At the outset of a dispute, both sides are often emotionally charged and determined to see their fight to the bitter end. However, as the dispute continues, both sides usually see the merit in settlement or compromise of their differences.
If the parties are unable to settle the case prior to the filing of a lawsuit, there is an opportunity to settle during the progress of the court case. In fact, many judges will require the parties to make a good faith effort to settle the case prior to hearing the case. Many require the use of a mediator to try to help facilitate the settlement.
Even if you are confident in your case, settlement may be in your best interest. There are usually three reasons why a litigant should consider settlement: The risk of loss, the cost of prosecuting or defending the case, and the personal burden of litigation. Plaintiffs also need to take into consideration the chance of collection on any monetary judgment.
No lawyer can guarantee you a best-day result. There is always risk that you will not prevail in court. You should always consider your risk of loss during a settlement negotiation process. If you feel that your best day in court would yield at $10,000 judgment against your adversary, but your chance of success is only 50%, it would make good business sense to consider an offer to settle for $7,000. After all, when factoring in the risk of loss, you claim is only valued at $5,000.
The above scenario does not factor in the cost of litigation. Prosecuting or defending a claim usually involves significant costs, including attorneys’ fees and court costs, and fees arising from court reporting services, private investigation, expert testimony, court-ordered mediation- the list can go on. Except under exceptional circumstances, those costs will be incurred by you, whether you ultimately prevail or lose. Let us presume that in your $10,000 case described above, you anticipate costs of litigating the case to conclusion of $3,000. Suddenly, your claim valued at $5,000 is only worth $2,000 after the anticipated expenses are paid. The offer to settle for $7,000 looks even better.
Law suits are not fun. They often take an emotional toll on the parties that tends to grow as the case progresses. And law suits take a long time— sometimes years— to resolve. Sitting through mediation, depositions, hearings, and attorney-client meetings can take a toll on anyone— all of this which is endured before the day of trial. When you add to this personal burden the expense and uncertainty inherent with a law suit, you may ultimately decide that settlement is the best route in order to put the dispute and aggravation to bed.
Plaintiffs should also consider the chance of collection on a monetary judgment. If you ultimately obtain a judgment against a defendant who is insolvent, the judgment, insofar as you are concerned, may be worth the paper it is written on. Furthermore, even if the defendant has the assets to satisfy the judgment, he may make life difficult for you in your efforts to reach those assets. While the law affords you certain tools to aid you in your recovery, using those tools may require yet additional attorneys’ fees and costs. As a plaintiff, you should take into consideration the chance and cost of recovery when valuing your claim.
Not all law suits can settle, and not all law suits should settle. However, in analyzing your case, it is recommended that you consider settlement opportunities that make financial or personal sense.