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To Settle or Trial, That is the Question

Different plaintiffs have different levels of risk tolerance. Some would rather be assured a definite recovery than push for a higher settlement amount and take the chance of losing it all. Others have an unrealistic sense of the value of the case and blindly seek to advance the case to trial even when there are limitations to the amount of coverage and serious problems with the liability.

The cost of the trial is sometimes a consideration. Time expended with an expert to review the records and prepare for trial is expensive. Some cases require as many as six or seven experts or more in various disciplines. Daily transcripts of the trial are generally ordered. Travel arrangements, lodging and meals add into the equation. The cost of just the trial alone can easily exceed one hundred thousand dollars. Hence, it must be assessed whether the projected cost of trial will eat up any anticipated financial benefit that a trial would have over a settlement or significantly reduce the client's share of the recovery if there is only a modest award. And of course, the potential and cost of an appeal and the uncertainty of its ultimate outcome is yet another factor that must be weighed in the context of considering a potential settlement.

There is obviously a big "risk-benefit" issue when considering a settlement versus proceeding to trial. There is little advantage to a trial if a favorable settlement can be obtained. Although there is the possible benefit of having a jury verdict sustained in excess of the settlement amount, there is also the chance that the case will be lost or that the jury will award less than that offered in settlement. And, if the jury awards an excessive amount, the case can be tied up in the appellate court for years only to be sent back for a new trial or even dismissed. Studies have shown that cases that are tried are more often decided in favor of the defendant's and the awards in the other case are more often less than that which could have been obtained in settlement.

Generally it is in the interest of the parties and most often the defendants to have the matter kept confidential. Confidentiality is sometimes a motivating factor for a defendant to want to settle a case and has value which generally evaporates once trial begins. A confidential settlement protects both sides and assures that neither will be exposed to unwanted publicity with the understanding that the settlement is simply a resolution of the financial interest of the respective parties and not necessarily an admission of culpability.

Another trial consideration is whether to enter into a "high-low" agreement. On occasions an insurance company will want to protect itself against a verdict in excess of certain limits and in exchange is willing to guarantee a minimum recovery to the plaintiff even if the jury were to find in favor of the defendant. These agreements usually take life as the trial unfolds as each side assesses how likely it is for there to be a verdict one way or another. It is usually at the end of a trial that the parties enter into such an agreement. The advantage to the plaintiff is that it provides a guaranteed recovery and avoids the potential of an appeal. The downside, of course, is that if there is a jury verdict in excess of the agreed upon ceiling, the settlement is capped at the agreed upon sum.