As always, before reading this post please review my disclaimer by following the link above or by clicking on this link. As always, any legal principles discussed apply only to the Commonwealth of Virginia.
Introduction
Last week, I told you that my blog post this week would not come until Friday because I had a trial today. Yet, here I am. Why? Well, this morning the parties in my case reached a short-term settlement and the trial was delayed to July as a result (with a decent possibility of a final settlement by then). As often happens with this blog when I go to court, this experience inspired me to do this post - although I'll admit it's a post I've been toying around with doing in some sense for a while.
You've probably heard that most lawsuits never actually make it to trial - they settle out of court, usually with undisclosed settlement figures. As a result, if you are involved in a court case, especially if both parties have an attorney, there is a decent chance your lawsuit also will ultimately settle. This post will discuss some of the advantages of settlement, and why it may be worthwhile for you to consider settling your case, even if you don't get everything you want.
Reason to Settle: Cost Saving
The first reason, and usually the biggest, to settle is that it usually saves a lot of money. Trials are expensive. Legal fees can run in the tens of thousands of dollars, or more in bigger cases. A settlement cuts the case short, and saves you a substantial amount of money. Even a settlement on the day of trial prevents you from paying for the costs of the trial itself, and then any appeals that may have occurred.
Usually a settlement for less than what you want (if you're a plaintiff) or more than you want to pay (if you're a defendant) is still ultimately going to save you money, even if you were going to win at trial. This is a major factor that pushes people to settlement, and a very valid one.
Reason to Settle: Risk Management
Another reason to settle is risk management. Going into a trial, you frankly never really know what will happen. You may have a strong case, but the wrong judge and/or jury could still end up costing you a victory. A resulting appeal can be costly, and in many cases, even if you're right, your appeal will end up not even considered by the appellate court (see my post on appellate litigation to understand why even a correct appeal might not get heard).
While you never really know what will happen if you step into the courtroom, a settlement is completely under your control. The settlement is one of agreement - both parties lay out what they want to have happen, and they will come away with an enforceable document making it happen. Settlements, then, provide certainty in an otherwise uncertain environment.
Reason to Settle: Flexibility
By law, there are very few things a judge can actually do in a lawsuit. In a suit for money, for example, they can enter a judgment, and that's it. What if you'd be willing to take something else, other than money, to settle the debt you are owed, such as an apology, a particular piece of property, etc.? Well, the court cannot order that, but a settlement can.
One of the great things about settlement is that you can do all sorts of things a court cannot do on its own. Even better, as long as your settlement contract is legally enforceable (so the various rules of contract law do apply to it), you can frequently get your settlement contract enforced as written if it is later violated. For example, if you really do want a formal apology of some sort, that's a fairly unique thing without a reasonable cash value, so you might very well later be able to get a specific performance order where the court requires the person to do it if that person reneges.
Flexibility is one of my personal favorite advantages of a settlement. Courts really are limited in what they can do, while settlements can do almost anything you can imagine.
When is it Too Late to Settle?
While the above are by no means the only reasons to settle, they are the three main ones I encounter. But this question - when is it too late - is one I also encounter a lot. My saying is, "it's never too late to settle." And legally speaking, this is true. In most cases you could go to trial, get a judgment, appeal that judgment, get a final order from the Supreme Court, and then still decide by agreement between the parties to do something completely different.
While that may all be true technically, it is not entirely practical to expect such a thing to occur. Realistically, then, the odds of reaching a settlement fade the closer to the end of trial you get, and disappear almost entirely once the verdict is made. This is true for two reasons. First, if cost is your main reason for settling, the farther along you go, the more sunk costs you have and the fewer costs a settlement will avoid. Second, by the end of trial it is often clear who is likely to win, and then once the verdict is made, it is entirely clear who has won. That party now has a strong disincentive from agreeing to anything different - even if it's not a complete victory, you're going to have a hard time moving that party closer to your position from the judgment they already have in hand.
As a result, in my career I've had a good number of trials settle the morning of trial, but very few after the trial has begun, and only one after a ruling was made. So while it is technically never too late to settle, the longer you wait, the harder it is, so if you want to settle, it's a good idea to get to work on negotiations right away.
Conclusion
Settlements are often a very good alternative to taking a case to trial, and that is a good reason why a vast majority of lawsuits do settle. Nonetheless, you also need to be ready to go to trial if settlements don't come through. If you are involved in a lawsuit you would like to attempt to settle, please feel free to call (703)281-0134 or e-mail SLeven@thebaldwinlawfirm.com to set up your initial consultation. Our initial consultations are free for up to half an hour!
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