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Drafting a settlement agreement? Include an express covenant not to sue to recover attorney fees in case of breach

A settlement agreement should preferably contain an explicit agreement that the plaintiff (or would-be plaintiff) won’t sue the other party — that way, if the plaintiff does file suit, and the other party gets the case tossed on grounds of settlement, then the other party should be able to recover its attorney fees as damages for the breach of the agreement not to sue.

Why is it a good idea to include such explicit language? Because there’s apparently a split among different jurisdictions as to whether an express “covenant not to sue” is required in order to recover attorney fees in case of a lawsuit despite settlement. See Bolton v. McKinney, No. 200637, slip op. at 4-5 (Va. Apr. 1, 2021) (reversing lower court’s refusal to award attorney fees; reviewing case law).

UPDATE: Noted corporate-law practitioner Glenn West emailed me (because the comment feature on this blog is evidently having trouble) with a link to a useful piece that he posted on this subject, with additional citations: Releases and Covenants Not to Sue—Seeming Legal Redundancies That Aren’t (Weil.com 2019).

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