Go To Trial or Settle Your Case?

Whether or not to take a case to trial, especially an employment case, can be a gut wrenching and life changing decision.

Make the right decision, and you vindicate yourself, prove your boss wrong, and walk away with two or more years’ worth of wages in your pocket.

Make the wrong decision, and you spend $15,000 in costs (not the attorney’s fee, but the attorney’s trial expenses), and you walk away with nothing to show for it besides 2-4 wasted years of your life.  And a gloating ex-boss.

So, it’s obviously a HUGE decision.

That’s why I want to tell you about how the decision to go to trial was studied by scientists, and what they found out about what is usually the right decision, what what is usually the wrong decision.

There article is from the Journal of Loss Prevention, and like most information about going to trial, it’s written for employers (who can pay scientists to study things for them).  But, there’s lots of good info here for employees — and even some good news about employment lawsuits in particular (see highlights).  Here’ the piece:

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NEW STUDY CAN HELP YOU DECIDE WHETHER TO GO TO TRIAL

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A new study of civil claims between 2002 and 2005 finds that most plaintiffs who go to trial instead of taking a settlement offer end up with less money than if they had taken the settlement offer.

According to the study, the plaintiff made the wrong decision by proceeding to trial in 61 percent of the cases. Defendants made the wrong decision far less often – 24 percent of the cases. Jonathan D. Glater, “Study Finds Settling Is Better Than Going to Trial,” The New York Times (Aug. 8, 2008).

Commentary and Checklist

Whether an employer is on the plaintiff side in a lawsuit or the defense, the vast majority of cases do settle; estimates put the number between 80 and 92 percent.

Deciding to go to trial comes with a hefty price tag if the decision results in a loss. On average, getting it wrong cost plaintiffs about $43,000 and, although wrong less frequently, defendants paid a much greater price when they erred: $1.1 million.

This study is the largest of its kind to date and examined trial outcomes over a 40-year period – although the data for the losses was only from 2002 through 2005. The research shows that over time, poor decisions to go to trial have actually become more frequent.

There are a variety of reasons why an individual or an organization may refuse to settle a lawsuit. One reason is that they may not fully understand the chance and consequences of a loss at trial. Another is that, emotionally, they may not want to let go of the fight – no matter what the consequences.

Interestingly, plaintiffs are more likely to roll the dice and go to trial when they have hired an attorney on a contingency fee arrangement. In other words, if there is no monetary settlement in the plaintiff’s favor, the plaintiff does not pay for the lawyer’s services.

Missing from the survey are the costs and fees associated with going to trial. In some instances, the fees and costs associated with trial may exceed the verdict.

In the employment context, plaintiffs are more likely to find a jury that identifies with them (most jurors are or were employees); therefore, less risk is involved when employers settle with plaintiffs/employees so long as they do so quickly before expenses and emotions spiral out of control. To that end, here are some things to consider:

Take your emotion out of the decision on whether to settle or try a case. You should make a business and not an emotional decision.

When considering the costs of going to trial, make certain that you add fees and costs.

Your time and the time of your people responding to discovery requests and attending depositions should also be considered when deciding to extend litigation.

Make certain that your attorneys continually communicate with the plaintiff or their attorneys. Good communication and professional demeanor will always allow for a better settlement offer.

When mapping your defense, make certain that settlement is always an option and that settlement is explored as early as possible before fees begin to escalate.

This informational piece is part of “The Loss Prevention Journal” published on August 18, 2008.

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Notice the figure of $43,000 if a plaintiff loses at trial?  I think that’s high, but not totally unrealistic for an employee-plaintiff in an employment lawsuit.  Usually the plaintiff-attorney absorbs a large portion of those costs.

However, if you are considering hiring an attorney to take your case against your employer, YOU MUST CHECK WHO PAYS COSTS, especially if you lose.  If you win, costs are just deducted from the winnings.  If you lose, it can empty your savings, your retirement, even sap away your home equity.

The final nugget in this article I want to comment on is the portion about how some people may not want to settle because they don’t want to let go of the fight.  How likely would you be to fall into that trap?  How likely would your BOSS be to want to keep fighting because they like to fight?

Please tell us if you have seen any of these happen at your own work, whether to yourself or to people around you who took on the company — how did the managers react?  Did the case settle or go to trial?  Or, are you trying to hire an employment attorney?  What traits are you looking for?

-Curt K (The Undercover Lawyer)