Below is an excerpt from §3.3 of CIVIL PRACTICE: OPENING THE CASE 2019 EDITION, part of a series on guiding attorneys through the stages of civil litigation. Click here to learn more about our Civil Practice Handbooks.
Advantageous Timing for Settlement Negotiations in Civil Litigation
Settlement can be broached at any time during a pending dispute. However, certain times lend themselves to more fruitful discussions. The attorney and the client should always be mindful of the need to have the maximum factual information available to determine the relevant occurrence facts, the legal issues arising out of the occurrence, and the damages sustained. Until such a state of preparation is reached, entering into negotiation results in the substantial risk of not obtaining an adequate settlement. The need for preparation should be contrasted with and balanced with the desire to reach an expeditious agreement and thereby avoid future expenses and risks.
Keeping these points in mind, the initial time for negotiation is prior to the institution of the litigation itself. If there is a free interchange of positions and information, settlement may be achieved without the need for actually filing suit. Counsel for the claimant should give consideration to early preparation in order to be ready for pre-litigation discussion with the defendant or the defendant’s insurance carrier.
Another opportunity for settlement negotiations generally occurs after the filing of the litigation but before any discovery begins. In many cases, proper evaluation is not undertaken until the dispute has been formalized, thereby requiring each party to consider the other party’s position from both a legal and a factual standpoint. In other situations, the statute of limitations or other reasons prevent fruitful discussions prior to the filing of litigation. Some attorneys and insurance carriers become adamant about not negotiating prior to the filing of litigation. Such a position is not well taken if the advantages of settlement are seriously considered.
A third prime opportunity for consideration of settlement occurs after the conclusion of discovery. Settlement discussions commonly occur at a pretrial conference when attorneys for both sides have occasion to examine the discovery in some detail and determine the position they will take at trial. Counsel and the parties should, by that time, appreciate the occurrence facts and the applicable law and be able to properly evaluate their case.
Settlement discussions also may occur “at the courthouse steps” when the parties and the lawyers have not been able (or did not take the time) to properly assess either their or the other party’s position before actually going to court. Such settlement negotiations are not as fruitful as those that occur earlier because the majority of the expenses for litigation have already been incurred at that point. The per diem for attorneys’ fees, expert testimony, and the other expenses for trial are relatively minor when compared to the cost of pretrial discovery and final preparation for trial. It is uncommon for the costs of a civil trial to exceed the preparation costs.
The last prime occasion for settlement negotiations is after judgment is rendered and during posttrial handling. In many cases, the adverse result to one party may result from errors in the trial. After a trier of facts has rendered its decision, parties frequently realize positions they had taken before were not supported. It is then advantageous to both sides to settle the case rather than to incur posttrial and/or appeal expenses.
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