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The Warshawsky Law Firm Blog

Monday, October 12, 2015

To Settle Or Not To Settle, That Is The Question

Although people speak about "having their day in court," very few civil cases actually go to trial.  The vast majority of civil cases either are dismissed or settle.  According to various online sources, only approximately 10% of civil cases go to trial.  Moreover, research shows that many of the cases that go to trial would have been better off settled.  In this blog post, I want to discuss some of the considerations that go into deciding whether or not to settle a lawsuit.

As I explain to potential clients, in most cases, it is not easy to win a lawsuit.

First, the plaintiff's allegations have to be strong enough to avoid being dismissed for "failure to state a claim for relief."  This is a relatively low hurdle to jump over (but higher in federal court than in state court).  Assuming the plaintiff has a legitimate grievance against the defendant, and assuming that the plaintiff's allegations do not raise novel legal issues, this hurdle is one that a competent lawyer should be able to get over -- or the lawyer should not take the case.

The second, much higher hurdle is called "summary judgment," which is where the defendants ask the judge to throw out the lawsuit because, based on the evidence developed during discovery, there is no basis for the jury to rule in the plaintiff's favor.  Some kinds of cases, e.g., employment discrimination, are especially prone to being dismissed on summary judgment.  Other kinds of cases, e.g., false arrest, are less likely to be dismissed on summary judgment.  Unfortunately, at the start of a lawsuit, it is difficult to predict the chances that any given case will be dismissed on summary judgment.  Nevertheless, the ability to exercise this judgment accurately is a hallmark of an experienced, effective civil litigator.

The last hurdle that a plaintiff must get over to win a lawsuit is the trial.  Even when the plaintiff has a strong case, the jury can side with the defendant.  There are no guarantees once the jury starts deliberating.  The jury's sense of "justice" does not have to coincide with the plaintiff's.  Moreover, depending on the type of case, it can be more or less challenging to persuade the jury to find in favor of the plaintiff.  For example, juries are notoriously reluctant to rule against police officers in civil rights cases.

In short, winning a civil lawsuit isn't easy, but litigation is an all-or-nothing affair in which the only outcomes are win or lose. 

Given the nature of the legal system, it almost always make sense for the plaintiff to settle for a reasonable amount of money instead of running the risk of losing and obtaining no compensation for the harms the plaintiff has suffered.  (In addition, plaintiffs who lose cases can be required to reimburse the defendants for their costs and attorney's fees -- so the plaintiff ends up even worse off financially.)

OK, but what is a "reasonable amount of money"?  How is this determined?

Unfortunately, there is no formula that can answer this question.  It involves making an educated assessment of the "value" of the case (based on the damages that the applicable law allows a plaintiff to recover) and the "likelihood" of winning or losing at each stage in the litigation process (primarily based on case law).  These variables then must be viewed in light of the plaintiff's financial circumstances and willingness to risk losing the case.  For example, a plaintiff who does not "need" the money from a settlement is going to evaluate a case differently than someone who needs the money to pay bills.  Very few plaintiffs are this fortunate, however.  Most need the money, and sooner than later -- which can be a compelling reason to settle a lawsuit.

But again, it all depends on whether the defendant makes a "reasonable" settlement offer.  Some offers are just too low to accept, even for cases that are worth little and have low chances for success.

In my experience, however, most defendants in most cases will make settlement offers that are "reasonable" based on the facts and law of the case, even if the offers are lower than the plaintiffs would like (as they almost always are, of course).

This brings me to a critical issue:  unrealistic expectations.  In my experience, most plaintiffs believe their cases are "worth" more than they really are (from a legal perspective).  This is understandable, because the plaintiffs have experienced injustice and want compensation.  Unfortunately, the law usually does not provide for the amount of compensation they think is fair.  Usually, the law provides for much less.  In those situations, all I can do is explain to my clients how the legal system values their case and help them make an appropriate settlement decision based on the strengths and weaknesses of their case as well as their personal circumstances.

At The Warshawsky Law Firm, our goal is to obtain as much compensation as possible for our clients.  We screen potential cases carefully.  We research and draft complaints thoroughly.  We conduct aggressive discovery to obtain the evidence needed to defeat a motion for summary judgment.  Above all, we prepare cases with an eye for trial.  We are not afraid to take cases to trial.  Indeed, we had three jury trials this year alone.  But this does not mean that going to trial always is in our clients' best interest.  Often it isn't.  It almost always makes more sense to accept a reasonable settlement than to "roll the dice" at trial.

The decision whether or not to settle ultimately depends on the facts of each case and each plaintiff's personal circumstances.  Sometimes, however, plaintiffs refuse to settle and then obtain a worse outcome later (either a lower settlement, a summary judgment dismissal, or a loss at trial).  This happens much more often than the cases in which the plaintiff "hits a home run" at trial.

If I could offer just one piece of advice to plaintiffs, it would be to lower their expectations and accept settlement offers that they and their attorneys think are "reasonable"; then they should take the money, consider that a victory, and move on with their lives. 





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