The Truth About Settlement

I once knew an attorney, his name was Bob, worked at a law firm in upstate New York, smart guy but the antithesis of everything that I believed in when it comes to practicing law. He told me once, “we’re not a law firm of settlors”. I suppose he meant we’re not a law firm that settles cases. Whatever that meant. All I know is, I don’t back down from fights but there’s a big difference in fighting everything versus fighting efficiently and with purpose. So, when I heard Bob tell me that he doesn’t settle, I was not impressed. In fact, I lost all respect for the old man. His lack of hesitation in putting his own ego before the needs of his client was astounding and disgraceful to the practice of law.

Settlement is a sensible approach. There’s a reason 95% of all cases settle before trial. Settlement doesn’t necessarily make everyone happy, but that’s what settlement literally means: you’re settling for something less than your most optimal position. Why? Because the so-called “optimal position” does not exist. It ceases to exist the moment you commence a lawsuit. Everything after you commence a lawsuit is essentially “stopping the bleeding” and trying to either find a way out of your situation, or mitigating loss.

Unfortunately, too many people involved in a litigation fail to realize any of this.

So, What Do You Do?

The following is a letter I sent to a client regarding a settlement which I believe covers a lot of ground when it comes to considering any settlement:

“Dear ____

We have received the following offer for settlement purposes only:

Settlement amount: $180,000.00

Terms: TBD

My opinion is this, it’s worth considering this offer. You can accept or counter as you see fit because the choice is ultimately yours alone. However, in deliberating this offer I highly urge you to consider the following:

The Mounting Costs of Litigation

Discovery: The discovery process entails drafting demands and responding to demands such as demands for documents and interrogatories. It also includes the deposition court reported costs of which alone can be roughly $2,000 per day. The time to prepare for, conduct or even just attend depositions is also costly. The legal expense not including court reporter fees can range between $1,000 – $2,000 per day.

Motion Practice: A motion is an application/request to the Court to do something. For example, a motion to dismiss is asking the Court to dismiss certain causes of action because they have no legal or factual merit. A motion for summary judgment is asking the Court to render a judgment now in your favor because there are no issues of material fact. Then there are the common discovery related motions. There are 4 main types of Discovery Motions: (1) a Motion to Compel Discovery Responses (2) a Motion to Strike the Pleading for Failure to Comply with Discovery Demands (3) a Motion to Preclude the Admission of Documents at Trial and (4) a Motion for a Protective Order. Filing motions are costly because we have to conduct thorough legal research, draft a memorandum of law in support of our position, prepare exhibits, prepare an affidavit for your signature, respond to the opposing party’s position, and sometimes prepare for and conduct oral argument before the judge. Motions entail a detailed factual and legal analysis. The costs of a motion can range anywhere from $2,000 – $10,000 approximately depending on the motion, the complexity, the urgency, etc.

For more about motions generally, see: https://davisblegal.com/2019/11/30/faqs-everything-you-need-to-know-about-motions/
For more about a motion for summary judgment see: https://davisblegal.com/2022/02/07/faqs-on-a-motion-for-summary-judgment/

Correspondence/Strategizing/Planning: This refers to general correspondence between attorney and client, attorney and attorney, and attorneys and the court. Often we’re forced to respond to letters filed with the court, respond to court notices, or we have to appear for mandatory court ordered conferences. In addition, there is the general correspondence between the attorney and client discussing strategy. This time adds up which means additional costs of thousands of dollars.

Trial: Trial preparation and unavoidably expensive. We require a minimal additional retainer fee of $10,000 just for trial preparation.

Enforcing a Judgment: Even if you’re successful at trial or if you are successful in a motion for summary judgment (see above) enforcing a judgment is a process in and of itself. Between preparing restraining notices, subpoenas, conducting depositions, and marshal’s fees, you could easily spend thousands of dollars just chasing after your money.

For more about enforcing judgments see: HERE

The Risk of Loss

There is always a risk of loss in any litigation. This is the most difficult aspect of a lawsuit for most clients to understand. You’re putting your faith, and trust in the hands of one individual, the judge, who may or may not see things the way you see them. Clients often focus on “justice” and “equity” but the reality is, judges don’t see things that way. Judges are not these wise all-knowing beings. In fact, more often than not it’s just the opposite: short sighted, lazy, and completely ignorant. In addition, Judges do not focus on the equity or fairness of a situation. They often do not care at all about your story or the emotional aspects of your claims. Instead, they focus on what the contract says or what the applicable statutes say. Even with that standard in mind, judges get things wrong and then you’re faced with the decision to pursue an expensive appeal.

While this offer doesn’t necessarily provide you with everything you desire right now, it’s never good business sense to stand on principal, it’s never a good litigation strategy to stand on principal. You must ask yourself: Are you prepared to bring this to the end and lose? Are you prepared to bring this to the end only to receive the same if not a lesser result as the one being presented now? Have you considered the financial, mental, and emotional toll of proceeding with a litigation?

I’m always happy to discuss further. It’s your choice and I will advocate for you no matter what.”

 

Truly,

 

Jeffrey Davis, Esq.”