Why Lawsuit Settlements are in Everyone’s Best Interests
Most civil lawsuits involve 4 or more parties. In the most common case, there is a plaintiff (the party that was allegedly “wronged”), the defendant (the party allegedly responsible for the “wrong”) an insurance company covering the loss and the court system itself. In this post, we discuss why lawsuit settlements make sense and are in the best interests of all parties.
Features of the Legal Process
The civil system exists to adjudicate disputes between parties. These can include small disputes such as rents or the private sale of goods. Other civil disputes involve negligence cases such as:
Civil System Design
Fair disposition of civil disputes is the goal of the system. Thus, certain features are placed into the process to ensure the disputes are fairly decided. One such feature is the discovery process.
Discovery is where all parties are required to share information. The idea behind the sharing of information is to streamline the process and narrow down issues to be decided by a judge or jury. Discovery includes some or all of the following:
- Interrogatories – questions asked by parties to the lawsuit. These questions are then answered by the other parties and their truthfulness certified under penalty of perjury.
- Requests for the Production of Documents – requests for any and all documents that might be relevant to the proceedings.
- Depositions – questions answered under oath as if taken before a judge and jury.
- Requests for Admissions – questions narrowing down disputed issues.
- Witness Lists – identifying potential fact and opinion witnesses.
What is important is that the discovery phase is time consuming. All parties must participate and court rules give each party ample time to comply. These time factors are features of the system and simply a practical part of the process. They are also a reason why lawsuit settlements make sense.
External Factors Impact the Process
Over time, population increases within the United States resulted in an increase in disputes between private parties. This makes sense because more human interactions lends itself to more possible disputes.
The civil court system is funded by local, county, state and federal governments. Tax revenues (excluding the federal government which operates with a deficit) are the funds used to run the legal system. Thus, the legal system must compete with other governmental programs for funding. Simply put, the public only allocates a limited amount of tax dollars to the civil legal system. The problem is, those resources are woefully inadequate to fund the ever increasing amount of civil disputes which occur nationally.
The result is that filed lawsuits overwhelm the system, causing significant delays in justice. Cases are decided chronologically which means that, regardless of merit, plaintiffs must wait out the process. Crowded dockets are also a reason why lawsuit settlements make sense. Without them, cases which now take several years might take many more to resolve.
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Lawsuit Settlements Make Sense
Settlement is when the parties agree to an amount of damages a plaintiff is entitled. In this section, we examine why settlement makes sense for each participant.
Settlement Makes Sense for Defendants
Although many civil defendants have insurance policies in place to protect against loss, lawsuit settlements make sense for defendants for a variety of reasons. Most importantly, the risks are high for defendants as civil judgments can attach to various forms of property including real estate, bank accounts, etc. Settlement releases the Defendant from any and all claims arising from the events at issue and settles the matter once and for all.
Insurer’s Best Interest
Many civil cases involve insurance companies who are ultimately responsible for a plaintiff’s recovery. Insurers are experts in the defense of claims and use various tactics to minimize their exposure. Ultimately however, insurers also recognize that lawsuit settlements make sense.
This is because lawsuits which fail to settle must be tried before a judge and jury. At trial, juries decide liability and damages. Leaving the decision to random juries has its risks, not the least of which is subjective nature of certain damages such as pain and suffering. Many a jury has surprised insurers with the amount of damages awarded.
Settling lawsuits makes sense because it is a normal part of the legal process. The insurer benefits by closing the claim with a known and acceptable amount and protects its insured according to its obligation.
Plaintiff’s Best Interest
Lawsuit settlements make sense for plaintiffs as well. Although many plaintiffs are disappointed in settlement amounts, they also realize their value. While juries can return very large verdicts, the opposite can also be true. Many plaintiffs are negatively surprised at the minimal amount of damages certain juries award. Worse, a jury might not return a verdict in the plaintiff’s favor at all.
After all, each jury brings into the courtroom his/her own personal experiences and biases into the equation. These cannot be known prior to trial, even to the most astute trial attorneys and legal professionals. Settlement makes sense for plaintiffs because recovery is certain and the amount acceptable. The matter is concluded and all parties can move on with their lives.
The System’s Best Interest
We’ve already discussed the limited amount of resources available and the impact upon the judicial system. The court desires the fair adjudication of cases in the most efficient manner possible. Lawsuit settlements make sense in light of these goals since the lawsuit is resolved without using more resources than necessary. The system disposes of the case and all parties are satisfied.
Attorneys also understand that lawsuit settlements are in everyone’s best interest, including their own practices. Many civil litigators are paid on a contingency fee basis which means they only earn a fee if they secure a monetary award through their work. Settlements make sure they are paid for their work. Settlements are counted as a successful outcome and attorneys can turn their energies on the next case. Successful settlements are the life blood of any legal practice.
We often hear parties who are disappointed with their settlements. And this is understandable since a large part of every settlement is making concessions to reach an agreement. All parties have a position that must be represented. If the system is to work at all, settlements must make sense for all involved.
Thank you for your interest in lawsuit settlements.