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Study warns that trial often results in disappointment

We don't accept some of what was written in a recent study published by the Journal of Empirical Legal Studies, however, it does embody an appropriate caution regarding the risk associated with trials.  The study evaluated more than 2,000 cases and concluded that the parties would usually have done better if they had accepted the last settlement offer, rather than holding out for a verdict.  The study claims this was true for plaintiffs about 60 percent of the time.

The study claimed that in 15 percent of cases that went to trial, both sides were right to reject settlement:  the outcome was better than what had been offered by the adversary, but less than what had been demanded.  In 24 percent of cases, the Defendants made the wrong decision to proceed to trial.

The study suggested that in the six of ten cases where Plaintiffs should have settled, they went home with an average of $43,000.00 less than they would have if they had taken the last settlement offer.  For Defendants, the failure to settle was more costly:  an average cost of trial that exceeded one million dollars.

Critics immediately noted that the study combines too many differenct circumstances to be useful in predicting whether it is wise to settle any given case.  For example, and we find this to be true in our experience as well, inexperienced attorneys, or attorneys who lack experience in a given area, are far more likely to err by over-valuing their case:  Many of the "disappointing" outcomes we have observed have been clear examples of an attorney not knowing as much about a given area of law as he or she thought they did.  We have also observed that all attorneys have a tendency to identify with clients, and both clients and attorneys tend to accept as true that which they badly want to believe is true:  As a result, it can be hard for an inexperienced attorney to guide a client to an advisable compromise outcome.

In any event, it is virtually impossible to predict with certainty how witnesses and parties will testify, what issues will arise at the last moment, and ultimately, what an unknown group of five jurors [5 of 6 jurors decide civil claims in Michigan] may do with a particular claim.  In that sense, this article does remind us of the necessity of carefully evaluating all settlement offers.  It must be kept in mind, however, that if a litigant is not prepared and able to try a given case, an experienced adversary will take that factor into account in making a settlement offer or demand:  settlement proposals made to a party who is apparently incapable of trial or unwilling to risk a trial will be less attractive.

Thompson O’Neil, P.C.
309 East Front Street
Traverse City, Michigan 49684
Toll Free: 1-800-678-1307
Fax: 231-929-7262