Throughout Canada, the legal system has consistently emphasized the importance of encouraging settlements to resolve disputes. The reasoning behind the courts’ settlement focused approach is that it serves the broader interests of parties by sparing them the financial burden of long, contentious trials, and it alleviates the strain on an already heavily burdened court system.
A Pierringer Agreement — or a proportionate share settlement agreement — is one of the ways whereby parties can resolve litigation. In some cases, all parties involved in a lawsuit may agree to settle the entire matter at once. However, in complex multi-party lawsuits, achieving such a neat resolution may not be feasible.
In such situations, a Pierringer Agreement, named after the 1963 Wisconsin case of Pierringer v. Hoger, 124 N.W.2d 106 (Wis. 1963), is one option available to the litigants.
A Pierringer Agreement pursues a more targeted objective than a global or total settlement: the primary aim is to proactively manage the risks associated with litigation. The goal of this type of risk management is to simplify and speed up legal proceedings, achieved by reaching agreements on liability issues with some, but not all, parties. As a result, the number of disputes are minimized, saving time and money.
In Amoco Canada Petroleum Co. v. Propak Systems Ltd., the Alberta Court of Appeal described a Pierringer settlement agreement as an agreement that lets one or more defendants in a multi-party lawsuit settle with the plaintiff and leave the case. The remaining defendants will only be responsible for the specific part of the loss they directly caused. They don’t share responsibility with the settling defendants, but those defendants who didn’t settle might share responsibility with each other.