Trial Counsel for Law Firms

Go to Trial or Settle?

We discussed civil trial economics and criminal trial economics to explore why cases go to trial or settle.  The analyses are based on the assumption that cases have probabilities and people are rationale. Neither assumption is accurate. Therefore, it is helpful to consider some factors affecting the decision to settle or go to trial.

Three common factors affecting settlement are risk, money and personality, each of which is discussed below.

Risk

Uncertainty – probable outcomes are unknown, but a decent trial lawyer will be able to assess the strengths and weakness and have a general sense of what the trial outcome may be. The amount of pre-trial discovery and availability of case law inform the analysis.

Level of risk tolerance – high or low risk tolerance may move things towards trial or settlement. A plaintiff with a 75% chance of success and high risk tolerance may be prepared to take their chances at trial no matter what.

Money

Resource imbalances – a well-resource party can take a less-resourced opponent through a lot of expensive procedure.

Cash flow – inability to finance litigation can grind things to a halt for a plaintiff who has not adequately planned ahead.

Power imbalances – like resource imbalances, power imbalances can affect the likelihood of settlement to avoid other consequences.

Lost opportunity cost – litigation interferes with other work and opportunities and there is a real business cost associated with it. This is especially true of civil litigation.

Personality

Importance of principles / notions of justice – a sense of righteousness can toss economic approaches out the window altogether. Vindication can be a factor for both criminal and civil matters, in order to prove that one was right.

Stigma – the stigma of a criminal record is a huge force behind going to trial in a criminal matter.

Level of litigation tolerance – litigation is generally a negative experience that many people want to avoid. This can be exploited by battle-hardened litigants.

Perceptions – the plaintiff may see a 75% chance of success, but the defendant may feel the plaintiff’s chance is 25%. Such huge differences in perception may stem from a lack of objectivity or bad advice.

Dealing with these Factors

If any of the above factors are at play and driving a case to trial that should not go to trial or forcing an improvident settlement, some strategic intervention is required.  Settlement counsel and trial counsel can help neutralize these factors for more predictable outcomes.

Hassell Trial Counsel
111 Greensides Ave
Toronto, Ontario M6G 3P8


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