Good piece on how it’s usually wise for plaintiffs in injury cases to settle their claims, even when the settlement feels like too little money. The short version is that pre-trial settlement of the claim is generally the wise choice.

According to the forthcoming study, plaintiffs–the people bringing the lawsuit–mistakenly go to trial 60 percent of the time.  The measure of a mistake is whether they receive more at trial than was offered or less. If it’s less, the authors treat that as a mistake.

Interestingly, while defendant’s make the wrong choice less frequently, the study reportedly finds that when they are wrong, they tend to be wrong by a much greater amount.

I’ll be interested to see the study once it’s out because it may have understated something that’s important. If the study only compares the amount of the settlement offer to the amount of the trial verdict, the study may understate the harm to the plaintiff who chooses incorrectly.

Here’s why.

It usually costs substantially more to go to trial. In contingent fee cases, it is not unusual for a lawyer’s fee to increase if the case goes to trial.  That increase is designed to reflect the sharp increase in the amount of work the lawyer must do.The hourly lawyer’s fees also increase sharply as trial approaches, as the lawyer and his or her staff will spend a lot of time on the clock preparing for trial and going to trial.  When I am in trial, it is not unusual for my work days to run 14-18 hours, and when a trial goes several weeks or longer, it’s easy to see why things get expensive.

It’s not just about lawyers fees. In addition, the expenses associated with trying a case can be postponed until late in the game, but they steeply increase on the brink of trial. Expert witnesses spend many hours getting ready to testify. That’s an expense. So are the costs of exhibits and presentations.The bottom line is that going to trial costs a heck of a lot more.

As a practical matter, it measn that a settlement today of $25,000 might result in an equivalewnt bottom-line net recovery that is roughly equal to a trial result in the same case of $40,000.  So in this example, if an injured person turned down an offer of $25,000 and went to trial and won a verdict of $30,000, it would prove to be an unwise choice because the net amount in the person’s pocket would actually be less.

It’s a sobering article. But it confirms my professional experience. It’s part of why those of us who try cases regularly tell clients about the risks of going to trial.  We always want our clients to make informed choices.

David Sugerman