When to Litigate and When to Settle

One of the most common and important maxims is, “Life isn’t fair.” No truer words were ever spoken, and there is no surer way to drive yourself crazy than to cling to the fantasy that everything in life will be fair or that everything in life will be exactly as you want it to be.

An Imperfect Justice System

For people who have been genuinely wronged and harmed by others, just thinking about the perpetrators, events, and the ensuing damage can be an infuriating and frustrating experience. There is an understandable desire to see justice done, to see wrongs righted, to see people made whole, to obtain some kind of official stamp of validation, and perhaps even to teach someone else a lesson or enrich oneself.

Unfortunately, the justice system and the court system are far from perfect or reliable from the standpoint of actually accomplishing any of these objectives. The court system is slow, grinding, expensive, unpredictable, and often riddled with human and judicial error. Many members of the public believe that the court system has some magic method of pouring in all relevant information, understanding exactly what occurred, and then rendering an infallible result, but that simply is not true.

The level of quality control for different jurisdictions and courts varies substantially, and the odds for a client with a strong case and skilled law firm can be much higher, but a rough unscientific estimate in relation to the United States court system — in general and as an entire whole — would be that the U.S. court system (civil and criminal) commits a serious miscarriage of justice about 25-33% of the time in the total inventory of what the system handles (in other countries, the percentage is often much worse).

Sometimes, these errors are due to judicial error, jury error, bad advice from an attorney, an inadequate expert witness, a dishonest witness, another courtroom actor with inaccurate or concealed evidence, or a party who goes pro se or flubs their own evidence and testimony during the litigation process. Other times, injustice in the court system results from someone simply running out of money before they can get through to the end of an adequate adjudication process. There are other reasons as well, such as death, health issues, casualty or data events destroying evidence or records, and various other unforeseen events. This is not to say that the U.S. judge and jury system should be jettisoned, but it is to say that the system is only the best system available from a range of possible legal systems, all of which are flawed and subject to human error. The bottom line is that these various imperfections result in a lot of injustice, carnage, and misery in the lives of those who are dragged through the legal system. This general backdrop is important to keep in mind when deciding when to settle a disputed matter rather than litigating it to the end and getting a court decision.

To Settle, or Not to Settle

Settlements almost always involve compromise, which in turn usually entails getting less than everything one believes they ought to receive relative to the opponent. Moreover, if one settles, one will never know what one could have received if they had fought to the end instead. As this is the case, how does one know whether entering into a settlement would be “giving up,” “leaving too much on the table,” or unwise?

Often, there is no way to know for certain what the optimal course of action would be, since by definition an unknown counterfactual (litigating to finality) is always left around if one settles. However, one useful rule of thumb to consider is this: Can you, at minimum, hold your nose and live with the situation the proposed settlement deal would create? Or would the settlement create an unbearable or fundamentally unworkable situation for you or someone else or leave you with a deep, resentful, oppressed, lingering feeling that the bargain struck was nowhere within the margin of fairness or ethics? In the former instance, it is often most prudent to take the deal, and in the latter instance, to turn it down and hold out for either court resolution or a better offer down the road.

It may sound strange to entertain the possibility of accepting a deal that requires you to hold your nose. Keep in mind, however, that disputes can consume an incredible amount of time, money, and energy, often at a cost exceeding whatever is in dispute. Stress, health problems, uncertainty, and missed opportunities can pile up because of a dispute. In some instances, the opportunity costs associated with preventing a person or an organization from focusing on other positive aspects of life can be considerable. There is no certainty that you will reach the end of litigation without life and circumstances changing drastically in the meantime, disrupting the original plans and outcome anticipated. In most instances, it is sheer fantasy to think that third parties or the general public will ever care about the outcome of your litigation, that the other party will come to their senses and feel remorse, or that some glory moment will result from the ultimate decision of the court. Furthermore, if one litigates to the end without settling, everything is out of your hands, and there is no guarantee that the court will actually get the answer right or impose a set of remedies that actually solve the problem(s) as well as a well-written, nuanced settlement agreement. A litigant who had a chance to reach an adequate settlement and passes on it, only to lose in the end and possibly be stuck with attorney fees to boot, usually feels like they have not only the wound of a loss but the salt of remorse ground into it.

When to Litigate

There are situations in which one should not settle. It is usually inadvisable to settle solely due to a lack of self-confidence, to placate someone else in spite of one’s firm conviction, gut instincts, or best judgment or because of temporary fatigue, depression, or a lack of moral courage. And there may be situations in which the other side is manifestly oppressive or unreasonable to the point that no adequate practical solution can be reached. Sometimes, there is no practical way to split the difference; every so often, the cause or situation is not amenable to compromise (a possible example would be protecting a child from serious harm, saving people from a sex predator, standing up for a principle of conscience, etc.). Disputes are often much more than a question of mere money, property, or greed. Furthermore, living under the constraints of a bad settlement one regrets having self-imposed can be very taxing in many ways, including from a psychological standpoint.

The Carrot of Settlement, the Stick of Litigation

About 90-95% of disputes that start off in civil or criminal litigation will be settled, plea bargained, or otherwise resolved by mutual voluntary agreement without ever going through to anything resembling completion of a trial or verdict. If that is true, and if settlement is often the wisest course of action, does that mean litigation and the use of attorneys are always a waste of time? The answer is an emphatic no, especially if the dispute concerns anything particularly important, valuable, or complex.

While it is a good idea to settle early if a reasonable deal can be obtained, often this avenue is not initially available. Indeed, some opponents will not even talk or bargain at all until they have first been grabbed by the hand of the law and forced into the litigation system to confront the issues and exchange evidence. Often some litigation is needed simply to get the initial information and documents necessary for an intelligent and fair settlement negotiation. Without the stick of litigation, the carrot of settlement will often lack sufficient attraction on its own to get anything resolved in tandem with the kind of troublemakers who cause a dispute to arise in the first place.

Litigating to a settlement is often like a card game or a chess game that progresses until enough cards are revealed or enough chess moves are made to make it clear to everyone how the matter is likely to shake out if pursued to its final and costly litigation conclusion. Knowing what information to discover, when to settle, how much to seek for settlement, how to bargain for settlement, and how to memorialize settlement into a clear and enforceable agreement are important aspects of the resolution process. Use of an ethical and knowledgeable attorney can often be extremely important in this regard.

It can also be a smart idea to get second or multiple opinions about litigation and settlement to see if one’s own predilections (or the positions of one’s allies or opponents) are in the mainstream notion of what would be reasonable. Be wary of anyone, including an attorney, who oversells one approach to the exclusion of others, paints a pie-in-the-sky scenario, tells you only what you want to hear, or seems only to recommend approaches that would enrich someone else at your expense.

What About Mediation and Arbitration?

Mediation and arbitration are also possible options for resolving disputes. Mediation is when opposing parties meet with the help of a professional mediator — usually a neutral attorney or retired judge — who will try to help the parties reach a voluntary settlement agreement. Mediators can often act as a sounding board to help parties and their attorneys objectively look at the respective strengths and weaknesses of their own positions and creatively problem solve to identify an arrangement everyone can agree upon and tolerate in order to resolve the dispute.

Arbitration is when the opposing parties essentially agree to have a private judge impose a binding decision upon them through a private litigation process that is usually designed to be simpler, faster, and more streamlined than the regular court process. Arbitration can be mutually agreed to after a dispute arises, or it can be mandated in a written contract originally signed by the parties before the dispute arose. In many instances — such as when confidentiality is desired, arcane knowledge is involved, or the regular local court system is backlogged or of poor quality — it may be wise to utilize arbitration.

Every Case Is Unique

The very best way to deal with a dispute is to avoid putting yourself in such a position in the first place. That strategy, which is easier said than done, often entails involving attorney advice upfront and in a preventative way, instead of at the backend in a remedial way. It also involves being careful about the people and entities with whom one gets involved. But even with the best of efforts, sometimes, one is simply unlucky and finds themselves on the wrong street corner in life when an auto wreck just happens to come their way.

When one does find themself entangled in a dispute, it is often best to try to end the dispute as quickly as possible and, in the process, to remember that there are usually no easy answers or thorn-free paths ahead. In many situations, some bleeding will happen, but the goal is to keep it to a minimum. Attorneys, like doctors, often can’t prevent or eliminate all pain, but they can frequently help contain and reduce it, as well as help a client get past a situation and move on to recover in the best way possible. When it comes to getting mixed up in a legal dispute, and when deciding whether, when, and how to settle out of it, remember the famous line in the movie The Princess Bride: “Life is pain, Highness. Anyone who says differently is selling something.”

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