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Why most business litigation lawsuits settle

Experienced business litigation attorneys know that most lawsuits settle. In California, the percentage of civil lawsuits that settle as opposed to going to trial and verdict is usually right around 96% in any given year. This may seem odd to some observers. After all, most plaintiffs believe in their case, or presumably they wouldn't have filed it. Most, or at least many, defendants believe themselves to be blameless - and indeed some of them are. Nonetheless, when a case is filed the odds are overwhelmingly in favor of the case settling rather than going to trial.

What Settlement Means. At its core, settlement of a lawsuit means cutting a deal with the other side. This pretty much always means that both sides give something up and compromise their claims in order to resolve the case. It is often said that a good settlement is one in which both sides walk away less than happy because each side has given something up. Litigation is a form of negotiation. Sometimes it is simply not possible to negotiate a settlement without the preliminary step of filing a lawsuit and pursuing it. This does not mean that the case need go all the way to trial. Good attorneys often help their clients by avoiding trial and helping their client to reach a negotiated agreement - often a negotiated agreement that would not have been possible to reach without initially resorting to litigation.

Some cases do need to go to trial, no doubt of that. Sometimes the other side simply will not approach their case rationally. There can be other reasons why a case does not settle. But there are usually compelling reasons for the parties to strongly considering settlement.

Reasons to Settle.

  • Control the Outcome. In our Firm's opinion, the most important reason that settlement is usually advisable, even for strong cases, is to control the outcome of the case. When parties settle, each side knows what it is getting - and not getting. If the case goes to trial that means that neither side controls the outcome - a judge or jury does that. No matter how much respect an attorney may have for a judge or for the jury system, trial outcomes are usually uncertain. Sometimes very uncertain. And yes, trial outcomes are sometimes very unjust or downright unfair. Clients often know this intellectually, but experienced trial attorneys have actually experienced it, usually more than once. This is why experienced attorneys often encourage their clients to control the outcome by settling the case.  
  • Controlling costs is another compelling reason to settle cases. Even if a party does not get everything it wants in settlement, it usually avoids a lot of attorney's fees and court costs by settling prior to trial. Under the American system of justice the loser usually does not pay the winner's attorney's fees, so settlement often makes financial sense. And attorney's fees usually increase exponentially as the trial date approaches and the attorneys are working hard to prepare for trial. This cannot be helped. Woe betide the attorney who fails to prepare for trial! Thus, settling the case prior to trial is often financially sensible.
  • Finality and certainty. Finality is another reason to settle a case. Even after trial is finished, there can be an expensive post-trial and appeal process. The losing side may file for a Motion for New Trial followed by an actual Appeal. Even dubious appeals can drag on for over a year and cost both sides money. Normally, settlement eliminates all of this, providing both finality and a high degree of certainty.

In my own experience, it is very rare for parties to later regret settling their cases. Usually when this happens it is because one party or other has unresolved non-monetary issues related to the case. These sorts of problems are not the sort that lawyers or lawsuits can typically resolve. Almost always, in our experience, settlement makes financial sense and allows the parties to get on with their lives. 

Buffington Law Firm's experienced business litigation attorneys have tried many cases and settled many more for their clients.  If you have a business, real estate, or trust dispute, give us a call to arrange for a free legal consultation.   

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