Deal or No Deal: Is Settling Better Than Going to Trial?

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Most lawsuits settle – some lawyers say 90% – before trial.  During a mediation, parties frequently have to choose between accepting a proposed offer and going to trial, and my experience as a mediator has taught me that parties frequently over-estimate their chances of winning.  A long-term study confirms that parties who decide to go to trial frequently make the wrong decision.

The study, which analyzed over 2000 California lawsuits that went to trial after mediation, found that most plaintiffs who passed up a settlement offer and went to trial ended up getting less money than if they had taken that offer.  In fact, plaintiffs were wrong 61% of the time!

Defendants made the wrong decision by going to trial far less often but defendants were wrong in 24 percent of cases.

In just 15 percent of cases, both sides were right to go to trial – meaning that the defendant paid less at trial than the plaintiff had wanted but the plaintiff got more than the defendant had offered.

According to the study, getting it wrong cost plaintiffs about $43,000 on average. Although defendants were less often wrong about going to trial, the cost was much greater: getting it wrong cost defendants an average of $1.1 million.

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