According to the American Bar Association relatively few lawsuits ever go all the way to trial. Most parties to civil (non- criminal) cases are settled long before trial. Once a suit is filed, the legal process itself can actually help opposing parties understand the strengths of their respective positions, often facilitating a settlement.
Here are 5 things parties to litigation should consider about negotiating a legal settlement:
1. Define Liability. Contrary to popular belief, settling a legal matter usually does not require either party to admit right or wrong. A settlement can define a new relationship between the parties by specifying their new responsibilities or just reaffirm old ones.
2. Define Issues. In a legal complaint, lawyers list all legal theories of why a defendant is liable to the plaintiff. It not only can create confusion, but this practice tends to raise emotions. A settlement can resolve some of the less important issues while leaving other issues to be heard by the judge or a jury.
3. Reduce Expenses. Many legal professionals will agree that settling a legal dispute can be far less expensive than litigation. Filing a legal action involves pleadings, motions, discovery, pre-trial hearings, status conferences, case evaluations, jury selection, trial preparation, a trial, post trial motions, appeals, etc. Time and financial commitments as well as risk of financial exposure act as great motivators for negotiating a settlement.
4. Manage Risk. When parties to litigation reach a settlement, they themselves are controlling the outcome of a dispute. This reduces their risk of having a third- party, such as a judge or jury, decide the final outcome and terms of a dispute.
5. Strategy. Known as a “strategic default” among some legal circles, parties can often negotiate settlement terms more favorable to them than those terms and provisions found in an original agreement.
It’s often said that a good settlement is reached when both parties leave the negotiation table a little unhappy. Negotiating a reasonable settlement takes time and patience and is influenced by at least one of the above- listed factors.
Disclaimer: You should not rely or act upon the contents of this article without seeking advice from your own attorney.
Since 1990, David Soble has represented lenders, loan servicers, consumers and business owners on residential and commercial real estate, finance and compliance issues. He has been involved in thousands of real estate transactions, being responsible for billions in real estate loan portfolios throughout his career.