RE: REQUEST FOR INFORMAL ADVICE REGARDING THE TREATMENT OF SETTLEMENT AGREEMENTS IN THE SAME MANNER AS JUDGMENTS.
I AM WRITING AT THE ATTORNEY GENERAL'S DIRECTION TO RESPOND TO YOUR RECENT REQUEST FOR INFORMAL ADVICE REGARDING THE MANNER OF PAYING SETTLEMENT AGREEMENTS. YOUR LETTER INFORMS US THAT-YOUR OFFICE HAS TRADITIONALLY NOT QUESTIONED AN AGENCY'S CHOICE OF FUNDS (I.E., OPERATING OR PERSONAL SERVICE FUNDS) IN THE PAYMENT OF A JUDGMENT OR COURT ORDER. YOU ASK WHETHER THIS SAME TRADITIONAL TREATMENT SHOULD BE AFFORDED IN YOUR OFFICE'S PAYMENT OF SETTLEMENT AGREEMENTS WHICH TERMINATE LITIGATION.
IN ANSWERING YOUR QUESTION, WE ASSUME THAT: 1) ANY SETTLEMENT AGREEMENT BEFORE BEING PRESENTED TO YOUR OFFICE WOULD HAVE BEEN APPROVED BY THE APPROPRIATE AUTHORITY AND COUNSEL — EITHER AUTHORIZED IN-HOUSE COUNSEL, THIS OFFICE, OR IN THE CASE OF OUR DISQUALIFICATION, COUNSEL HIRED IN OUR STEAD — 2) THAT ANY PROCEDURAL REQUIREMENTS NECESSARY TO THE PROPER EXECUTION AND APPROVAL OF THE SETTLEMENT HAVE BEEN COMPLIED WITH, AND 3) THE AGENCY HAS SUFFICIENT UNENCUMBERED FUNDS AVAILABLE TO PAY THE SETTLEMENT.
BOTH SETTLEMENTS AND JUDGMENTS HAVE THE SAME AFFECT; THEY TERMINATE LITIGATION, LIMIT THE RISKS OF FURTHER LIABILITY AND LOSS, DEFINE THE FUTURE RIGHTS OF THE PARTIES, AND PUT TO REST THE CONTROVERSY INVOLVED. NEITHER FUTURE JUDGMENTS NOR SETTLEMENTS ARE GENERALLY MATTERS CONTAINED IN AGENCY APPROPRIATIONS AND BUDGETS, THOUGH OFTEN IN ORDER TO REACH A SETTLEMENT OR SATISFY A JUDGMENT, PAYMENT MUST BE EXPEDITIOUS. ACCORDINGLY, YOUR OFFICE HAS TRADITIONALLY NOT QUESTIONED THE AGENCY'S CHOICE OF FUNDS TO BE USED TO PAY A JUDGMENT, AS LONG AS UNENCUMBERED FUNDS WERE AVAILABLE IN AGENCY ACCOUNTS. BECAUSE SETTLEMENTS AND JUDGMENTS SERVE THE SAME PURPOSES, WE BELIEVE THAT FROM AN ANALYTICAL STANDPOINT, IT IS APPROPRIATE FOR YOU TO AFFORD THEM THE SAME TREATMENT.
(NEAL LEADER)