Lawsuits can be expensive, emotionally draining, and time-consuming. But there’s one move that many business owners overlook: having settlement discussions early on. Whether you’re the plaintiff or the defendant, sitting down to discuss a resolution at the beginning of the legal process can pay off in more ways than one. Here’s why it’s worth considering:
1. It Caps the Opponent’s Legal Fees (and Yours!)
Legal battles are a marathon, not a sprint, and attorney fees can add up quickly. By opening the door to settlement talks early, you signal that you’re willing to avoid unnecessary litigation. This move can discourage the other side from going all-in on legal fees, particularly if they see there’s potential for a resolution. Not only could you save them some cash, but you’ll also save yourself a fortune in the process.
2. It’s Inadmissible in Court
Here’s a fact that not every business owner knows: settlement discussions are generally inadmissible as evidence in court. This means you can explore possible resolutions without fear that your words will come back to haunt you. It’s a safe space to test the waters and see if there’s common ground. By law, this “off-the-record” nature gives both parties the freedom to negotiate openly without losing leverage.
3. It Demonstrates Good Faith
Settlement talks show that you’re willing to approach the situation reasonably, which could work in your favor later on. Judges and juries appreciate parties that attempt to resolve disputes amicably before dragging things through the court system. Even if a settlement isn’t reached, your willingness to try could reflect positively if the case escalates. It says: “We tried to handle this like adults.”
4. It Provides Clarity on the Other Side’s Position
Early settlement discussions can offer a preview of what the opposing party truly wants. Is it all about money, or are there other motivations—like a desire for acknowledgment or future assurances? Understanding their priorities early can help you decide whether to settle or fight, while also informing your broader legal strategy.
5. It Saves Time and Emotional Energy
Running a business is hard enough without a lawsuit hanging over your head. Early settlement talks can help you avoid months—or even years—of court dates, depositions, and legal back-and-forth. Even if a resolution doesn’t come immediately, an early conversation can set the tone for a faster resolution later. The time you save is time you can reinvest in your business, your team, and yourself.
6. Courts Expect and Encourage Settlement Discussions
Here’s the thing: courts don’t actually want your case to go to trial. Litigation is expensive and time-consuming for the judicial system, too. Many courts actively encourage settlement discussions, and some even require parties to attend mediation or settlement conferences before the case can move forward. Judges often expect that both sides will have at least attempted to negotiate early on—and they may look unfavorably on parties that refuse to do so without good reason. Engaging in these discussions aligns with the court’s preference for resolution and can show that you’re playing by the rules.
7. You Retain More Control Over the Outcome
When a dispute goes to trial, you’re essentially putting your fate in the hands of a judge or jury. Early settlement discussions give you a chance to maintain control over the terms of the resolution. By negotiating directly, you can craft a solution that works for both parties, rather than risking an unpredictable court decision.
8. It Helps Protect Relationships
This is especially critical for family-owned or closely held businesses. If the dispute involves a vendor, a customer, or even a business partner, preserving the relationship may be just as important as resolving the legal issue. Early settlement talks can reduce hostility and keep the door open for future collaboration—something that a bitter courtroom battle can almost never achieve.
9. It Shows You Mean Business
Ironically, showing that you’re open to settlement can convey strength, not weakness. It signals that you’ve done your homework and are confident enough in your position to have a productive conversation. This can nudge the other side to take your case more seriously, potentially leading to a more favorable resolution.
Final Thoughts
The phrase “the early bird catches the worm” applies in lawsuits too. Early settlement discussions are not a sign of weakness—they’re a strategic move that can save money, time, and stress while opening the door to creative resolutions. Even if you don’t reach an agreement right away, the process can lay the groundwork for an eventual resolution, keep the litigation on a less combative path, and, most importantly, let you get back to focusing on what matters most: running your business.
