What is a Settlement?

A settlement is an agreement reached before the end of a trial that ends a dispute between parties who have a pending case in the court system.

When a case is filed, there is usually a long period of time to wait until it eventually goes to trial. During this time, most parties will be inclined to at least attempt to settle their case and go back to their normal lives as soon as possible.

 

Reasons to Settle a Case

Settlements Save Time
Due to the extensive amount of time it takes for both parties to investigate and research relevant laws, cases often wander through the court system for many years before going to trial.

When a case finally does reach a trial, there’s no guarantee of what the outcome will be. And sometimes, with the exception of small claims court, there is an extensive appeals process that can be utilized, dragging the process out even longer.

Settlements Save Money
While trials are often long and arduous, the monetary cost of going to trial can be just as great.

Some of the many fees incurred from a trial can include attorney’­­s fees, expert witness fees, document-filing fees, and administrative fees of all kinds.

As an example, in a personal injury case, insurance companies pay their defense counsel by the hour. With some cases exceeding 70 hours, the cost adds up exponentially. And, more often than not, multiple expert witnesses must be brought in to share their experience around the specific injury or circumstances that aren’t clear to someone outside of their profession. Experts aren’t cheap.

Other costs can include travel and accommodations if the case is not local to the counsel hired. If a lawyer is required to fly to another location, rent a car and stay in a hotel in order to conduct business, they are legally allowed to request reimbursement for their expenses.

Settlements Provide a Quick Resolution
People file cases when they feel they have been wronged in some way and cannot find a satisfactory solution on their own.

Settling provides a fair and reasonable compromise that eliminates the expense of a trial, while ensuring proper compensation is provided for the party who has been wronged.

A settlement also mitigates potentially greater losses that often accompany a jury verdict.

How are cases settled?

In a courtroom setting, there is a formal structure for parties involved in a dispute to exchange information where lawyers can advise their clients of their rights under the law. It’s not uncommon for both parties to gain information surrounding the case and then proceed to calculate the benefits of coming to a settlement agreement.

Generally speaking, both parties in a case will want to resolve the issue as quickly and inexpensively as possible, provided the outcome is fair to the person who has been wronged.

Looking at the potential cost of a trial and what is at stake for each party to gain or lose as a result of the potential verdicts, one party will usually initiate and write an offer letter to the other party that outlines the risks of the case going to trial. This letter also calculates potential damages and a proposed settlement amount.

By pointing out the strengths and weaknesses of the case to the other party, the offer letter is an attempt to persuade the other party to negotiate a fair agreement, ending the stressful experience of the court system for both sides.