Almost all civil lawsuits settle before trial. The reasons why parties settle a lawsuit vary. For example, a party may find that he or she has evidentiary problems with proving a case at trial or a party may find that the high stress of litigation is too much. Most often, however, it is the limited financial resources of the parties that play a large role in settling a case.
One way to place financial pressure on a plaintiff or defendant is to make an offer to settle. Offers to settle expose parties to costs sanctions in a lawsuit, that is, which side will be paying some, or most, of the legal fees of the other side at the end of the day. Here is an example of how it works. The plaintiff sues the defendant for $50,000.00 on July 1, 2002. On December 1, 2002, the plaintiff makes an offer to settle for $25,000.00. The parties go to trial on May 1, 2003 and the plaintiff is awarded $35,000.00. Because the plaintiff was awarded more at trial than the amount set out in the offer to settle, the court will penalize the defendant for not accepting the offer to settle. The defendant will be ordered to pay virtually all of the legal fees for the lawyer’s work performed on behalf of the plaintiff between December 1, 2002 and May 1, 2003.
Plaintiffs or defendants may think that their lawyer is not fighting for them if the lawyer encourages settlement but that is often an unfair assumption. Under the Rules of Professional Conduct which govern lawyers, there is a positive duty upon a lawyer to advise and encourage a client to settle a lawsuit whenever it is possible to do so on a reasonable basis.