What is a Settlement
In the general sense, a settlement is an alternative to going to a trial to resolve a dispute. A settlement is a mutual agreement between two or more parties to resolve a dispute. The settlement might involve money being exchanged by one or more disputing parties and/or the performance of some act by one or more disputing parties or a relinquishing of a legal claim by one or more disputing parties.
A lawyer that is involved in a civil case might agree that instead of going to trial, the case can resolve a dispute through a settlement. The settlement of a civil case is typically reached by unilaterally or bilaterally exchanging information – typically, the exchange of documents and witness lists are done to meaningfully explore mutually agreeable terms of settlement. Important deadlines are set so that a trial will not occur , and then the parties will attempt to reach an agreement on the terms to settle the case.
A settlement is generally a good alternative to going to trial over a civil case. The parties can have more control over the process, and depositions are often a part of the settlement process (which is also more within the control of the parties involved in the dispute).
Lawyers often try to resolve disputes – including civil cases – by engaging in a settlement negotiation with legal representatives of possibly opposing parties. The goal of most lawyers is to get a good deal for their client. When it comes to a settlement, what is considered a good deal is in the eyes of the lawyer and the client he or she is representing.
Cost-Effective for All Parties
One huge factor in favor of out of court settlement is the cost of legal fees and expenses for you and opposite party. Bringing a case to trial implies engaging in a lot of procedural work to try to get to that end point of actually going to trial. Because both sides want their argument to be fully developed and that the judge or jury be correctly informed, there is a lot of work that must be done on both sides. Examples on the plaintiff’s side: Getting all the basic evidence down in writing, being prepared to present evidence, witnesses and arguments. This time consuming process has to be done no matter what, but oftentimes settlement can be achieved in the midst of the process. Examples on the defendant’s side: Getting all the basic evidence down in writing, being prepared to present evidence, witnesses and arguments . . . sound familiar? You’re exactly right – the same exact process has to be done on both sides. The difference is that once it’s done, STOP. There is no further need for discovery, motions, witness preparation, depositions, travel and lodging expenses for attorneys who might be traveling from out of state or out of town, etc. The list goes on, and the costs multiply. The numbers speak for themselves. Unless a case goes to trial, typically about 50% for each side’s legal fees and expenses are saved. For example, if the plaintiff’s total cost came out to $10,000.00, that amount would likely be reduced to about $5000.00 (50% savings.) This would almost always take place for the defendant as well. Consider this scenario. Case costs $10,000.00 for the plaintiff, $10,000.00 for the defendant. Total cost for both, if case does not go to trial = $20,000.00. Total cost, if case proceeds to trial = $40,000.00. So, pulling out a calculator, let’s look at the costs for the parties if they settle out of court. If both sides somewhat willingly gave up a portion of their positions in a "compromise" settlement, perhaps the parties reach a settlement of say $15,000.00. The costs total $15,000.00 for both sides, about 37.5% of the costs if the case should have gone to trial. Looked at from this perspective, the savings appear better still.
Time and Speed of Resolution
Investigation and any trial in some jurisdictions can take three to four years. In Pennsylvania, for example, the average life of a civil case is 2.83 years. For lawyers, this translates into several years of holding their breath to see what will happen in the courtroom. On the other hand, settling a case is not an instant solution, but it can often close a case within months. Such closure can be particularly important in a personal injury matter where a client may need help with mounting medical expenses or a lost paycheck. In addition, per the American Bar Association (ABA), over three-quarters of civil cases are settled before trial, and significantly more than half are resolved on a motion before a trial is started. By resolving the matter early, clients are spared the extra cost, stress and delay of trial. In addition, about 95 percent of cases settle after a mediation session. In fact, the ABA Section on Litigation’s Practice Guide from 2010 that focused exclusively on mediation reported that mediation "achieves a high settlement rate in civil cases." Unlike litigation, settlement doesn’t drag out for years, often spanning more than a decade, as sometimes is the case.
Predictability and Less Risk
Settling a case out of court provides both parties with more predictability than a court decision. When both lawyers can present their sides, the issue of outcome is somewhat in their hands. However, if you go to trial, you always have to account for variance in outcomes and a 50/50 chance that you may or may not get what you think the trial is worth. So the outcome of a case is more predictable when the parties settle before trial. A controlled outcome is more desirable to most clients than the risk of an adverse verdict. In a trial situation, even things that seem to be favorable on the surface can be risky. Think things such as jury instructions, bias, evidentiary issues, etc. Because juries are human beings put in very stressful situations making serious, life-changing decisions, they are unpredictable. They can react against both sides for all kinds of reasons. If there is a chink in the armor for one side, even if it is not critical to the merits of the case, juries can use it to justify a verdict that goes against that party. The unpredictability of outcome can be highly stressful to clients in a trial situation.
Privacy
Maintaining privacy is another important reason why the vast majority of lawsuits settle before reaching trial. While attorney client privilege does protect some communications between you and your attorney, a lot of times the public could get information about your case, and you do not want that to happen.
Settlement agreements are usually kept confidential. That means that there is no public record that you sued, or that you’ve been sued , or that you were involved in any kind of legal problems at all. Settlements are free from the glare and scrutiny of the public. And that’s a good thing for parties who do not want to have their private matters aired because there is so much media attention on cases these days.
The confidentiality is extremely important to you and your spouse privately whether you want settlement to be confidential, or whether you are involved in a high asset, high income divorce or child custody case where your name and the names of your children are all over the public record, and you do not want that.
Preservation of Relations
Often the parties have a relationship that they hope to preserve even after the dispute is resolved. They may own a business together, sell to each other, or buy from each other. They may be in-laws, business partners, or in some kind of joint venture. A suit against a company can affect its owners and officers in ways that go beyond the company itself. A close-knit family might have a disagreement that leads to a lawsuit between one of its members and one of its companies. Or, a dispute can arise between friends over a matter wholly unrelated to their relationship. Most lawyers are aware of the devastating effects that a lawsuit can have on relationships. A lawsuit can be the crucible in which relationships become irrevocably dissolved.
Relief from Judicial System
A trial is an all-consuming process, one that is not likely to result in a simple resolution of the case. It is often said that the trial is the end of the beginning, and it is certainly a long road to reach that point of resolution. By settling out of court, the lawyers involved have a distinct opportunity to alleviate the pressure on the judicial system. There are a tremendous number of cases making their way through the judicial system at any time, and the influx of new cases means an increasing amount of pressure on all levels of the system. Especially in a state as populous as California, it is very unlikely that a case can be resolved quickly or easily through the judicial system. To settle a case out of court is obviously to eliminate that particular case from the system entirely. That means one less case that the court has to deal with, and a lessening of the pressure on individual courts through the elimination of even one case. The more cases that can be settled outside of court, the less burdened the judicial system becomes. Beyond easing the load of the system, reducing the number of cases that are taken to trial produces other benefits. Because the trial is such a long and often difficult process to go through, it can completely halt the process of a case from the start of litigation to its ultimate conclusion, whenever that will occur. While the judicial system would obviously like to work through cases at an efficient rate, what the system looks for even more is an efficient way to dispose of a case and get it off of the books. One of the chief advantages of out-of-court settlements is that they not only allow for a case to be disposed of, but also to be disposed of fairly quickly. A case that is settled outside of court removes the extended wait associated with the trial, allowing the parties to pursue other opportunities, at least until such time as the case would be resolved in court. Everything in a given case is prolonged for a substantial amount of time, and this means that the settlement route provides not only relief for the court, but also for the parties involved in the case. The bottom line is that the judicial system is overburdened, and lawyers like the individuals at Spenser M. MacDonald, Attorney at Law, know how to best take care of themselves, their clients, and the judicial system itself. The vast majority of cases can be resolved without taking them into the courtroom, and that provides a great service to everyone involved.
Conclusion: Strategic Considerations
In summary, there are strategic reasons why attorneys advising clients often favor the prospect of settling claims that have not been litigated as opposed to the prospect of defending cases in court. The litigation process is adversarial and frequently leads to more discovery and other legal proceedings than initially expected by many litigants. The cost of the litigation process and the time it takes to reach a conclusion in an adversarial context can be discouraging, especially if there is no victory in sight .
In a settlement negotiation context, professionals have more control over the outcome than they have through motion practice, protracted depositions and trials. The key here is that parties, especially professionals, have more control over the outcome of settlements than they have in the context of litigation in court.
Similarly, for any litigant, including an attorney in a civil matter, there may be concerns about the public nature of certain aspects of the courtroom process. For such litigants, settling can avoid adverse publicity that any party might encounter in the course of the courtroom process.