A court notice setting a mandatory settlement conference can raise practical questions: Do you have to appear? Must you accept an offer? What information should you bring? For California businesses and individuals involved in a lawsuit, the conference is an opportunity to explore resolution before trial—not an order to settle. This guide explains the California rules, preparation steps, and decisions you may face.
What is a mandatory settlement conference?
A mandatory settlement conference, often called an MSC, is a court-directed meeting intended to help parties resolve a lawsuit. A judge or another designated settlement officer typically facilitates discussions about the claims, defenses, financial exposure, and possible settlement terms.
California Rules of Court, rule 3.1380 allows a court to set one or more mandatory settlement conferences on its own motion or at a party’s request. The conference often takes place as trial approaches, although scheduling varies by court and case.
The word “mandatory” generally refers to required attendance and compliance with the court’s orders, not an obligation to settle. Trial counsel, the parties, and people with full authority to settle must personally attend unless excused by the court for good cause. Anyone whose consent to settlement is required must also be personally present unless excused. You do not have to accept an unfavorable settlement. The settlement officer does not ordinarily decide the lawsuit at the conference.
In business litigation, settlement discussions may address more than a payment, including disputed contracts, ownership interests, continuing obligations, or the end of a business relationship.
Who must attend the conference?
Under rule 3.1380, trial counsel, the parties, and people with full authority to settle must attend personally unless the court excuses their attendance for good cause. If any person’s consent to settle is required for any reason, that person must also be personally present unless excused by the court for good cause. This requirement includes an authorized representative when an insurer’s or another entity’s consent is necessary.
For a company, choosing the right representative matters. Sending someone who can discuss the dispute but cannot approve a resolution may not satisfy the attendance requirement. Do not assume that delegating authority eliminates the need for anyone whose consent is required to attend.
- Confirm decision-making authority. Identify any required approval from owners, directors, an insurer, or another person.
- Review the court’s instructions. Check the scheduling order, local rules, and department procedures for attendance requirements.
- Request exceptions early. Do not assume a phone call or remote appearance is permitted without court approval.
Failure to comply with attendance requirements or court orders can lead to sanctions. Tell your attorney promptly about travel, medical, or approval-related obstacles.
How to prepare for a mandatory settlement conference
Preparation should cover both the legal dispute and the practical terms of a resolution. Your attorney can assess the evidence, potential damages, remaining litigation costs, and collection risks. A strong legal position does not necessarily mean the other side can pay a judgment.
Rule 3.1380(c) requires each party to submit to the court and serve on each other party a mandatory settlement conference statement no later than five court days before the initial date set for the conference. In unlawful-detainer cases, rule 3.2005 permits the court to exempt parties from that deadline. Rule 3.1380 calls for a good-faith settlement demand, a good-faith offer from each defendant, and a detailed discussion of the facts and law concerning liability and damages. It also requires the plaintiff’s statement to itemize economic and noneconomic damages. Check for applicable exceptions and additional local requirements.
Before the conference, review:
- Key documents: Contracts, amendments, invoices, payment records, correspondence, and relevant discovery.
- Financial calculations: Claimed losses, disputed amounts, and any supported interest or attorney-fee claims.
- Negotiation priorities: Your preferred terms, acceptable alternatives, and unresolved approval requirements.
- Practical concerns: Payment timing, security, tax questions, and the effect on ongoing operations.
Distinguish internal strategy from information that must be served on the other side. Do not assume the settlement statement is a private communication with the settlement officer.
What happens during settlement discussions?
Procedures vary. The settlement officer may speak with everyone together, meet separately with each side, or move between the parties. Expect questions about disputed facts, weaknesses in each side’s case, and the cost of continuing litigation.
Offers may change throughout the conference. Discuss each proposal with your attorney before accepting it. Consider the whole agreement rather than only the headline payment: a broad release, extended payment schedule, or continuing obligation can materially change its value.
Confidentiality also deserves attention. As the advisory committee comment to rule 3.1380 explains, the mediation-confidentiality provisions in Evidence Code sections 1115–1128 do not apply to settlement conferences under that rule. Evidence Code section 1152 generally makes compromise offers, and conduct or statements made during negotiations, inadmissible when offered to prove liability for the disputed loss or damage. That evidentiary-use limitation does not create a blanket confidentiality privilege.
Ask your attorney what protections apply before sharing sensitive information, including any applicable court orders or stipulations. If the parties want confidentiality provisions in a settlement agreement, those provisions should be discussed and drafted expressly rather than assumed.
What happens if you settle—or do not?
If an agreement is reached, clarify its essential terms before leaving. Depending on the dispute, those may include:
- The payment amount, due dates, and consequences of nonpayment.
- Which claims and parties are covered by the release.
- Any remaining contractual or business obligations.
- Dismissal timing and responsibility for fees and costs.
- Whether the court should retain jurisdiction to enforce the settlement.
Code of Civil Procedure section 664.6 permits a court, on motion, to enter judgment on a settlement of pending litigation if the parties stipulate in a qualifying writing signed as provided by the statute or orally before the court. A qualifying writing may be signed by a party, the party’s attorney, or an insurer’s authorized agent in the circumstances specified by the statute; not every signed writing qualifies.
Section 664.6 also permits dismissal without prejudice and retention of jurisdiction to enforce the settlement when the parties or their counsel stipulate in writing or orally before the court to that procedure. Any request for retained jurisdiction should be properly documented and presented to the court before dismissal, with the statute’s signature and other applicable requirements satisfied. An informal understanding may create disputes about whether an agreement exists or what it requires.
If no agreement is reached, the lawsuit generally continues. Do not assume the conference pauses discovery, motion deadlines, or trial preparation. Follow the existing schedule unless the court changes it. Further negotiations may remain possible, but preparation for trial should continue.
Talk to a California business attorney
A free consultation with Itkin Law can help you understand preparation, attendance requirements, and settlement considerations for your dispute. Schedule a free consultation or call (424) 603-8888.
This article is attorney advertising and provides general information only. It is not legal advice and does not create an attorney–client relationship. The law changes, and this article reflects the law as of its publication date. Every situation is different — contact us to discuss how the law applies to your exact circumstances. See our full disclaimer.
