Consent Judgments (or Decrees)
Historically, judgments are issued by courts of law while decrees are issued by courts of equity or chancery; however, with the merger of the courts of law with the courts of equity the term judgment has generally replaced the term decree. For purposes of this article, the terms judgments and decrees are interchangeable.
Since litigation involving a private party or government agency is both an expensive and unwanted distraction, you should never ignore or discount settlement as an option. There are instances where the parties agree to settle the action even before a lawsuit is filed and, in those instances, a confession of judgment may be offered in exchange for not filing the lawsuit. Even when you can’t avoid the filing of a lawsuit, it is common knowledge that, for a variety of reasons, the vast majority of actions are settled before a judgment is rendered.
While some may worry that making the first move towards settlement is considered a sign of weakness, it’s not. Plaintiffs often propose early settlement on favorable terms, coupled with a warning that the settlement terms will only become less favorable as time passes and litigation expenses mount. In other instances, the defendant may take the lead (by proposing favorable settlement terms) knowing that the facts are so one-sided (in plaintiff’s favor) that few, if any, meritorious defenses exist; again, coupled with a warning that the settlement terms will only become less favorable as time passes and litigation expenses mount. Early settlement, and settlement before trial, may also achieve the objective of avoiding disclosure of unfavorable or incriminating information. An experienced lawyer is able to sense and determine the appropriate times to discuss settlement.
While settlement agreements can be informal consensual agreements by and between the parties, consent judgments are written settlement agreements by and between the parties that are prepared in the form of a court judgment to be approved by, and filed with, a court. Consequently, consent judgments have the qualities of both a contract and a judicial decree: to the extent that a consent judgment is a writing that contains various provisions, and is signed by the parties, it has the qualities of a written contract, and by agreeing to file the document with the court, the consent judgment acquires the qualities of a judicial decree.
One of the most attractive features of consent judgments is that the court may retain jurisdiction over the consent judgment for purposes of interpretation and enforcement proceedings. Accordingly, whereas private settlement agreements (that are not filed with the court) require the parties to that agreement to file separate lawsuits each time the other party violates its terms, the parties to a consent judgment can simply seek enforcement and contempt sanctions for violations of the consent judgment (avoiding the need to start a new lawsuit). This time-saving feature has both advantages and disadvantages depending upon whether or not you are the party seeking, or avoiding, enforcement.
Another feature (of consent judgments) is the fact that any lawsuit regarding enforcement of a consent judgment is likely to be heard by the same judge that the matter was originally assigned to, ensuring that the matter remains within the jurisdiction of a judge that is familiar with the case, the parties and their counsel. Once again, this particular feature may prove to be a blessing or a curse. You should assess this factor carefully before consenting to the filing of any consent decree since there may be tactical reasons to not having the same judge monitor the action.
Significantly, unlike ordinary court judgments, consent judgments can have expiration dates, and it is strongly recommended that you negotiate to include an expiration provision in any consent judgment that you may sign. You may also consider obtaining from all other parties a representation that no objection will be made by any of them in the event that you decide to file a petition with the court after the expiration date to rescind the consent judgment. In the absence of an expiration provision, the validity and enforceability of a consent judgment, like any ordinary judgment, may never expire or be expunged from court records. While courts have enforced consent judgments that are more than 20 years old, the courts have no inherent power to examine or enforce an order that expired by its terms.
As a final matter, it is worth mentioning that you should negotiate for an express reservation of the right to appeal the consent judgment, otherwise, you waive that right upon signing. It may seem meaningless, but you and your attorney should discuss this issue before waiving any right to appeal.
Confessions of Judgment
Unlike consent judgments, which are agreements entered into after an action has commenced, confessions of judgments involve one party consenting to judgment before the action is commenced. Generally speaking, confessions of judgment are executed together with an underlying settlement agreement during the course of negotiations leading up to a lawsuit. Procedurally, confessions of judgment are conditional; meaning that the confession of judgment will not be filed with the court so long as the party consenting to the confession of judgment complies with the terms of the settlement agreement. Upon satisfaction of the terms of the settlement agreement, the confession of judgment becomes a nullity, and it may be destroyed or returned to the party that had consented to judgment.
As a practical matter, by negotiating an early settlement and also obtaining a confession of judgment, you are able to avoid the time and expense of having to: (1) serve a summons, (2) prepare and file a complaint and, (3) wait for the defendant to appear. Additionally, the details of the dispute may never have to be disclosed and remain confidential. The savings are obvious, and confessions of judgment have all of the qualities and the effect of a judgment (that may be filed with the court).
Generally speaking, unless it is determined that the confession of judgment is governed solely by federal law, the degree of formality required depends upon the law of the state which applies to the agreement.