Should I Settle? The Pros and Cons of Settlement Negotiation

You are involved in a lawsuit, and the opposing party approaches you about the possibility of discussing a settlement instead of proceeding towards trial.  Should you do it?

The vast majority of cases never end up in trial.  If the case is a true slam-dunk, they will often get resolved early on through various motions that can be filed.  In the rest of the cases, usually one side will approach the other about possibly reaching a settlement.  There are several benefits to a settlement, but there may also be some potential down-sides.

PRO:  Cannot Be Used Against You:

One key benefit to remember is that the judge and jury will never get to hear anything about your settlement negotiations.  By statute, such negotiations are confidential and inadmissible in court.  That means there is little harm is starting settlement negotiations with the other side to see what their best offer will be.  If they are ultimately not successful, and the other side does not move enough in your direction, you can still ask for the full amount when you go to trial.

PRO:  Gives You Control Over the Outcome:

One benefit of a settlement is that it gives the parties control over the outcome.  When a case is turned over to a judge or jury, you can never be completely sure of how it will turn out.  What you think may be clear negligence the jury might see as a mere accident.  By settling the case, the uncertainty is taken out of it.

PRO:  Quicker Resolution:

The wheels of justice turn very slowly, and it can take considerable time to arrive at a final outcome through the court system.  Settlement allows the parties to reach a resolution often well in advance of trial.  That means, you will get your money a lot sooner and can move on with your life after having some type of resolution.

PRO:  Cheaper than Trial:

Litigation can often be expensive, due to the countless hours that can be involved in discovery, depositions, and motions.  Especially if an expert witness is needed, those costs can rise considerably as a case goes to trial.  Settlement allows the parties to achieve a resolution before going through the time and expense of a trial in front of a judge or jury.

CON:  You Don’t Get 100%:

By definition, if you reach a settlement then neither side is getting 100% of what they were asking for originally.  Depending on the strength of your case and the evidence available to you, the final settlement could be closer to one party’s demand or the other.  While this is an important consideration, it is often outweighed by the potential benefits of settling.  In addition, just because you start negotiating does not mean that you have to settle the case.  Settlement negotiations let you see what the other side is willing to do.  If their offer is adequate, you can decide whether to take it or not.  If it is not adequate, you have not lost must in attempting the settlement.

CON:  Might Show “Weakness:”

One potential con is that engaging in settlement negotiations may portray to the other side that you are not confident in your case.  However, this is most often not a concern and the potential risk can be mitigated by a skilled attorney.  If the other side starts the settlement negotiations, then showing weakness is not much of a concern at all and it is quite valuable to entertain the negotiations. 

CON:  Might Tip Your Hand:

Some people are concerned that engaging in settlement negotiations will “tip your hand” or give the other side a sneak peek at your trial strategy, which would then allow them to prepare to combat your strategy.  There may be instances where you would strategically want to hold off on settlement talks to not signal to opposing counsel what your strategy may be.  However, you do not have to reveal everything at settlement.  Also, by the time settlement talks occur, there has usually been quite a bit of discovery done, and all the parties have a good idea of what the facts and issues are.

Anytime you are involved in a lawsuit, there is uncertainty in the outcome.  Engaging in settlement negotiations can help to put certainty and control back into your hands.  While the decision of whether to discuss settlement must be evaluated on a case-by-case basis, in a majority of the cases the pros tend to outweigh the cons.

If you are involved in a lawsuit, talk to the experienced trial attorneys at Goosmann Law Firm, PLC, in our Omaha, Sioux City, and Sioux Falls offices to evaluate your case and whether discussing settlement makes sense in your situation.