Top 4 Factors to Consider Before You Settle Your Lawsuit

Should you settle your lawsuit? You must first consider these Top 4 Factors before you decide to settle.

It's rarely pleasant, but litigation is a fact of life: as the saying goes, "suits happen." Many issues can cause a lawsuit. You could be involved in a business deal gone bad, a property or contract dispute, an allegation of negligence or workplace misconduct, or hundreds of other issues that can only be resolved through litigation.

In just about every lawsuit, you will eventually be faced with the decision to settle or to go all the way to trial. While your lawyer can and should advise you on a settlement, ultimately the decision is yours. Here's a brief overview of the top 4 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.

Every lawsuit carries with it risk. You and your lawyer should be analyzing risk throughout the case, as the risk often shifts based upon new facts and evidence that may get introduced into the case. Other times, you may become aware of issue with one of your witnesses or your facts that, if discovered by the other side, could be highly determinate to your case. If there is higher risk of you not recovering at trial, you need to consider settlement.

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.

Conclusion

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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