Under New York law a financial services professional in his late 50s, who fires his first law firm then proceeds to mediation with a new law firm during which he signs a settlement term sheet resigning his job in exchange for $268K after a day-long mediation has no 21 day think-over period nor a 7 day back-out period until after the settlement agreement and general release are signed, binding him regardless of heavy duress claims.

The case is Reches v. Sack & Sack, LLP, Sup Ct, Kings County, February 23, 2018, Jimenez-Salta, J., 60 Misc.3d 1216(A), 98 N.Y.S.3d 502, No. 2018-51152, 511057/17).

Approximately 2 weeks before mediation plaintiff fired his first law firm which pursued an employment discrimination claim for him. He retained a new law firm which submitted a four-page mediation statement to the mediator. At mediation, Plaintiff was concerned that a human resources manager, and not employee’s information technology manager appeared on behalf of Morgan Stanley. The employee spoke for over an hour about the employment discrimination charge pending before the EEOC as his opening statement to the JAMS mediation audience.

Following an entire day of employment discrimination mediation, a “Settlement Term Sheet” was signed. Plaintiff agreed to resign his position in exchange for a lump sum payment of almost $268,000. His new law firm allegedly agreed to pay plaintiff’s first law firm from the $50,000 attorney’s fee for employment discrimination work. The case arose after plaintiff sued his second law firm.

The court noted that settlement term sheets are not binding agreements even though plaintiff had not contested his. Plaintiff chose not to pursue a claim of constructive discharge for working in a hostile environment or one with employment discrimination. Instead he resigned during the mediation process and did not rescind the settlement term sheet. After mediation he signed a Settlement Agreement and General Release. He was given 21 days to think over the agreement and 7 days to revoke or take back the agreement he signed. He chose not to revoke the settlement.

EEOC charges are not dismissed until a charging party, in this case plaintiff, withdraws them. Settlement term sheets do not become binding on the parties until after settlement agreements are signed. Those are two, separate acts although sometimes defense counsel draft settlement agreements during mediation which then triggers the 7 day period allowing revocation. Of course, a party who signs a settlement during mediation has not been given the 21 days to consider such agreement and they would have to knowingly waive such period of time. This charging party’s / plaintiff’s buyer’s remorse did not occur until after these time periods expired.

Arguing “heavy duress” in signing a settlement term sheet failed for this charging party / plaintiff since no binding agreement had been signed. The court noted that no one forced him to remain at mediation for an entire day with his employment lawyer. The Settlement Agreement and General Release became binding 7 days after signing regardless of any claims of duress.


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