedules, provisions, rights, responsibilities, disclaimers, waivers, penalties, and indemnification clauses of the contract. After the salesperson has been talking for quite a while, the salesperson asks whether you understand all of the terms and provisions that you were just verbally informed about. You are asked whether you find the terms satisfactory. You are asked whether you have any questions. You are asked whether you consent to the agreement. You will not be able to review the written terms of what the salesperson just informed you about before it becomes a contract. Nor will you be able to change the terms after reviewing it when it does get reduced to writing.
Would you buy a car under these circumstances, or would you insist on reviewing the written contract before buying the car? Do you think lawyers or judges would buy a car under such circumstances, or would they also insist upon reviewing a written contract beforehand? If you answered “no” to the first half of the question and “yes” to the second half of the question, your instincts are correct.
Now let’s see what happens when you go to court
This is what may very well happen to you when this type of verbal contract prowls our halls of justice. It begins when you go to court, typically when the case is scheduled for a settlement conference or trial, but can occur at other times. While waiting for your case to be called by the judge, or after appearing before the judge who tells you and your spouse to try to settle, you find yourself involved in extensive ongoing settlement discussions and negotiations back and forth typically in the hallway outside the courtroom, perhaps in a small conference room if you are lucky.
Your case is called, or called again, for you to appear before the judge. You, your spouse, and the lawyers are ushered into the courtroom before the judge. In addition to a court officer, there is either a court reporter (stenographer) or a recording device recording what is being said.
Then, seemingly out of the blue, one of the attorneys tells the judge that the parties have reached an agreement. (Hopefully, the attorney’s statement will not come as a surprise to you.) The judge asks which attorney is going to “put the stipulation of settlement on the record”, meaning, which attorney is going to verbally state the terms of the agreement so that everyone can hear it, and it can be recorded.
The details of the agreement are verbally stated
One of the attorneys then begins to state what you and your spouse supposedly agreed to in the hallway and/or with the judge’s assistance, on issues ranging the gamut of grounds for divorce, child custody and visitation (including a very detailed parenting plan), basic child support and child support “add on” expenses (such as medical insurance, uninsured medical expenses, child care, educational expenses and/or life insurance), spousal support, the division of property including real estate, businesses, bank and brokerage accounts, collectibles, personal property, retirement accounts, and other assets, the allocation of debts, attorney’s fees, and so on.
Although at the outset you were told by the judge to listen very carefully to what is being said, you discover that the other attorney or the judge often interrupts with questions, requests for clarification, and/or “off the record” discussions (meaning, the court reporter or recording device is not recording what is being said at the time until the judge says the case is “back on the record”). You find it difficult to listen and keep track of everything. Also, if you are paying attention and do not feel intimidated, you might even say to your attorney “I didn’t agree to that” or “we didn’t talk about that”, at which time further discussions or negotiations may need to take place.
At some point, the attorney will say that what has been put on the record is the agreement and stipulation of the parties. The other attorney may still add a few more points which may lead to further negotiations or discussions.
Then comes the “voir dire”
Eventually, when it is acknowledged by everyone that everything has been addressed, then comes the “voir dire”. This is where you and your spouse enter into a binding contract without ever having read or signed anything.
The “voir dire” starts with the judge swearing you and your spouse in as witnesses. The judge then begins to ask you and your spouse a scripted series of questions designed to ensure an end to the case in the form of a binding contract, and that it will be extremely difficult for either of one of you to change anything later on. With each question you and your spouse answer, it is as if you are signing another letter to your signature to a written contract, except there is nothing in writing to sign!
By this time, you are probably emotionally and mentally exhausted and tired of all the wrangling and legal proceedings, have had enough, and just want to be done with it and either go home and crawl under the covers or go out to celebrate.
The judge’s questions to you and your spouse (along with my comments in parentheses) go something like this:
“Did you hear the stipulation of settlement that was just put on the record by one of the attorneys? (Were you really paying attention and able to absorb it all, or was your mind wandering here and there?)
Do you understand it? (Did you really?)
Do you have any questions for your attorney about it? (If you do not have any questions about it, you are either feeling too numb and overwhelmed to have any questions, or do not remember enough of what was said to ask any intelligent questions.)
Did you have an adequate opportunity to speak to your attorney about the terms of the stipulation? (It’s 4:59 p.m. and you can see everyone is tired and wants to be done for the day. You don’t want to be the one who holds everything up to ask questions, do you, or perhaps come back tomorrow? This could lead to things being renegotiated which could anger those around you.)
Did anyone coerce, pressure, or threaten you into entering into the stipulation? (…other than perhaps the judge or your own lawyer?)
Has anyone made you any promises other than what was stated in the stipulation? (…like, “this will be the end of the litigation”?)
Do you understand that instead of entering into this stipulation, you have the right to proceed to trial but that you are waiving that right? (Well, at least you know it now.)
Do you understand that this stipulation is binding upon you and your spouse? (Do you understand that there is nothing to read and sign before it becomes a binding contract?)
Do you consent to the stipulation knowingly, freely, and voluntarily? (…other than the pressures brought to bear upon you by the judge, your lawyer, and the unfriendly environment? By the way, judges, being also lawyers, like to say things in threes because there appears to be a certain magical quality associated with this number in relation to certain events. When we got married, for instance, it was “love, honor, and cherish.” When we die, it will be “give, devise, and bequeath.”)
Are you satisfied with the representation of your attorney? (You will probably have a better handle on the answer to this question later on after you’ve had an opportunity to read and digest what you agreed to.)
Have you taken any medications or consumed any alcohol which might impair your ability to understand what was just put on the record? (Would you tell the judge if you did? It is interesting that you are not asked: “Is there any medication you should have taken that would have helped you to understand the stipulation?”)
It’s a done deal!
After having asked both you and your spouse the same series of questions, and perhaps a few more just to be sure there is no way out, the judge will then say something like “having heard from the parties and their respective counsel, having heard the stipulation put on the record, and the parties having accepted the stipulation freely and voluntarily, the court hereby accepts the stipulation as put on the record.” The judge will then usually thank you, your spouse, and the attorneys for having worked so diligently to reach an agreement which is, after all, in the best interests of everyone involved.
The transcript of the stipulation put on the record will then need to be ordered, transcribed (put into writing), and paid for. When that is done, you will for the first time be able to read and review what you agreed to.
Although it will be too late at this point, you need to know one particularly important thing…It is a done deal. Later on after you receive the transcript, you cannot change the agreement unless you have a valid legal basis, such as coercion or fraud (and you already told the judge no one coerced or threatened you, and that you entered into the stipulation knowingly, freely, and voluntarily.) Fraud can be difficult to prove, and that means more legal fees and proceedings.
As you get comfortable and start to read the transcript and think that, if nothing else, at least the divorce is finally over, you realize a mistake was made! You did not agree to $79,000.00 being transferred from your account to your spouse’s. You agreed to $29,000.00. The court reporter transcribed the amount incorrectly! What do you do now? You call your attorney. Because there was nothing in writing, are you sure, with all that went on in court, that you did not agree in court to $79,000.00 and, if not, will your attorney be able to convince your spouse’s attorney of an error, and will the other side agree to the correction? If not, did the judge take notes of the stipulation while it was being recorded by the court reporter?
Hopefully, civility and honesty will prevail in resolving the discrepancy.
Believing the worst is over and behind you, you try to get comfortable again to reread the transcript of the stipulation of settlement. Horror sets in! It’s not in there! You read the transcript again. Still nothing! Your attorney forgot to address your receiving half of your spouse’s retirement assets which you thought was agreed to!
This is not how the court system should be serving you
As you can see, there can be disastrous consequences to putting a stipulation of settlement on the record. When stipulations (agreements) are put together under hurried and pressured circumstances, errors and omissions can occur. (On the other hand, those disastrous consequences to you could be a gift to your spouse, or vice-versa—but do you want to take that chance?)
The sad truth is that people have more rights buying a $30.00 telephone than when entering into a stipulation of settlement put on the record. At least the telephone can be returned and your money refunded if it breaks down within the warranty period, or you can return it within a certain period of time if not “completely satisfied”. However, with the stipulation put on the record, absent a legal basis to set it aside, you cannot negotiate a better deal if you do not like the one you made in court.
By doing business this way and resolving cases with stipulations put on the record, lawyers and judges do a disservice to litigants. People are stressed out and anxious when they go to court. People really do not understand everything they are consenting to, let alone the consequences. Most people give their consent and go along with stipulations put on the record because they want to avoid appearing ignorant, or are too embarrassed to admit they really do not understand what is going on. Many people are afraid of angering the judge or their own attorney by not going along with the stipulation put on the record. Some people even mistakenly believe they will have a later opportunity to review and further negotiate a written agreement before signing it.
Consider also that the stipulation of settlement put on the record can be used by attorneys as a kind of shield in an attempt to conceal a lack of preparedness or unwillingness to proceed to trial because, for instance, your money to pay legal fees ran out. Consider also that lawyers who often appear before certain judges want to “please” judges by helping to get cases settled where, often, the most expedient way to get a case settled is with the stipulation put on the record.
The good news
The good news is that you do not have to agree to enter into a stipulation of settlement put on the record! The consent of both you and your spouse is necessary. You can tell your attorney, who will then advise the court, that you will not agree to anything unless it is in writing and you have had time to review it. Why should you be deprived of this right? Hopefully, also, long before you are ever put into the situation described above, the attorneys will have already drafted a written settlement agreement which you have been reviewing and considering along the way, perhaps with the assistance of other professionals such as accountants or financial planners.
But be prepared!
However, be prepared for other pressures to come to bear if you try to protect your rights. The judge may threaten you (if you appear to be the recalcitrant one) that if the case does not settle that day with the stipulation of settlement put on the record, you will have to “proceed right to trial!” The judge may even make other threats, like awarding counsel fees to the other side. (Of course, these threats would likely not be “on the record”.) Or your attorney may tell you in private, after one of those “attorneys only conferences” (the subject of another article) in which you were not present and, so, do not know what was said, that if you do not settle, the judge will “give you nothing” or “you’ll lose custody”.
Do not give in! Step back a moment and think about what is happening. Say to yourself: “Okay, we have a detailed understanding for an agreement. What would happen if I really answered “no” to any of the questions the judge asks me? What if I were to say as my mantra, for instance, “I really do feel very pressured and need to see the agreement in writing?”
However, if the judge still insists you start the trial because the judge will not allow the case to be adjourned so that a written agreement can be drafted, read by you, and fine-tuned by everyone, be prepared to at least start the trial (because not being prepared for trial can be another pressure put to bear upon you and your attorney).
This will empower you and give you courage
Consider this! We lawyers have to order a copy of the transcript of the stipulation of settlement put on the record so that we can prepare, and the court can confirm, that the divorce papers are properly prepared and based upon the verbal agreement put on the record which could be many weeks later. If we lawyers and the judges require transcripts so we can see and conform what was agreed to and in order to prepare the divorce papers correctly, why shouldn’t you be allowed to read the agreement it before it becomes binding?