Strategies for Settling a Case

The vast majority of lawsuits settle without ever being heard by a factfinder.  This is important so that parties can reach a resolution and courts can preserve resources for matters that are incapable of being resolved.  The act of settling a case is oftentimes more of an art than a science.  However, there are a few strategies for settling a case that litigants and attorneys should know in order to best facilitate the settlement process.

High-low

One of the most popular strategies for settling a case is typically called the high-low.  Under this strategy, the party bringing the lawsuit makes a settlement demand that is aspirational and is several times larger than the amount of money for which the case might settle.  The defendant counters with low settlement offer, which is typically not much more than zero.

The parties then begin a “settlement dance” in which the plaintiff lowers their settlement demand and the defendant raises their settlement offer.  If the case is capable of being settled, the parties will likely meet somewhere in the middle.  It is difficult to say how high a plaintiff should make their initial settlement demand, but this may typically be several times more than the amount a party hopes to receive to settle a matter.  The first amount a defendant makes may vary depending on the size of the case but needs to leave plenty of room for negotiation.  An experienced lawyer should understand the amount of money that can be offered to facilitate the settlement process.

Ballpark Settlement

Another one of the strategies for settling a case is to dispense with the “settlement dance” of the tactic above.  In the ballpark settlement strategy, both parties come to more reasonable settlement numbers from the beginning of negotiations.  Sometimes, an attorney might indicate around what ballpark a party might settle, and if this is agreeable, the other party makes an offer in the ballpark indicated.  The other party then counters in the ballpark noted and the parties could eventually resolve the case around the numbers discussed.

This strategy has several advantages over the high-low strategy noted above.  Parties might be offended by an unreasonably low or high settlement offer and this could break off settlement discussions entirely.  By speaking of settlement terms in the ballpark where a case might settle, the parties are less likely to be offended and stop negotiating.  In addition, the ballpark settlement strategy avoids the time and effort associated with the back-and-forth of the high-low method, which can be exhausting after a period of time.  Sometimes, parties wish to feel like they received an advantage from a settlement, and if this is the case, the high-low method may be best.  However, a ballpark settlement may work with sophisticated parties who want to dispense with extra steps on the road to a settlement.

Nuisance Value

Another one of the commonly used strategies for settling a case is to resolve a matter for nuisance value.  Nuisance value is the amount of money that a party will have to pay in legal fees to defend a case even if they believe that the matter has questionable merit.  The amount of nuisance value varies from case to case, but it can be around $50,000 in many matters.

Settling for nuisance value can be appealing for parties, because it may not signal that a party believes that a case has merit, just that it is not worth it to defend a case if it can be dispensed with for a certain amount of money.  Of course, not all cases will settle for nuisance value, since the amount of the claim could far exceed the amount of money that might be needed to defend the matter.  Nevertheless, individuals should consider offering this amount of money to settle a matter since parties may be agreeable to resolving a case for this sum.

Time Limits for Settlement

Another one of the popular strategies for settling a case is to convey that a settlement offer will not remain open for long, and that the other side only has a limited amount of time to accept the offer or provide a counter-offer.  So-called “exploding offers” may incentivize a settlement because they put pressure on the parties to work on a deal before the offer expires.  Moreover, this may help justify a high offer at a later time in the case because a party may relate that they only conveyed a lower settlement amount for a limited period of time and this offer was rejected by the other side.

However, so-called “exploding offers” may frustrate other parties to the litigation and might decrease the amount of good will that exists between the parties.  In addition, this might incentivize the other side to provide their own “exploding offer” during the settlement process.  An experienced litigator should know whether it makes sense to employ this settlement strategies given the circumstances of the case.

The Rothman Law Firm is experienced with settling matters that have been litigated or other issues that our clients have with different parties.  If you are looking for an experienced New York and New Jersey attorney to handle the handling and settling of your legal issue, please do not hesitate to contact The Rothman Law Firm to request a free consultation.