Weighing Settlement and Litigation Options

Litigation can be a serious gamble. Settlement is almost always a substantial compromise. Both options carry their own unique risks and rewards. But how does a client know which path to take when seeking resolution of his or her dispute? Obviously, the answer will depend on the circumstances of the case, the complexities and strengths of the client's position on the issues, the extent to which the client is willing or able to spend money for a trial and numerous other intangibles. Determining whether to roll the dice at trial or enter a less-than perfect compromise agreement to avoid the expense and risk of litigation is often the single most difficult and agonizing decision a client will  have to make in the course of a lawsuit. It involves a scenario where the lawyer and client must work together to reach the right decision. But, it's not always an easy choice to swallow.

First and foremost, the client must examine the strength of his or her case on the merits. The likelihood of success at trial will govern how much leverage can be asserted in settlement negotiations. In other words, if the client has a strong, persuasive case to present at trial, the more powerful his or her position will be at the negotiating table. Coming from this position of strength enables the client to convey that he or she is not afraid to roll the dice at trial, because he or she believes they would likely win. It would take a pretty generous offer - whereby the party gets virtually everything they are requesting at trial - to draw this client away from a litigation track. That is because, under this scenario, going to trial might be the right choice, unless a settlement offer presents an opportunity to conserve resources, avoid the emotional fallout from litigation and simply dispense with the conflict once and for all with virtually no risk.

At the other extreme, there is the client with a weak case on the merits. This client must be more willing to compromise and accept a less-than-perfect outcome because he or she realizes they are less likely to prevail at trial. There may be a tendency to walk away from a compromise under these circumstances feeling dissatisfied. But, the client must temper that dissatisfaction with the recognition that he or she simply "cut their losses" and entered a compromise agreement to avoid the substantial risk of gambling with a weak case in front of the court. Even though it may be hard to accept, the reality often is that the client would have done worse at trial than he or she did by way of the compromise. Of course, the outcome is not perfect, but it is governed in large part by the strength of the client's position in the underlying case.

Most cases fall somewhere in between, such that the case presents a mixed bag of strong facts and weak or vulnerable ones. In these more common cases, there are many factors to consider. The lawyer's knowledge of the presiding judge, the skill/experience level of the opposing counsel and the likability/credibility of the client as a witness are a few factors that will weigh on the decision. Ultimately, the lawyer and client must determine the degree of risk involved in rolling the dice at trial, given the above-referenced factors. Anytime, there are weaknesses in a case, there is a corresponding risk associated with trial. The way to alleviate the risk is to settle the case before trial. However, that usually means accepting a compromise or less than desirable outcome. While this may not seem palatable to the client at first, it is the price that must be paid for avoiding the risk of trial. The key to making the right decision is striking the proper balance of risk and compromise.

I often hear it said that a good compromise agreement usually results in both parties walking away feeling a little dissatisfied. That is the nature of compromise. The only way around it is to roll the dice - and that always carries the possibility of losing everything. So, the proverbial question becomes: When should the client stick to his or her guns and when should the client strike a deal? There is no simple answer. While I am always prepared to go to trial and excel, and I always convey that confidence to the other side, I also try to remain cognizant of reality and work hard to achieve results that are best tailored to my client's individual needs. Like just about everything else, balance is the key and "winning" is a relative term.