Although I'll tell you why more people should just settle rather than go to court to fight a lawsuit, I should first talk about the settlement conference I was able to sit in on today. For some background information, basically a settlement conference is an attempt for the parties involved in a lawsuit to settle on an amount of money (or some other terms). It is private; there is no court reporter present, and these are usually closed to the public. However, Judge Knepp was nice enough to let me sit in on his settlement conference today.
I am not allowed to talk about many specifics regarding the settlement conference, although I'll write about what I can. Note that I will refer to numbers and amounts with lowercase letters. It started out by not starting. This is because the plaintiff didn't show up, although lawyers from both the plaintiff and the defendant did show up. We finally began with the plaintiff attending via telephone an hour late. The plaintiff alleges the defendant violated her Americans with Disabilities Act (ADA) rights. It ended up with the defendant offering to settle for amount x. However, the plaintiff insisted on receiving amount y. For the sake of legal fees and cost to go to trial, Judge Knepp suggested to the defendant to settle for amount z, which the plaintiff refused. The plaintiff refused to stray away from amount x, and it resulted in the plaintiff deciding to go to lawsuit. Unfortunately, because of the nature of this lawsuit, Judge Knepp expects the trial to be expensive for both the plaintiff and the defendant. He also expects expenses to be less for both sides if they could just settle.
So there you have it: most of the time, settlements cost less for everyone. Both the plaintiffs and defendants pay less in legal fees when they settle and get a more desired result. This is because both sides are able to talk out the problem and negotiate terms of the settlement, instead of having no idea of what a jury of strangers would do in a trial. This is illustrated in the following story. At lunch today, Judge Katz and Judge Helmick told a story of an individual injured from a train and automobile collision. Although an extraordinary amount of money was offered as a settlement by the train company in the lawsuit between them and the injured individual, refusal to accept the amount resulted in trial. However, the jury had a completely unexpected view of the case, saying that the train company wasn't negligent whatsoever, resulting in the injured individual getting no money. Legal fees also must be kept in mind, because many trials are expensive, in many cases, it may be cheaper to settle than to for either side to win.
But on the bright side, it was Cathy's (Judge Helmick's career law clerk) birthday, so there were bagels for lunch when I got back from the settlement conference.
Nice post. You say that more people should settle-- I wonder what percentage of civil cases like this go to trial and how many are settled? How much does an average civil court case cost to adjudicate? How does a "settlement conference" relate to other legal terms I've heard, namely: "mediation," and "arbitration?"
ReplyDeleteThe beginning questions are those to which I unfortunately have no answers. However, regarding the last questions you pose, a "settlement conference" relates to the terms "mediation" and "arbitration" because they are all methods of settling a lawsuit without going to trial. I also found a study in 2008 from The New York Times about the amount of money lost when parties are unable to settle. Defendants are wrong 24% of the time in making the decision to go to trial, and they lose on average about $1.1 million. Plaintiffs are wrong 61% of the time in making the decision to go to trial, and they lose on average about $43,000.
DeleteThanks, Poom. Are all three methods to avoid a trial equal? Is there a sequence to follow in settling a potential lawsuit? Does one, for example, begin with a settlement conference, then if that fails move on to a mediation process, etc? Why have three different ways to settle a legal dispute without going to trial?
DeleteA settlement conference is when a judge is a mediator between the plaintiff and defendant involved in a lawsuit. Both sides sit in separate rooms, and the judge moves between the rooms, acting as a messenger and making recommendations to both sides in hopes of finding a resolution. Mediation is when a mediator meets with both sides face to face. Arbitration is litigation in private. An arbitrator looks at the evidence presented by both sides involved in the conflict and makes awards. All three methods are private and confidential. There are three different ways to settle a legal dispute because one doesn't work for every single case. For example, if parties are bitter towards each other, they may prefer a settlement conference because there is a judge to help them out and the parties do not directly interact with each other. There is no sequence in which plaintiffs and defendants must complete these out of court settlement methods.
DeleteAlso, I happened to find an answer for one of your questions you posed in your first comment. According to the article "A Magistrate Judge Reflects on Settlement" written in The Federal Lawyer, Volume 61 Issue Four by Judge Knepp, less than two percent of cases in federal court litigation go to trial.
Poom,
ReplyDeleteI enjoyed having you attend the settlement conference and you did a very nice job summarizing what took place without compromising the confidentiality of the proceeding. To supplement your response to Mr. Boehm's inquiry, the difference between a settlement conference and a mediation, to me, is whether it is conducted by a judge or by a mediator (mediators are typically retired judges or esteemed members of the bar who are hired by the parties to help them settle the case). I don't believe there is any real difference between a settlement conference or a mediation in terms of the parties being together or apart. Typically, both begin with everyone in the same room, and they progress to being separate with the facilitator (judge or mediator) going back and forth. While the conference you observed was atypical in a few respects (including that we did not reach a resolution--85 percent of the time when I convene a settlement conference the case settles), it nevertheless gave you good insight into the process, and why it is important, both to the parties and the court.