Not every civil case will go to trial. Many are settled out-of-court and that is in fact the preferred outcome in some cases. However, not everyone knows what settling out-of-court involves and how it can affect the people involved in the lawsuit. Here are five things you should know about legal settlements.
1. The Definition of Settlement
A settlement is the term used for when the parties involved in a lawsuit resolve the dispute without going to trial. It’s a very common way for civil litigation to end. Settling a lawsuit out of court means you and the other party or parties involved create a contract and ask the court to enforce it or file a notice of dismissal. Settlements tend to be introduced early in the process and you may participate in a settlement conference. For example, a personal injury settlement may involve a discussion of how much compensation you’re owed and how much the other party can pay.
2. Key Reasons To Choose Settlement
There are several reasons you may choose to settle instead of going to trial, including privacy, relationships, finances and urgency. Privacy refers to negotiating directly with the other party to avoid third-party involvement, publicity and negative effects on various stakeholders. Relationships between parties tend to experience less damage from settlements than from trials. Finances can play a role in choosing to settle, depending on whether the plaintiff thinks he or she will save more money by avoiding drawn-out court proceedings or by gaining the protection of court decrees. Urgency refers to a need to end a case quickly, which can be achieved by reaching a settlement agreement.
3. Where Compensation Comes from
When the party filing a lawsuit is awarded compensation as part of a settlement, he or she may receive it from one or more sources. Common sources of compensation include the plaintiff’s assets and the plaintiff’s insurance provider. You’re more likely to receive compensation from an insurance company than from the plaintiff.
4. Types of Settlement
Settlement agreements come in two main types: unilateral and mutual. A unilateral settlement agreement, also called a unilateral release, means one party is released but not the other. In unilateral settlements, one of the involved parties releases the other party from the lawsuit. In mutual settlements, both parties release each other.
5. Some Advantages And Disadvantages
Reaching a settlement has advantages and disadvantages. Some advantages include increased certainty in the outcome once an agreement is reached, lower stress levels and lower resource usage. If you settle out-of-court, you’re more likely to save money and time. The main disadvantage of settlement is that you won’t receive as high a compensation amount as you might if you went to trial.
It’s important to discuss your civil litigation options with your legal team before making any decisions. Talk about how likely you are to win your lawsuit if it goes to court and whether you want it to go to court. Listen to the attorney’s advice about whether settling or going to court is better and why.