Study finds settling is better than going to trial

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General

8/8/2008
James R. Carroll, Jr., Esquire
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Study finds settling is better than going to trial

The following link is to a New York Times article regarding a comprehensive study of civil lawsuits that has found that most of the plaintiffs who decided to pass up a settlement offer and went to trial ended up getting less money than if they had taken that offer. The study was co-authored by Randall Kiser, who is an analyst at DecisionSet which is a consulting firm that advises clients on litigation decisions. When measuring how much money was recovered, 61% of the plaintiffs were wrong in deciding to not take a settlement and go to trial. However, defendants made the wrong decision by proceeding to trial only 24% of the time.

Approximately 80-92% of cases settle before they go to trial, however. The study was based upon a review of 2,054 cases that went to trial from 2002 to 2005.

Significantly, however, for plaintiffs who made the wrong decision and went to trial, it cost them about $43,000.00 on average. But, the defendants who made the wrong decision about going to trial were hit in a much greater amount, on average of 1.1 million dollars. Therefore, the errors that the defendants make are much more costly, despite the fact that the errors are made less often.

Also, the study indicated that factors such as rank of a lawyer’s law school and the size of a law firm were not dispositive in determining whether or not the lawyer and/or client made a mistake in going to trial. Therefore, as per the study, it does not really matter if you come from a big city firm or a small local firm, the same mistakes can be made.

Because we are experienced trial lawyers here at C&C Law, I immediately spotted a few defects with the study. First, the study stated that 15% of the cases the plaintiff received more than what was offered by the defendant, but less than what was demanded by the plaintiff before trial. This points out a fallacy in the ‘study’. A demand is a number to be worked from to reach an agreement. The fact that a plaintiff received less than their demand means NOTHING, if that demand did not represent what a client would accept as settlement, i.e., I demand $100,000.00 on a case I wish to settle for $50,000.00. After the trial, a jury awards met $57,000.00. I may have received $43K less than my ‘demand’, but I still resolved the case for what I thought was ‘full value’.

Also, a study like this, which gets printed in the NY Times is dangerous as it misinforms clients and potential clients and suggests that the problem is that the attorney is operating under a contingency fee agreement. (This has been a new ground for attack by tort (d)eformers; if they can’t prevent lawsuits and/or cap damages, then they will try to get limitations on contingency fee agreements, so people without money, who can’t pay hourly for an attorney, won’t be able to find an attorney because contingency fees have been curtailed or limited such that the claim is not worth the attorney risking his time and costs to prosecute.)

To see the entire article, go here.