Demystifying the Law: Settling a Civil Case

Posted July 28, 2011 in Demystifying the Law by

When you have a dispute with another person or business, you have the right to have that dispute resolved in a court of law. This is known as a civil lawsuit. When you file a lawsuit, you’re signaling to the other party that you want to solve the disagreement between you. But many civil lawsuits are settled before they are ever heard by a judge or jury. Today’s article will demystify how civil lawsuits are settled.

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Why Settle a Lawsuit

There are a few reasons why you would want to settle a civil lawsuit rather than having a judge or jury reach a verdict. The primary reasons are:

  • Litigation – a lawsuit – is expensive because legal fees can add up. Settling a case before trial will usually cost less in attorneys’ fees.
  • Litigation is slow. It can often take years from the time a case is filed until a verdict is reached.
  • Litigation is public. Except in certain circumstances, every court hearing and every document filed with the court is a matter of public record. This means your family, friends, strangers and even the media have the right to attend hearings, read these filings and share the information with other people. If you want to keep your case and information private, the resulting settlement can be sealed.

Questions to Ask When Deciding to Settle

As we said earlier, when you file a lawsuit, you’re sending the other party a signal that you are serious about the issue. But once you’ve filed the lawsuit, you don’t necessarily have to see it through to its conclusion.

It’s not uncommon to file a lawsuit when you have been unable to amicably resolve a dispute. But once that lawsuit is filed, both parties may feel new motivation to try to find some resolution that doesn’t require a trial.

How do you settle a lawsuit? Sometimes it’s as easy as picking up the telephone. But each dispute is unique, and you and your lawyer need to decide what’s right for you.

Let’s assume you’re the defendant in a lawsuit, meaning you’re the one being sued. You need to analyze the situation:

  • How much will you pay in legal fees and expenses to resolve the case in court?
  • How much do you think the other side (the plaintiff) will pay? Is the plaintiff paying his or her own legal expenses out of pocket, is an insurance company paying for the legal fees or is the attorney representing the plaintiff on contingency (meaning the lawyer is paid a percentage of any money that is won)?
  • What is the likelihood that a judge or jury will decide the case in your favor? What is the likelihood that the judge or jury will decide the case in the plaintiff’s favor?
  • If the plaintiff wins the case, how much money, if any, will you have to pay the plaintiff? What other action might you be forced to take? Can you afford to settle?
  • How long will it take to resolve the lawsuit if you go to trial? Is there value to you to resolving the case quickly? Is there value to the plaintiff?
  • Are there confidentiality or privacy issues involved? Does the media have any interest in the lawsuit? Would embarrassing information about you be revealed if it were made public?

After you’ve asked and answered those questions, you should have a better idea whether it makes sense to try to settle the lawsuit.

Making a Settlement Offer

Either you or your attorney should reach out to the other side to begin settlement negotiations. You’ll have to decide if the discussions are better handled lawyer-to-lawyer or one-on-one with the other side.

The first step is finding out whether the other side is open to negotiations. After you’ve established they are willing to discuss a settlement, you can then try to find out what resolution would make them happy.

You and your lawyer can then create a settlement offer. This is simply a list of things you’re willing to do, actions you’re willing to take or money you’re willing to pay to end the lawsuit. (It may be a combination of all three.) The other side will have a list as well.

Once you have developed a tentative settlement offer, you or your attorney will present it to the other side. There may be back-and-forth negotiations.

You need to remember that a settlement is often a give-and-get situation. There are trade-offs to be made when it comes to settling a lawsuit: You may not be getting the same results you’d get at trial, but you’re ending the dispute, saving legal fees and maintaining your privacy.

Once you’ve reached a tentative deal, your lawyer can write up a formal settlement agreement that both parties sign. After it’s been signed and the basic conditions have been met, your civil lawsuit can be dismissed.

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