In the majority of civil lawsuits, the defendant settles with the plaintiff because it is more economical to do so. A trial is always a risky proposition. With a settlement, the defendant knows how much they are going to lose. The plaintiff will also have to sign an agreement to not pursue any further litigation, so there won’t be additional losses in the future.
In a trial, the defendant may prevail. However, the opposite may also be true. They could be ordered to pay the plaintiff thousands, tens of thousands, and in some cases even millions. On top of this, the plaintiff could go after them again at a future date if more issues arise that result in damages.
Imagine a man is diagnosed with mesothelioma. He sues his former employer for $5 million. The employer offers to settle for $2 million, and the man rejects the offer, opting instead to go to court. The jury awards the man $20 million. After the man passes away, his family goes after the former employer for new damages such as funeral expenses, and they lose more money.
In this example, had the employer paid the $5 million, they could have saved more than $15 million. Lawyers understand that this will often be the case, so if the plaintiff’s attorneys have compelling enough evidence the defendant’s lawyers will typically recommend settling. If they think the evidence is not compelling enough to sway a jury, they may opt to go to trial.
When it Makes Sense to Settle
If you’re filing a lawsuit, your attorney will discuss the likelihood of a settlement with you. A part of this process is calculating your damages and agreeing on a minimum settlement amount you will accept. This figure will be partially based on how much money you have to spend on representation during a trial and the defendant’s insurance coverage limits.
Another aspect of the case your attorney will cover with you is its strength. To determine this, your lawyer will examine:
- The strength of your evidence
- The strength of the defendant’s evidence
- Any practical difficulties in the case
- How the jury ruled in similar cases
All of these points will be used to determine your chances of winning in a trial. The stronger your case is, the better your odds will be, and the more you can hold out for in a settlement. If your case is determined to be weak, your lawyer may recommend that you accept a lower settlement because you won’t fare well in a trial.
The Financial Aspects of a Settlement
There are many common ways people get injured that can result in a lawsuit. Personal injury attorneys often represent people who are injured by the negligence of an individual or an entity, and they often work on a contingency basis. This means you don’t pay until the case is settled or won in court and the lawyer’s fees come out of that money.
The IRS will also get a share of your settlement. Your state’s tax authority will also take a cut. This is not a set amount, and how much you end up paying in taxes will depend on the type of case and other circumstances.
Why You Might Want to Avoid a Trial
Another reason you may want to avoid a trial is negative publicity. The other side may want to avoid a trial for the same reason. Civil trials are open to the public, which means private, sensitive information can be made public by the press. This could include trade secrets that could damage or ruin your business if they are exposed.
When you’re deciding whether or not to accept a settlement, you’ll need to carefully consider the costs of a trial and the possible fallout before you make your decision. This is an important decision that shouldn’t be taken lightly. An experienced lawyer will be able to go over the pros and cons of a trial in your case and help you decide your next step.