Advantages and Disadvantages of Out-of-Court Solutions – Part I: Should I Settle?

While a trial is the ultimate means to pursue financial compensation for injuries, most plaintiffs decide to settle out of court. Find out what to consider when deciding whether or not to accept a settlement.

When a person is injured in an accident and decides to pursue a personal injury claim against the at-fault party, they may expect their claim to go straight to the courtroom and be tried in a lengthy litigation process. However, the reality of personal injury claims is often markedly different from this expectation. In fact, only a small percentage of all claims ever reach a trial stage. Sources differ on how small this percentage is. Some state that it’s only 4 to 5 percent. Other estimates place the number of cases that settle out of court between 80 and 92 percent, leaving the percentage of those that are ultimately tried at 8 to 20 percent.

Although exact data is not available, it seems clear that most personal injury claims are not finalized by the decision of a jury but rather by the means of a carefully negotiated settlement agreement between the plaintiff and the defendant. This may suggest that a private settlement holds some clear advantages over a trial. It’s natural, then, that many people seeking compensation through an injury claim often ask their personal injury lawyers if they should settle rather than pursue a trial.

There is, of course, no straightforward answer to this question. Each case is different and unique. No serious attorney would advise their client to pursue either a settlement or a trial at all cost. However, out-of-court solutions do have certain advantages that the injured person must consider and weigh when making a decision whether or not take their claim all the way to the courtroom. In this article and the next, we will present an overview of some of the advantages of settling a claim out of court. We will also answer the question of when it can be more beneficial to pursue a trial.

Time and Cost

Put simply, settlements are less expensive and less time consuming than trials. Of course, many personal injury attorneys work on a contingency fee basis which means that all pre-litigation expenses and the attorney’s ultimate pay are financed from the compensation awarded.

While this may happen either as a result of a settlement or a jury verdict, the fee is usually higher if the compensation is won in a trial. In addition, costs related to preparing a case for a trial may consume a larger share of the money awarded than costs of the discovery at the settlement negotiations stage. In the end, even if the compensation awarded by the jury may be higher than a potential settlement amount, a significant portion of it goes to cover all the expenses incurred during a trial.

While not all trials drag on for years, when deciding to pursue a trial a person must be prepared for a considerable time investment. For example, pre-trial proceedings involve depositions – giving a sworn testimony in the presence of a court reporter before a trial – that can be lengthy and tiresome. In addition, both the plaintiff and the defendant must appear before the court during a trial which may involve taking time off work and traveling long distances. This, in turn, may translate into additional expenses.

Predictability

Settlements are carefully thought-out and negotiated. While both parties must be willing to compromise in order to reach a satisfactory solution, both come to the table with a clear set of expectations and goals. An experienced attorney is able to tell which of these are reasonable and worth pursuing and which can be sacrificed. If both the plaintiff and the defendant act in goodwill, a predictable, satisfactory settlement can usually be reached.

Trials, on the other hand, are notorious for being unpredictable. Both the extent of the liability of the at-fault party and the ultimate compensation payout is open to the judgment and interpretation of the jury. This introduces an element of subjectivity.

During a trial, factors crucial for the outcome – such as eyewitness testimony or a piece of key evidence – can be brought into question by the other party’s attorney, swaying the jury’s perception of the case. That’s why it’s hard to estimate how large the amount of the compensation ultimately awarded by the jury will be. In some cases, it may turn out that the payout is less than the amount offered at the settlement stage.

Another key difference between a settlement and a jury verdict following a trial is related to questions of privacy and finality. You may need to ask yourself if you want your injury case to go to trial.