You may believe that settling your lawsuit out of court seems like taking the easy way out, but there are many advantages to settling your case out of court and several factors that you should consider before filing a lawsuit on your claim. There is no “one size fits all” when deciding whether your case needs to go to trial or whether to accept a settlement offer. Therefore, it helps to consider the following factors when making the decision for your case.
Settling out of court gives both parties control over the outcome of the case. Unlike trials, settlements are not able to be appealed or reviewed, so accepting a settlement offer closes the case. In a settlement, the plaintiff accepts a sum of money offered by the defendant. In exchange, the plaintiff agrees to release the defendant from all liability. The case never reaches a judge or jury.
Settlement also guarantees an award of damages for the plaintiff by avoiding the uncertainty of a jury. While it’s true that a plaintiff may collect a windfall at trial, putting your case in front of a jury also allows for the possibility of collecting nothing or very little. For example, a jury may return a damage award less than a potential settlement offer or find that the defendant was not negligent. Unfortunately, it is nearly impossible to predict how a jury is going decide a particular case. Avoiding this uncertainty through settlement gives both sides peace of mind and the ability to negotiate an amount with which both sides can agree.
Settling is also likely to bring about a much faster resolution to your case than going to trial. Personal injury cases can take several years to resolve in court, with the trial itself lasting up to a week. At the end of the trial, however, the verdict may be appealed, which may extend the time frame even longer. A party appeals because they believe an error of law was committed and the judge made an error in overseeing the case. Further, if a plaintiff wins at trial, it could take an additional 1-2 years before he or she receives their damages award. On the other hand, once a settlement is reached, the plaintiff will typically receive compensation within a few months.
Another danger of filing suit is that if the defendant appeals and the appeals court finds there was indeed an error of law by the judge, the case could be sent back to the trial court for a new trial, which adds on even more time to the process. Conversely, a settlement can be reached at any point, even prior to the filing of a lawsuit. Settling may also reduce or completely eliminate the need for depositions, a lengthy discovery phase in which documents are exchanged between the parties, or trial preparation – all of which are lengthy and costly processes.
It is far more expensive to go to trial than to settle out of court. The basic rule of thumb is that the earlier a case settles, the less expensive the process. If you go to trial, oftentimes the contingency increases. For more on regarding the contingency fee agreement, check out our article on the topic.
The discovery phase also includes additional expenses, such as depositions, mediation fees and the cost of hiring experts. For more on case costs, visit our section on case costs. The plaintiff will also have to pay for the expert’s testimony at trial. Depending upon your fee arrangement with your attorney, a plaintiff may be required to pay upfront for the pretrial discovery phase. Other times, the attorney will front the cost and take it out of the final damage award, should the plaintiff’s case prevail. Additionally, considerations include cost of travel and any time you might have to take out of work, including a week for trial. Settling before trial greatly decreases all of the expenses and potentially eliminates some altogether.
In addition to avoiding the stress of leaving your case in the hands of a jury, settling out of court will likely produce significantly less stress in general. If you proceed to trial, you will likely be expected to testify, where you will tell your side to the judge and jury. This process opens you up to cross-examination, which could lead to information being revealed that could hurt your case.
Other witnesses and experts from both sides will also take the stand. Knowing that their testimony has an impact on your case and that you have no control over what they say may add to the stress of a trial. As stated above, trials usually last about a week, and it will likely be difficult for most people to take such a long time off from work, as you will likely be expected to be in the courtroom throughout the entirety of the trial.
Another thing to consider is that trials are public record, meaning anyone can look at the court documents once the case is over. Settlement negotiations are not public record, and the final documents may include a confidentiality clause. Knowing there will be a certain degree of privacy surrounding your case is likely to reduce stress as well.