Settling Business Disputes

Settling a Business Dispute

Studies show that over 95% of all lawsuits are resolved without a trial. Thus, the overwhelming probability is that a new case will settle. For that reason, much of a business litigator’s job is getting a case into a position that will enhance the possibility of a favorable settlement. Generally, the earlier the case can be settled, the greater the economic benefit.

Even though most cases settle, the attorney still must fully prepare your case for court. Inadequate preparations dramatically undermine the chances of achieving the best settlement.

SETTLEMENT CAN PROVIDE ADDITIONAL OPTIONS

A negotiated settlement can provide opportunities that would not be available through a trial.
In a court case, the remedies are usually limited to an award of money. But in a negotiated settlement, one party might be able to make business concessions to the other party in order to reach a mutually satisfactory resolution. And even when the exchange of money is the only possible solution, settlement can afford arrangements such as paying out the judgment over time, perhaps with agreed collateral to secure the payment.

SETTLEMENT CAN MAKE FINANCIAL SENSE

A major factor influencing settlement is the avoidance of the expense of litigation. As a case moves on toward trial, the expenses increase exponentially. When an attorney charges by the hour, an early settlement will materially reduce the legal fees. Furthermore, for the plaintiff, the present value of cash in hand is greater than an equal sum received in the future.

WHEN IS A CASE LIKELY TO SETTLE?

It’s impossible to predict. Some of the key times when business disputes are more likely to settle are:
• Before or shortly after a lawsuit is filed. Typically, these are smaller, simpler cases in which the defendant’s liability is clear and the damages are modest. Alternatively, one or both parties may be eager to preserve the business relationship because they have other deals in place or pending or few
alternative business partners. If the defendant is covered by insurance, it may be possible to negotiate a settlement with the insurance adjuster.
• At the conclusion of court-ordered or mutually agreed-on mediation.
• After the plaintiff’s or defendant’s deposition has been taken when each attorney can see how strong a witness the opposing party will make.
• After discovery has been completed when each side has a good idea of the other’s evidence and the attorneys can make an educated prediction about the likely outcome of a trial.
• On the eve of trial when facing the last chance to avoid the expenses and risks of trying the case.
• After the plaintiff presents a strong case, when the defense anticipates a large verdict in the plaintiff’s favor.
• After a verdict to avoid the delay and expense of an appeal.