Imagine you are a client, and that a lawyer is representing you in a case. The “other side” has made an offer to settle. You ask your lawyer, “Should I accept the offer?”
You might think the answer would be straightforward. Yet in perhaps two-thirds of cases examined in a study[i], one side or the other received a worse result at trial than the last offer from the other side.”
This according to John Lande, Professor Emeritus at the University of Missouri School of Law and co-author of the book, Litigation Interest and Risk Assessment. The book’s findings are that lawyers chronically underestimate their clients’ risk in litigation, and so make chronic errors in negotiating settlements.
Lande was interviewed by Peter Phillips, Director of New York Law School’s Alternative Dispute Resolution Program.[ii] His book is “designed primarily for lawyers.” But the subject is of enormous importance for almost anyone locked in a court battle.
As Phillips put it, many lawyers “overvalue the claims of their clients, and so aren’t alert to opportunities to bring value” to them.
If you’re a litigant, you don’t want this happening to you.
Lande gave the illustration of a Plaintiff who receives an offer of $100,000 to settle a case. The client rejects the offer,
presumably on the advice of his/her attorney, and gets a trial verdict for $50,000. [This award at trial is] really bad, because you would have done much better to take the $100,000 offer and save all of the time and expense and grief of continuing the litigation and going to trial.
There are myriad reasons why this happens, including, Lande says, because “Litigation is inherently risky and there are just so many factors that go into it, so it’s very hard to predict.” That some parties get a worse result at trial doesn’t itself indicate a problem, Lande says; “but when you have sixty-some percent of cases where that happens, that to me is a problem. It reflects some serious biases, some overconfidence in determining legal risks.”
If you have a court case, what should your lawyer be helping you take into account?
There are the more concrete matters:
–the likely outcome at trial;
–litigation costs; and,
But, Lande points out, there are also “intangible costs,” including:
–a damaged reputation; and,
“But people often don’t take these [considerations] into account when making decisions.”
Consider the factors that Lande sets out, and how they apply to your life and situation, because, while lawsuits may be necessary when parties are unable to reach agreements, fighting to the bitter end will be especially acrid when you would have done better by settling.
[i] Let’s Not Make a Deal: An Empirical Study of Decision Making in Unsuccessful Settlement Negotiations Randall L. Kiser, Martin A. Asher, Blakeley B. McShane, First published: 05 September 2008,
https://doi.org/10.1111/j.1740-1461.2008.00133.x. The Abstract sets out that:
This study quantitatively evaluates the incidence and magnitude of errors made by attorneys and their clients in unsuccessful settlement negotiations. The primary study analyzes 2,054 contested litigation cases in which the plaintiffs and defendants conducted settlement negotiations, decided to reject the adverse party’s settlement proposal, and proceeded to arbitration or trial. The parties’ settlement positions are compared with the ultimate award or verdict, revealing a high incidence of decision‐making error by both plaintiffs and defendants.
[iii] When it comes to family and divorce disputes, damaged relationships can be especially devastating. Consider the emotional costs to family members when parents battle over custody of their young children. Often, due to fear, anger and stress (and sometimes at the encouragement of their attorneys), one or both parties make accusations that may be exaggerated or even made up. It can be easily understood how such conduct can damage the parenting relationship, perhaps permanently, hurting the parents, and especially their children.
The risk of damaged relationships is in no way limited to couples getting separated and divorced. Disputes between siblings, business associates, neighbor and neighbor, to name a few, can badly harm relationships, sometimes irreversibly.
Questions to ask – and hopefully your attorney is asking you – include:
–How important is the relationship to everyone involved?
–Is it very likely to be damaged?
–In light of these questions, and other relevant considerations, is litigation the option that makes the most sense for you?