Government investigations are risky and expensive and, in the case of companies, commonly lead to settlements. Companies often resolve investigations even if they believe the government is wrong on the law or the facts, or both, and when (and sometimes because) the law on important issues is unsettled.

In our most recent article, we discussed how judicial scrutiny is becoming a growing challenge in securing approval of settlements of government enforcement proceedings. In this article, we look not at how to get a settlement approved but, rather, whether a private party may undo a settlement with the government because of a subsequent development in the law or related legal proceedings. The short answer is—possibly, but with great difficulty, as we explain below.

Parties seeking to vacate settlement agreements face an uphill battle. Courts and agencies are hesitant to consider challenges to final settlement agreements, which they consider to be binding contracts, negotiated at arms length, based on an understanding that the law and other circumstances may change which lead to regrets about the settlement. Both the judicial and executive branches have a strong institutional interest in finality, which, among other things, conserves public resources and permits attention to be devoted to current matters rather than a reconsideration of matters that were concluded in the past. Private litigants have a similar interest in finality—with the caveat that in the case of a significant change in the legal or factual landscape a private party may believe that justice requires a reconsideration of the settlement.