Study Finds Settling Is Better Than Going to Trial - NYTimes.com

Study Finds Settling Is Better Than Going to Trial - NYTimes.com, Aug. 7, 2008.

The researchers looked at 2,054 civil cases that went to trial from 2002 to 2005. In a majority of cases that went to trial, the plaintiffs recovered less than they had been offered in settlement.

Most cases do settle -- and we can't tell whether the plaintiffs who settled would have done better at trial.

The researchers are Randall L. Kiser (principal analyst at DecisionSet, a consulting firm that advises clients on litigation decisions), Martin A. Asher (an economist at the University of Pennsylvania), and Blakeley B. McShane (a graduate student at the Wharton School of the University of Pennsylvania). The article will be in the Sept. 2008 issue of the Journal of Empirical Legal Studies.

In negotiations, defense attorneys might want to say: "Hey, take our offer, because most plaintiffs don't do any better going to trial." Indeed, the Times story opens:

Note to victims of accidents, medical malpractice, broken contracts and the like: When you sue, make a deal.

But any given plaintiff (and counsel) won't know whether that will be true in his or her case. After all, if 61% of plaintiffs are worse off, aren't 39% better off going to trial? And would defendants start making lower offers if they believe that plaintiffs -- because of this study -- will be more eager to settle?

The Times now allows comments. I thought these were interesting:

Could it be because it is not always about the money? That people suing are motivated to get their day in court, believing there is a righteousness on their side stronger than the odds when flipping a coin? So this study shows their legal (and usually more public) vindication has a cost, interesting, but not really surprising.

I don't think lawyer-ing and the outcomes of decisions to go to trial should be measured in this way--that more money won for clients equals improvement "in the field". . . .

— JPM, Zurich

It probably requires a certain percentage of people willing to go to trial to keep the settlement offers in the range where most parties consider it worthwhile to settle rather than chance trial. That is, it may be the most efficient market already.

— JCA, Bay Area, CA

Thanks: Maureen Howard