In Part I of this series, I addressed the myth that lawyers must respond aggressively in all aspects of litigation to be effective. Now I want to focus on a related myth: that settlement connotes either weakness or liability.
Myth #2: If you settle, it is probably because you were going to lose at trial. You often hear references to out-of-court settlements in high-profile cases, and people frequently assume 1) the suit was a meritorious one and 2) the defendant(s) agreed to settle only because they would inevitably lose at trial. The truth is that many lawsuits are not well-supported by facts or the law, and that cases settle for myriad reasons, only a portion of which stem from fear of losing on the merits.
For example, sometimes the litigating parties have unequal access to resources. While one party may have strong claims or defenses, they may not be able to afford to take the case to trial. Even if a company has the financial means to take a case to trial, it may decide to settle for less than a full recovery, or more than it would otherwise pay, simply to save the time and cost necessary to have a court adjudicate a case. Still other businesses decide they would rather not spend months or years in limbo while they await the outcome of litigation, and choose to resolve it as quickly as possible.
Savvy business people involved in or considering a lawsuit should ask the same questions they would when making any other important decision: Do the benefits of prosecuting or defending a suit outweigh the risks? Are the potential benefits worth the cost to pursue (or to continue) litigation? What is the time and resource commitment necessary to prepare the case for trial? Companies must consider not only the financial commitment to litigation, but also the personnel commitment. Must the company suspend some or all aspects of its business operations while the litigation is pending? As with other business matters, commercial litigation should be approached in an efficient, effective and expeditious manner, and practical resolutions to a lawsuit should be considered as often as the likelihood of victory. If you use this approach, you may discover that sometimes a settlement just makes good business sense.
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