Settling a lawsuit outside of court saves time and money for everyone involved, and removes a great deal of the risk involved for all parties. Settlements give everyone involved a say in the resolution and all of the potential “worst case scenarios” are avoided.
What’s the Primary Reason People Involved in Lawsuit Agree to a Settlement?
The biggest reason people agree to settle a lawsuit is money.
Even if a defendant agrees to pay millions of dollars in a settlement with the plaintiff, it can still be cheaper than allowing a judge or jury to decide the award.
The thing about trials is there are no guarantees. There might be no award for the plaintiff or it might be far more than expected. Settlements give control to those involved so everyone can be satisfied with the outcome.
The outcome of the settlement versus a trial isn’t the only financial consideration when it comes to settling a lawsuit.
In many cases, the amount of money a plaintiff will pay his or her attorney is less if the case settles out of court. Pre-trial contingency fees tend to be five to 10 percent less than those paid after a trial is over.
Defendants also save money on legal fees when they settle because they pay for fewer hours of representation. Additionally, they do not need to pay for court costs, expert witness fees, or travel time for those involved in the trial.
The sooner parties are able to reach a settlement the less expensive it is for everyone involved.
Keep in mind, there are times when rushing to settlement is not an option.
For instance, when insurance companies are involved, they are required to settle in good faith. They are not permitted to rush to a settlement to save on litigation costs, but if a plaintiff accepts or proposes a reasonable settlement, the defendant can’t refuse just because the insurance company is footing the bill.
Avoiding the Stress and Bad Publicity of Trial
Money is not the only reason parties involved in a lawsuit choose to settle.
Litigation is stressful for everyone involved. And while some of the people with a stake in a lawsuit have the time to focus entirely on the trial preparations, others have obligations in addition to the lawsuit.
This is especially true in personal injury cases when the majority of a plaintiff’s time should be focused on healing and recovery. Someone injured in an accident will have the support of an attorney to help them with the stress of a lawsuit, but in many instances, it will be easier and less stressful to settle outside of court.
Lawsuits can also damage the reputations of those involved. Depending on what is at stake for a defendant, the person or entity might prefer to settle outside of court because the details of the settlement remain private. They also won’t need to worry about weeks or months of bad publicity during the trial.
Settlements Avoid Appeals
Finally, sometimes it is better a lawsuit ended in a settlement because it avoids the lengthy appeals process. Even after months of preparing for a trial and reaching a verdict, the process might not end. If either side decides to appeal the verdict, the process can continue for several more years. It might even be possible to appeal more than once.
Settlements cannot be appealed. Both parties agree to the resolution and the lawsuit ends once the obligations of the settlement are met.
Today, settling lawsuits outside of court has become so popular that many firms specialize in helping parties negotiate out-of-court settlements.