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What Does it Mean to Settle a Case?

Settling a case means ending a dispute before the end of a trial. Although popular media often makes it seem like significant cases get resolved quickly, a case can meander through the court system for years.

This article examines an alternative to traditional courtroom litigation: settling cases out of court. This approach is often less costly and time-consuming than the usual litigation proceedings.

Understanding Out-of-Court Settlement

An out-of-court settlement happens when the parties to a case resolve the legal issues without going to trial. It is when the parties negotiate a fair settlement agreement that is acceptable to both parties. There are various means to settle a dispute out of court. These processes are collectively called Alternative Dispute Resolution (ADR).

The most common types of ADR are arbitration and mediation. In an arbitration, the resolution process resembles litigation in some ways. But a neutral third party hears the case instead of a judge or jury. The parties pick the neutral third party who acts as the sole arbitrator.

Depending on the legal case, this agreement may include a settlement offer such as financial compensation, punitive damages, or other terms. For instance, parties may agree on non-monetary remedies such as contract modification or an apology.

An important disclaimer is that not all legal issues are suitable for ADR or settlement negotiation. For instance, some personal injury cases are too complicated for an out-of-court settlement.

Why Settle a Case?

A trial is a long, expensive process. Most people do not file a suit simply for the thrill of the courtroom experience. Instead, people file suit because they feel someone has wronged them and can't find a suitable solution. Settling a case may offer a way to avoid the expense of trial while still getting some compensation for the wrong committed against them. It can save both parties time and money compared with formal litigation.

Although settlement can be a great alternative to save time and avoid litigation costs, there are some things you should consider when deciding whether settlement is the best option for you.

Advantages of Settling Out of Court

The following are some of the advantages of settling out of court:

  • Faster resolution of cases. Some court cases could take months or years to resolve. Out-of-court settlements and other alternative dispute resolution (ADR) help parties agree and resolve the dispute within a shorter period.
  • Reduced cost. Most types of ADR are cheaper than court litigation. Settling a case early on will save you attorney's fees and other legal fees.
  • Control over the outcome. The outcome of a trial is often uncertain and lies in the hands of the judge or the jury. With out-of-court settlement, parties have more control over the outcomes and the terms of their agreement.
  • Avoidance of fault. When a case goes to trial, the court often determines the party at fault and who should get damages. But, when parties settle, the determination of fault is rarely included. This can benefit the parties who want to resolve the case without the stigma of blame.
  • Enhanced confidentiality. Court proceedings and orders are often part of the public record. But, with the resolution process, matters get handled privately. This helps maintain the confidentiality of the lawsuit and privacy for both parties.

Disadvantages of Settling Out of Court

Although there are many advantages to settling a case out of court, the parties should also consider some disadvantages.

  • Lack of accountability. When parties settle a case out of court, no one is at fault. This means that the party in the wrong can't be accountable for their actions.
  • Potential for lesser compensation. In some cases, the settlement amount could be less than what the court could have awarded had the party gone to trial.
  • Restriction on further action. Often, when the parties settle the case, they can't pursue further legal action against each other. This is particularly true in cases where the parties agree to relinquish future claims related to the dispute.
  • Lack of legal precedent. Settlement out of court does not result in a legal precedent. This means that the facts of the case and the parties' agreement can't guide future cases. This can disadvantage those looking to effect a broader change or establish a particular subject matter.

Although there are advantages and disadvantages of settling a case out of court, it is an option that both parties can use to avoid the lengthy and costly legal process.

How Are Cases Settled?

Settling a case out of court often involves a series of steps. The following are the common stages:

1. Exchange Information

The parties involved in the case start the settlement process by exchanging information. This phase is essential because it allows each party to understand the facts of the case and their position. Lawyers are not strictly necessary when going through the resolution process. But it helps to have an ADR lawyer to guide you through the process.

2. Assessment of the Case

After the parties gather the information, they will assess the case. This involves evaluating several factors, such as the potential costs of the trial, the economic and noneconomic costs, the likely outcome, and the likelihood of winning in court.

3. Making a Settlement Offer

Generally, one party starts the settlement by sending an offer or demand letter to the other party. This letter contains the proposed terms, often beneficial to both parties. The party could also outline the case's strengths and weaknesses.

4. Counteroffer

The party receiving the offer can also send a counteroffer. It may contain changes to some terms the party needs to settle the dispute. Parties may sometimes send their counteroffers back and forth as they try to agree on the terms.

5. Stops and Starts

The negotiation process may stop once the parties believe they can't agree. If something comes up that pushes the parties to settle, it can start again.

6. Negotiation

A facilitator or a neutral third party could also help the parties negotiate the terms of the settlement agreement. The facilitator could help the parties develop options and look at alternatives until they reach a deal.

7. Signed Agreement

Once the parties agree on the terms, they will write and sign a copy and submit it to the court. The court will enforce the contract with a court order or a binding decision.

Consult a Litigation and Appeals Attorney

Consulting with an ADR attorney or a litigation attorney is helpful if you are considering settling your case out of court or going through a legal dispute. They can give you legal advice particularly tailored to your civil lawsuit.

An attorney can help you understand the benefits of settling your case out of court versus proceeding to trial. They can also help you draft a settlement agreement, protecting your interests. You do not have to navigate this legal system alone. Contact a litigation and appeals attorney near you and ask for a free case evaluation.

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