Factors to Consider Before You Settle Your Lawsuit
It’s rarely pleasant, but litigation is a fact of life: as the saying goes, suits happen. You could be bringing or defending a lawsuit over a business deal gone bad, a property or contract dispute, an allegation of negligence or workplace misconduct – regardless of the reason you now find yourself on the wrong side of a lawsuit.
Though the overwhelming majority of civil lawsuits end with settlements, when one side in the lawsuit makes a settlement offer, it can be difficult for the other litigant to decide whether to accept it. Your lawyer can and should advise you on this, but ultimately the decision is up to you. Here’s a brief rundown of factors to consider in deciding whether to reject or accept a settlement offer.
Adequacy: The central question is whether the offer would provide adequate compensation for the actual damages suffered (whether business or personal). The settlement needs to be proportionate to the loss; a too one-sided offer is more likely to produce an impasse than a settlement. Your lawyer naturally has more experience on damage awards in similar cases, and can probably back it up with statistical studies.
Certainty: Whether a suggested settlement is submitted on a take-it-or-leave-it basis or serves as an invitation to begin negotiations, once you accept a firm settlement, it’s pretty much a done deal. It’s extremely rare for a judge to reject a settlement offer both sides have agreed on (in fact, if you opt to go to trial, you should expect the judge to at least ask, and perhaps press, both sides about the possibility of settling the case). In sharp contrast, trying to predict how a judge or jury will ultimately decide on the merits of a case is a very risky task.
Speed: How long it will take for a case to be tried on its merits is another major uncertainty; even if you win, the defendants may stretch the end date even longer through appeals. The more protracted the case, the more expensive it becomes to both sides, but the waiting game may be less of a problem for a well-heeled opponent than it would be for you.
Lower Stress: Some people may visualize their day in court as a chance to shine in the spotlight, but most people are less eager to deal with the stress of a trial. This comes not just from witness cross-examination, but also from what’s often the long, tedious and sometimes confrontational process of discovery (document requests and related arguments) and depositions (pre-trial questioning on the record in a lawyer’s office). Settlements, on the other hand, can be reached out of the public eye, and often include confidentiality provisions.
Proper consideration of these factors can help you decide whether your best interests lie in making or accepting a settlement offer. Here’s the other side of the coin: among the factors that should never guide you in evaluating a settlement offer are a desire for “make a point” (unless the lawsuit’s real purpose is to set a new legal precedent, rather than to get fair compensation for a real injury), bitterness or revenge, or financial expectations not grounded in reality.
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