To Settle or Not to Settle? That Is the Question

By Shulamit Shvartsman, Attorney | Reviewed by David Goguen, J.D., University of San Francisco School of Law
You're involved in a legal dispute, perhaps even a civil lawsuit. What are the pros and cons of settling out of court?

What do you get when you combine a litigious American public with an overburdened court system? The answer is: an overwhelming majority of civil cases that settle well before reaching the trial stage of a lawsuit, nationwide. Whether we're talking about a divorce, a car accident lawsuit, or a contract dispute, the parties in a civil case often choose to settle their case rather than leave their respective fates in the hands of an unpredictable jury. But is settlement always more beneficial? Let's take a look at some of the key pros and cons of settling a civil case, and a few more issues to keep in mind when you're deciding on the best path toward resolution of your civil case.

Settlement Basics

Settlement” is just a term for formal resolution of a legal dispute without the matter being decided by a court judgment (jury verdict or judge's ruling). Usually that means the defendant offers a certain sum of money to the plaintiff in exchange for the plaintiff's signing a release of the defendant's liability in connection with the underlying incident or transaction. This can happen at any point in a civil lawsuit. It can even occur before the plaintiff files a lawsuit at all, if the parties can come together a reach a fair agreement soon after the dispute arises, and both sides are motivated to do so.

Benefits of Settling a Case

There are many benefits to settlement of a legal dispute or lawsuit, for instance:

  • Expense. Trials involve attorneys, expert witnesses, extensive depositions during the discovery process, travel, and time. If a case settles before going to trial, many of these expenses can be significantly reduced or eliminated altogether.
  • Stress. Settlement may reduce some of the stress that a trial can bring on. Besides the anticipation of the unknown result to come, both sides of a lawsuit might fear getting on the witness stand and telling their story to a judge and jury, then being subject to cross-examination by the other side's attorney.
  • Privacy. Details of a civil case can be kept private when settled. When you take a case to trial, the court documents become a public record, and anyone can look at them, unless the judge orders the records sealed. When you settle a case, most of the details are kept out of the court documents, and aren't a public record. Many settlement agreements also incorporate a confidentiality clause.
  • Predictability. Any trial lawyer will tell you that a jury's decision isn't the easiest thing in the world to predict. By contrast, you can dictate the terms of your settlement agreement, or at least work with the other side to come up with a deal you can both live with.
  • Finality. The losing party can appeal a court judgment, dragging out the process even longer. Settlements can't usually be appealed.

When It Doesn't Make Sense to Settle

Sometimes a lawsuit is filed so that a plaintiff can satisfy a very personal or profound sense of right and wrong, or to make an important point that impacts more than the parties in the case. For cases challenging the constitutionality of a law or some other perceived fundamental unfairness, settling wouldn't be a good option because it doesn't create precedent and won't affect public policy.

And of course, if one or both parties aren't motivated to settle, or aren't coming to the negotiating table with a remotely realistic offer, then resolution of the lawsuit before trial may not be possible.

Who Decides?

When considering the terms of a settlement, as part of his or her role as counsel and advocate, your lawyer will analyze whether the settlement is actually in your best interest. In rare instances a lawyer might seek quick finality to a case and pressure a client to accept a settlement, but a good lawyer will weigh all aspects of the proposed settlement and whether it will adequately compensate the client's losses. A good lawyer will also recognize that the ultimate decision on whether or not to settle belongs to the client.

Learn more about settlement in the context of a personal injury case: Settlement FAQ.

Questions for Your Attorney

  • Do I have to sign a settlement agreement on the spot or do I have time to bring it to an attorney?
  • If my case can't reach settlement, what about other pre-trial dispute resolution options, like mediation?
  • Is there a chance that the court won't sign off on my settlement agreement?
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