What is the Minor Settlement Process in Texas?

Minor settlement hearings are almost always required in cases involving an injury to a person under the age of 18.  This process allows the court to consider the facts of the case, the injuries at issue, the risk of continuing litigation.  The court considers all those elements when determining whether the settlement terms between the plaintiff and defendant amount to adequate compensation for the minor.  

A minor settlement hearing may involve a pre-suit settlement or when the parties reach a settlement during litigation.  A settlement occurs pre-suit, such as when an insurance company or defendant agrees to settle the case after submission of a demand letter.  Under these circumstances, the parties will file a friendly lawsuit and ask the assigned court to set a minor settlement hearing to allow the judge to review and approve the terms of the settlement.  Once the settlement is approved, the plaintiff will then dismiss the case.  If the settlement happens during litigation, the parties will simply file a joint request for a minor settlement hearing.  In both cases, the court will assign a guardian ad litem to represent the minor’s interests.  The guardian ad litem will review the terms of the settlement and the entire case file before making a recommendation to the court.  The guardian ad litem will either recommend the court approve the settlement or recommend certain modification to the settlement in order to protect the child’s best interest.  

When Minor Settlement Hearings are Required

This depends on the state where the case is filed, but litigants should always plan on having to proceed with a minor settlement hearing if the case involves a person under the age of 18.  I have represented minors and their parents in cases that settled pre-suit without court approval.  

These were unique cases, however.  In each case, the minor was very close to the age of majority and confidentiality was the entire purpose for settling the cases (i.e., the cases involved allegations of sexual abuse and the purpose of settling, from the Defendant’s perspective, would be destroyed if the fact were brought to light in even a friendly suit).  Each minor, as a term of the settlement, was required to ratify the settlement once reaching the age of majority, while the settlement funds were placed in trust.  

The bottom line is that litigants should expect to go through the entire minor settlement approval process if the case involves minors.  The example above is the only exception I have seen in my career.  

The purpose of a Minor Settlement Hearing.

The Purpose of a Minor Settlement Hearing

1.     The court hears from an independent evaluator – a guardian ad litem – who makes a recommendation whether the court should approve the settlement, or make modifications to the settlement.

  1. The hearing is on the record, so there is written documentation about the parties’ and the court’s view of the settlement.  
  2. This is the primary purpose – the court protect the interests of a minor who is not yet legally competent to make his or her own decisions about the merits of a proposed settlement.  

What is a Guardian Ad Litem?

A guardian ad litem is a lawyer the court appoints to serve as an independent evaluator of a settlement for a minor.  Many lawyers add their names to a list for the court to consider when it’s time to appoint an ad litem to review a settlement before a minor settlement hearing.  However, in my experience most judges have a short list of their own of trusted lawyers they feel comfortable appointing.  It is a serious job, and both the judge and the ad litem recognize that a settlement for a child can have significant impact on that child from the time of settlement and into adulthood.  

Once appointed, a guardian ad litem will review the facts of the case (pleadings and discovery materials), interview the minor and her parents, review the case costs of plaintiff’s counsel, consider the appropriate fee to plaintiff’s counsel, and evaluate the risks of continued litigation.  At the hearing, the ad litem will either recommend the court approve the settlement or recommend modifications to the settlement.  

What Happens at a Minor Settlement Hearing?

At the hearing, the representative parent is sworn in and asked a series of questions regarding the minor, the injury sustained, future needs of the child, and the settlement.  Because it is a settlement that all parties are generally in agreement with, this proceeding is usually non-adversarial meaning that nobody is trying to stop it from happening. 

The court may or may not require the minor to be present. The primary purpose of the hearing is to demonstrate to the Court that the settlement has been independently evaluated and that both the settlement and the proposed use of the funds is in the best interests of the minor. The court will either approve or reject the settlement.  If the court rejects the settlement, the parties may either proceed to trial or return to the drawing board and renegotiate the terms of the settlement.  

Settlement Funds for a Minor

The court will typically approve funds to be used toward future medical care, cost of living, and for investment purposes (such as to be held in trust for the benefit of the minor).  In a vast majority of cases I have been part of, the funds have been either placed into a structure or into a interest bearing trust.