Early Settlements Can Save Money, Part II

In an earlier page we reported that a study found that early settlements can save money for both plaintiff and defendant.  See our prior page here.

A new study from the Journal of Empirical Legal Studies finds that if a plaintiff settles it can be more financially favorable than proceeding to trial.

The study looked at the results of 2,054 cases that went to trial from 2002 to 2005.  It found that plaintiffs made the wrong decision to go to trial in 61% of the time in that they ended-up with less money than had been offered in settlement.  In contrast, defendants were wrong 24% of the time in deciding to going to verdict.  In 15% of the cases, both plaintiffs and defendants made the correct decision in going to trial in that plaintiffs recovered more than what was offered yet less than the amount demanded.

The study also found that defendants face the biggest risk in forgoing settlements.  In cases where defendants incorrectly decided to go trial, the average plaintiff settlement demand was $770,900 while the average verdict was $1,900,000.  This means that defendants paid on average an additional $1,100,000.

However, in comparison, the average settlement offer to plaintiffs who wrongly went to trial was $48,700, and the average verdict was $43,000.

This study supports our experience that often a settlement favors a full trial to verdict.  However, we must go to trial on certain cases in order to obtain maximal recovery for our injured clients.

We go through a case by case determination of whether a client’s case should be settled or tried.  As we indicated in the earlier page, some cases should be settled, some should be tried, some should be settled early, and some should be settled on the courthouse steps right before trial starts.  We have the day to day experience to know when.


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