An assertion that settlements are often split among units so none feel accountable

“All too often at many companies, the costs of judgments and settlements are allocated to, and divided between, several corporate departments, therefore diluted effectively enough to relieve everyone of all responsibility or accountability for the total economic impact.” A hard charge laid by Joseph Speelman in the ACC Docket, Vol. 26, Nov. 2008 at 35. Speelman, head of litigation at LyondellBasell, gives no support for his assertion.

I think he errs. My experience has been that companies are acutely aware of settlement amounts. Typically, the business unit that caused the litigation bears the settlement cost. The head of that unit feels the pain acutely on the quarterly results. In fact, some companies “lend” funds to business units so that the units settle when appropriate rather than drag out the litigation and its legal fees and settlement charges to a flusher quarter.

We welcome comments

Your email address will not be published. Required fields are marked *