Should You Settle a Case?
Being involved in civil litigation can be expensive and time-consuming. In the end, the party bringing the lawsuit may wind up with nothing to show for it. So plaintiffs are almost always encouraged to settle. And defendants are often encouraged to settle because the cost of litigation may be higher than the amount demanded in the complaint.
How do you decide whether or not you should settle a case or go to trial? Here are 11 questions to help put the situation in perspective:
1. Is it worth the time, money and energy that a lawsuit will take?
2. What is the risk of losing the case?
3. Is it worth the fight? Litigation is stressful. Sometimes, for your piece of mind, it can be better to just let it go.
4. Is the evidence in the case favorable to you?
5. If you do win, how likely is it you’ll be able to collect? Does the other side have sufficient assets to pay a judgment? Will a long, expensive trial hurt the ability of the other party to pay? In other words, is it possible to get more money by settling now?
6. If you can’t collect, would you be willing to spend more money in an attempt to collect a judgment?
7. Is it likely that you’ll have to pay attorneys’ fees for the other side if you lose?
8. Will a court case result in negative publicity about you, your business, or your family? With a settlement, the terms are likely to be kept confidential.
9. Is it possible that trade secrets or other confidential information about your business will be revealed in court if you go forward?
10. Does the other side want to settle out of court?
11. Have there been successful similar cases (legal precedents)?
After an Agreement: Can You Unsettle a Settlement?
If you agree to a settlement, are you locked in? Generally yes, but, depending on the circumstances, there are a few exceptions. For example, some court cases may hold that a settlement agreement procured by fraud can be rescinded.
Settlement agreements are contracts. So a decision on whether or not a settlement agreement is binding is generally governed by state law.
If the other party does not abide by the terms, you may be able to:
- File an action in court for a breach of the settlement agreement.
- Motion the court to enforce the settlement agreement.
- Take steps to enforce the judgment if the party signed a confession of judgment.
If you have questions about a settlement in your situation, consult with your attorney.
“Without Prejudice”
When in settlement negotiations, the two sides may engage in written communications that state they are “Without Prejudice; For Settlement Purposes Only.”
Basically, this means the information can’t be used against either party as evidence in the event a settlement isn’t reached and the case does go to court.
Having communications that are without prejudice allows the free flow of ideas, which is generally necessary to reach a settlement.