In many legal settings, there are two options on the table – settle or trial. You have the option of settling your case before you ever even go to trial, while there are some cases that might do quite well during the trial phase, there are many more that make sense to settle.
Plaintiffs often ask attorneys, “Should I settle or go to trial?” Unfortunately, the advice can vary from case to case, and understanding the right way to move forward can depend a bit on the case itself.
The Two Options
Finding the right path means doing the homework and looking at both options carefully. In this instance, settlement is the formal resolution to any kind of legal case before it is actually taken to trial. Settlement can happen from the first day of litigation or even before a lawsuit is filed.
The plaintiff’s attorney creates a demand letter that spells out the damages, the legal principles behind those damages, and copies of evidence that supports those damages. Once that’s complete, the defense attorney responds, sometimes even with a counteroffer. Negotiations begin, and they may include other parties like insurance companies.
Often there are many phone meetings and email conversations between the two parties. Sometimes, pretrial hearings take place over small issues, but eventually, a settlement takes shape, and the parties sign the required documentation.
In a trial, though, things look very different. Once the case goes to trial, the judge decides if the defendant is liable for damages, and what those damages might be. Trial begins with the assembly of a jury. Once the jury is seated, both parties have the opportunity to give opening statements.
The plaintiff is allowed to call witnesses and the defense may cross examine them. The reverse then happens – the defendant calls witnesses, and the plaintiff cross examines them. Closing arguments are held, and the judge instructs the jury.
The jury deliberates, then comes back with the verdict in favor of one of the two parties. Sometimes this takes only a matter of hours. In other situations, though, it could last for weeks.
Trial or Settlement?
There are benefits and drawbacks of both settling a case and going to trial. One is the speed involved. Settlements tend to be faster than trials. Settlements take as little as three months to complete, but a trial could take as long as a year. Settlements are also often cheaper, and they tend to cost less. There’s also quite a bit more negotiation with settlements.
The plaintiff can reject or accept any offer, or even suggest other offers. The problem with settlements, though, is that they often aren’t as big as verdicts in a jury trial might be and they’re quite permanent. Once you accept a settlement, you can’t do anything else, even if new, associated problems present themselves.
Trials are usually fairly expensive, but they do tend to give those involved a sense of justice. Finding a party guilty often helps put the plaintiff’s mind at ease in the way a settlement simply cannot, as the defendant doesn’t have to admit guilt in the settlement process.
While there are clearly pros and cons on both sides, studies have shown that for most plaintiffs, settlement is the right way forward. In a 2008 study published in the Journal of Empirical Legal Studies, many plaintiffs who passed up settlement offers for trial ended up with less than they might have gotten if they’d taken the original settlement offer.
The study found that plaintiffs made the wrong decision to go to trial in 61% of the cases studied. In fact, those who did go to trial earned an average of $43,000 less in cases, much of those going to legal fees. Defendants also tended to spend more on cases taken to trial, but that number was higher, averaging $1.1 million.
The same study, though, found that most cases did settle, nearly 80 – 92% in most areas, but lawyers often have trouble deciding what might be right for a client, and sometimes they don’t express themselves well. After all, if an attorney suggests they have a strong defense, that may not be suggesting that they would do well during the course of a trial. Those kinds of misinterpretations can lead to trials when it may not be necessary or actually create a good outcome for either party.
While the study did find that the wrong decision to go to trial has become more frequent, understanding what’s at stake and what might be possible is clearly the key for clients trying to make a decision before the case goes to trial.