Suing? Settle.

Would-be coffee spillers take note: If you’re ever suing and get offered a settlement, take the deal. A new study shows that plaintiffs who turn down settlements and go to trial end up getting less than if they had settled.

Study Finds Settling Is Better Than Going to Trial [NYT] (Photo: Brymo)

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  1. TomCruisesTesticles says:

    Settle? But you have to try for the $40 million judgment. How else are you going to get a house in Malibu and Aspen? Those European vacations won’t pay for themselves, neither will the Maseratis or the steak dinners. You’re entitled to be able to recover more than your medical expenses and reasonable damages! You deserve to be taken care of for life, you and your attorney both, I’ll give you the number of a guy I know at Merrill Lynch! Have fun being a multimillionare-you’re entitled to it

  2. nicemarmot617 says:

    I love studies that state the extremely obvious. So what everyone knew has just been proven to be correct! Although I suppose only bright people realize they’re more likely to get more money out of a settlement.

  3. timmus says:

    I can’t imagine that any average person who gets $40 million is going to manage it wisely. They’ll forget about taxes, fail to hire a competent financial manager, spend it frivolously, and be right back where they were four years later.

  4. MeOhMy says:

    I’ll take it? Who told you to take it? Did I tell you to take it?

    This a clear violation of your rights as a consumer. It’s an infringement on your constitutional rights. It’s outrageous, egregious, preposterous.

    You get me one coffee drinker on that jury, you gonna walk outta there a rich man.

  5. Cogito Ergo Bibo says:

    In some states, if the eventual court award is lower than a previous settlement offer, you have to pay the defendant’s court costs and attorney fees. You forced them into court in order to get an award lower than was offered, prior to the trial. Makes sense, really. The defendant had to take on additional cost, due to your decision, despite having made a better offer. You rolled the dice and you lost.

  6. Roy Hobbs says:

    If settling were not almost automatically tied to sealing the case and no admission of wrongdoing, then settling might make more sense.

  7. thufir_hawat says:

    @TomCruisesTesticles: I would replace the “to try” in your second sentence with “to pay me to try”. How else am *I* going to afford my Malibu and Aspen homes and European vacations? What about my needs?

    I have counseled so many clients to settle only to be told (and paid) to go to the mattresses. Studies and advice don’t carrry a lot of weight when parties are motivated, as thay always are, by emotion.

  8. Reeve says:

    @Cogito Ergo Bibo:
    Costs are sometimes awarded depending on the state and specific facts of the case. Attorney’s fees are not usually allowed except in very special circumstances. So, usually you will not recover attorney’s fees just because you offered a settlement and the judgment came out less then the settlement offer.

  9. zimzombie says:

    Title should be:

    “Study States Suers Should Settle”

    I was going to say something about how the results of this study should decrease the value of settlement offers, but the alliteration was much more amusing.

  10. dragonvpm says:

    Ugh, another sketchy statistics post.

    Off the top, some obvious considerations for this kind of claim:

    The vast majority of cases do settle – from 80 to 92 percent by some estimates

    So, we have no way of knowing what the merits were in those cases. If they’re settling such a huge percentage of cases before they go to trial, you could easily be settling the majority of the cases where someone was justified in suing. The remaining cases could involve an unusually high number of people who were a overly optimistic or who had bad legal representation.

    But the findings, based on a study of 2,054 cases that went to trial from 2002 to 2005

    I seriously doubt that a study based on an average of 515 cases per year is going to come even remotely close to being statistically valid.

    “The lesson for plaintiffs is, in the vast majority of cases, they are perceiving the defendant’s offer to be half a loaf when in fact it is an entire loaf or more,” said Randall L. Kiser, a co-author of the study and principal analyst at DecisionSet, a consulting firm that advises clients on litigation decisions.

    Again, if 80-92% of lawsuits are settled, I think most people clearly realize that, and if you check out DecisionSet’s website it looks like they’re in the business of advising people when to settle in legal disputes so it would seem like their business plan is helped out by “proving” that settling gives you more money than going to trial.

    What would be really interesting (but impossible to figure out) is how many people who initiated lawsuits actually get as much or more than they initially wanted (e.g. they want $1 million, they sue for $10 million and the settle for $2 million).

  11. Cogito Ergo Bibo says:

    @Reeve: Agreed. And even then, it would only be those fees clearly linked to the actual trial. But I do hope that people are made aware of the fact that, when they pass over a decent offer, it could under some circumstances cost them more than just a lower award.

  12. mxjohnson says:

    “Would-be coffee spillers”? For the record, in the infamous McDonald’s coffee case, it was McDonald’s that refused to settle the case. A mediator suggested $225,000, but McDonald’s was confidant no jury would award the victim that much money. And Ms. Liebeck wouldn’t have filed suit in the first place had McDonald’s not refused to pay her medical bills. [www.reedmorganpc.com]

    In my own experience, I might be willing to take a smaller judgment from a court, than a larger settlement that includes a confidentiality agreement.

  13. typetive says:

    Does this take into account that often the settlements are sealed, which means that there’s no record of it to the public. If someone is suing to punish a wrong (through a large sum of money), not having a trial means that the award isn’t public … which is sometimes the point.

  14. Marshfield says:

    Might work for large suits, but what about small claims, where you’re suing for 4,000 and the SOB you’re suing would settle for $100.00? Just to be an SOB?

    I think I’ll take my chances in court on that one.

  15. Gopher bond says:

    @mxjohnson: Plus, Mcdonalds had known that their coffee had caused severe burns in the past but considered them statistically insignificant or something like that. Maybe if your coffee has had a history of peeling the skin off people, you might want to turn the heat down a few degrees.

  16. Gopher bond says:

    @timmus: Isn’t there a book detailing the lives of million dollar lottery winners? I forget what it’s called be it’s not a happy story.

  17. Farquar says:

    Could we stop using “spilled coffee” for unnecessary lawsuits? While I understand its fun to think that some woman sued McD’s and won millions just for spilling some coffee on her lap.. “It’s coffee, it’s supposed to be hot”

    This just shows ignorance towards the actual case. The woman had 3rd degree burns that required skin grafts. She wasn’t out for a quick buck.

  18. Trai_Dep says:

    It’s wryly amusing that Conservatives are all bleating about Trial Lawyer Scumbags and the Welfare Queens That Use Them. Until they need to sue someone after being victimized. Then, of course, they sprint to the nearest lawyer promising them the biggest payout.
    What’s even more amusing is that, once they’ve cashed their judgement check, they restart their bleating against Trial Lawyer Scumbags.

    Here’s hoping we all never need their services. But if you do, and you’re a trial lawyer hater, do you swear here and now not sue and take the first offer? You pretty much have to if you walk the walk your lips do when they talk the talk…

  19. Trai_Dep says:

    @Farquar: It was so hot that it fused her genital area to her upper thigh. Contemplate that lovely scenario and imagine McD’s snickering at your initial offer to settle.

  20. Red_Eye says:

    Not only that but here in Georgia they passed a law that says if I offer you a settlement and you refuse it and go to trial and get the same amount I offered or within a certain percentage you are now liable for all my legal fees.

    So spill coffee, get offered $200,000 to settle and refuse, go to court get $190,000 and pay my 2 million in legal fees.

    Ouch

  21. DeeJayQueue says:

    What happened to suing a company being about the principle? I’m on the fence about the coffee thing, and the 50 million dollar pants thing, but sometimes the principle is way more important than the money. Otherwise it would generally just be a simple matter of “Hey guys, your coffee burned my legs up, would you mind paying my medical bills and making me whole?”

  22. seth1066 says:

    In the McDonald’s case all the woman originally asked for was her medical bills paid and some compensation for her pain. MickeyD offewred $800.

  23. Gopher bond says:

    @Red_Eye: “So spill coffee, get offered $200,000 to settle and refuse, go to court get $190,000 and pay my 2 million in legal fees.”

    You forgot the part Trai_Dep pointed out about having your genitals fused to your leg. That’s the OUCH part.

  24. thetango says:

    I wonder if the study took into account frivolous lawsuits? If so, then I can see why it “pays” to settle early.

    I read the article with a smile on my face. In the case of my broken contract case (which involved a warranty on the building that my builder chose not to honor) the original offer made to me was $6000.

    I ended up with an award of ~$75,000. Of course, the article does point out that “on average” it is better to settle early.

    OTOH, in my case (and IMO) the builder cleary had no intention of honoring the warranty so I knew I was going to win.

  25. camille_javal says:

    @TomCruisesTesticles: most large jury awards end up reduced significantly by judges. It’s just a lot less exciting to report on that.

    I really fucking hate pretty much all media on litigation, because it tends to be a very narrow and largely false view.

  26. Crazytree says:

    some cases should settle.

    some should go to trial.

    you need the wisdom to determine which kind of case you have… although 90% of the time it is the former rather than the latter.

    also if it is a case that includes attorneys fees, like a wage & hour dispute, civil rights claim or breach of contract with a prevailing party clause… that should be included in the equation.

  27. BigBoat says:

    Settle, settle, settle. It cannot be emphasized enough. In my short time in legal orbits, I’ve already seen hundreds of thousands of dollars lost because of the “principle” of the matter. Do not roll the dice. Do not become blind because of your offended sense of justice. Take the sure thing and move on.

  28. SOhp101 says:

    Or how about actually listening to what your attorney says? Chances are if he says that you should settle, then do it. If you can’t trust his judgment regarding whether to settle, then why is he your attorney in the first place?

  29. esd2020 says:

    In the one lawsuit I pursued, I was offered a settlement of half I was asking for, declined it, and won the full amount + court costs.

    The merits of the case obviously play a big role in making that call. If I had a weak case, I would have taken half.

  30. thufir_hawat says:

    @seth1066: Not really. Plaintiff (Stella Liebeck) asked for $20,000, then $300,000 to settle before trial. McD’s did a poor job handicapping by offering nominal damages, but they thought they had no liability.

    @Farquar, @Trai_Dep: She suffered some pretty horrendous third-degree burns because she sat in a puddle of hot coffee for over ninety seconds while wearing sweatpants that absorbed the liquid and held it to her skin.

  31. sean77 says:

    @dragonvpm:

    But the findings, based on a study of 2,054 cases that went to trial from 2002 to 2005

    I seriously doubt that a study based on an average of 515 cases per year is going to come even remotely close to being statistically valid.

    You fail at math.

    You can estimate the margin of error by 1/sqrt(N). With a sample size of 2054, the margin of error is 0.022 or 2.2% pretty damn good.

  32. TheStonepedo says:

    When my father first opened his bicycle shop a customer disassembled a wheel, reassembled it incorrectly, failed to use the quick release as it was intended, then crashed resulting in a sprained wrist. He performed poorly at a tennis tournament the next week, sued, and scared the shop’s insurance company into settling for about $20,000. There is a reason bicycle forks now have “lawyer lips”. The expense of taking a case to court can turn a completely unreasonable grievance into a way for a lazy, unethical individual to make a quick buck.

  33. cerbie says:

    Don’t you lose the possibility of your case being used as precedent, if you settle? So, wouldn’t you want to base on how much that matters to you? If you need money, or insurance coverage that shouldn’t have been denied (assuming they were not performing major abuses of the system, etc.), well, settling sounds good. If they screwed you over, and you want it in the public record for the next person they do it to (which could include insurance claims, too), then why not go for it, as long as you can be pretty sure the lawyer costs won’t bury you (should you lose)? I guess that would boil down to: are you taking them to court to get money or performance that you need and they should have provided, or are you taking them to court to punish them and make sure people know what happened (hoping for said money or performance as a benefit of winning, but not as the reason for going)? Would it cause you stress for years to come that you didn’t take them to trial? Especially think about that if it’s a situation that could cause others harm. Emotional decisions may not be the best when viewed objectively, but don’t rule them out just because of that.

    @SOhp101: I was wondering about that, too. How often are the clients telling them no, if they suggest it? How often is the settlement laughable, and tantamount to receiving no settlement? Take thetango’s case, FI. I could easily see a problem building needing enough real repairs that even $40-50k of his award might be used up as a minimum for structural or code work (IE, not counting new molding, lighting, etc. as things are ripped out and replaced for safety or other serious concerns). In such a case, even up to $20k or more, it would not be different enough from losing (take lawyer fees, try to get rid of the building as a minor loss, and move on) to warrant taking it, and certainly a gag order or similar with it.

    And…how often should over-simplified statistics be believed at face value? That’s a troubling aspect. It could be exceptionally valid, but we’re so used to seeing spin away from our view of truth that it needs to be examined more, and more information given relating to the types of cases. With 80-90% of cases being settled anyway, doesn’t it prove its point, as a face value kind of level, before trying to defend it? This brings me far more questions than answers.

  34. Gopher bond says:

    @thufir_hawat: The facts that came out in the trial indicated that coffee at that temperature would cause 3rd degree burns in 2 to 7 seconds. There are no fourth degree burns so anything after 7 seconds is irrelevant. And about the sweatpants I say “so what?” you can’t wear sweatpants when you buy McDonalds coffee? Also irrelevant. McDonalds was wrong in that case, pure and simple but the public doesn’t remember it that way.

  35. TomCruisesTesticles says:

    @camille_javal: Correct, but my comment referenced attitudes of some litigious people, regardless of what the award was knocked down to.

  36. Loki_Monster says:

    @cerbie: In most cases, there is no precedential value to an individual’s lawsuit because that precedent was decided years and years ago.

    The chances a lawsuit involves issues that have any precedential value are virtually nil. Most issues have been litigated time and time again and the precedent has already been established.

    Anyone who views a lawsuit as anything other than a business transaction is going to make bad decisions. Take your hurt feelings and your ego out of it and do what makes sense from a cost/benefit analysis.

  37. modenastradale says:

    @testsicles:

    Yep, you’re absolutely right. I believe the original verdict in the McDonald’s case was absolutely justified. McDonald’s deliberately chose to subject its customers to injury risk to save a small amount of money. It behaved reprehensibly when this particular person was burned and needed payment for her medical bills. The plaintiff should have recovered every cent that was originally awarded, in my opinion.

    The fact that McDonald’s enormous PR machine has been able to transform this event into a tale of plaintiffs’ greed gone awry just makes me sick.

  38. Invective says:

    Everyone’s got an agenda. Really this is the same as “The Price of Gas Will Never Go Down Again…” I think fear runs about 99 percent of lives. The fear of being sued, the fear of Immigrants moving in, the fear of being forced to drive a little electric vehicle at blindingly slow speeds… But I digress.

    The RNC promotes ending all law suites and make us a nation of indentured servitude. Hence the schedule of abolishing bankruptcy. If we don’t have any court, it will cost us nothing, then business can move on unimpeded and we as a nation can take a kind of a ‘National Hosing’. Of course we were already there once. A King once demanded those who couldn’t pay for the wares, to be imprisoned. His family members ran the prisons, which cost virtually nothing to build, since the prisoners could do all the labor as well. This probably lead to some sort of 4th of July deal, but I guess everyone’s forgotten all about that history. Money is all that is important. We even rent our babies out on TV now, but I digress again…

    Oh and while we’re throwing out all court in the U.S. , we can very throw out the rest of our governmental system. Take the FDA, FCC and FTC for example. Without those agencies, our nation can save tons of tax money and we can use that money grafting credit cards on to our asses in the meanwhile, but I digress yet again. Oh wait, no I don’t! It’s being done already. Of course nobody watches C-Span, or pays attention to what PAC money has done for us as a nation… Our leaders of the FDA, FTC and FCC all are praised for doing a very difficult job of covering up how their agencies can get away with actually doing nothing substantial by the RNC. It’s really no different with the left either. When they get in power, they’ll gut what they want and move on. Same PAC agenda, different rhetoric…

    As for the headline here “Consider Settling”, I’m guessing nobody read John Grisham’s book “The Appeal”. It would be great if the Lemmings would stop fighting over the two political parties and step back for a moment of common sense, but then again we all love to watch those sports. Ugh…

  39. Invective says:

    Stuck an extra ‘very’ in the previous posting somehow. Damn I know better than to rush. Oh well. Someday maybe an ‘Edit the Edit’ button for us dyslexics with no time…

  40. brian25 says:

    Original Editor:

    The tongue-and-cheek reference to Liebeck vs McDonald’s is off the mark. She did try to settle. Liebeck originally asked for $20K, but McDonald’s repeated refusals to settle eventually drove the final value to about 2.8million… it was later reduced in a confidential settlement. She just wanted them to pay for her medical expenses (11K plus 9K for her trouble).

    [en.wikipedia.org]‘s_coffee_case

  41. hegemonyhog says:

    The McDonald’s coffee case is a symbol of everything that’s wrong with how people understand our legal system.

  42. Ghede says:

    Unless you are trying to set a legal precedent. If it is a groundbreaking case and you want to make sure others can follow, go the distance.

    Fat chance of that happening though. Unless you are that lady who is suing the RIAA. In which case, go lady, go!

  43. ohiomensch says:

    I work with workers comp cases. Over the past 10 years, 99.9% of the cases I have personally dealt with are the result of employees not following safety procedures, ignoring lock out/tag out, removing/ not wearing safety equipment, and in EVERY SINGLE case I was personally involved in, the injured worker received workers comp benefits. Why? Because it is the company’s responsibility to insure the safety of their workforce, even from their own stupidity. I think in many cases that is how liability should be applied. McDonald’s was clearly in the wrong. The coffee case was one of hundreds before it that actually made it all the way to court, and if McD’s had done the right thing, it never would have happened.

  44. newfenoix says:

    There MIGHT be some merit in this when dealing with many of the so-so lawsuits that are filed by the thousands by people just wanting to make a easy buck. But, in general, every case has to be considered on its own merits. If you have a very good attorney and a sympathetic jury, settling would be a major mistake. You just can’t make a blanket statement that it would be better it settle every time. That just might not be true.

  45. newfenoix says:

    @ohiomensch: You just said a mouthful. It seems that most smaller companies will do anything to stop an employee from filing for workers comp. And it is the responsibility of the EMPLOYER to make sure
    that all safety rules and policies are followed. When I was doing workers comp investigations, we would ask three standard questions:

    1: Was management trained in the proper procedures?
    2: Did management train the employees in the proper procedures?
    3: Did management ENSURE that the proper procedures were being followed?

    In most of the cases that I handled, the management was giving a pamphlet or rule book, told to read it and then teach the workers. That is not proper training.

  46. ShabazOSU says:

    @timmus:
    You’re exactly right. You should check out The Learning Channel, they have a documentary on a bunch of people who have won the lottery & how they blew it all. It’s actually pretty hilarious at the ridiculousness of what these people wasted their money on.

  47. varro says:

    @Marshfield: At least in Oregon, if you make a demand for under $5,500, you can do a 20.080 letter, which means if you get more than your demand letter at trial, you get costs and attorneys’ fees.

    A good law to get low-value cases to settle.

  48. varro says:

    @Trai_Dep: See failed Supreme Court nominee Robert Bork, who filed a personal injury lawsuit last year against the Yale Club, alleging negligence leading to him falling while at the club for an event.

  49. dragonvpm says:

    @sean77: Actually you fail at statistics.

    You can’t apply the margin of error unless you have a random sample, we don’t know that it was or wasn’t, but given the very nature of trial results (and their availability) it’s most likely not a truly random sample.

    I suspect that NYC probably has a lot more than 500+ civil trials per year and as such I think their sample size was probably not adequate given the variables involved. They’d probably need to split it up among the various courts in the city. Even just splitting it between small claims and regular court would make a big difference (given the results they discussed, I would imagine that they didn’t include small claims court, but as it is a civil court I would think it should have probably be noted and explained).

    Their numbers may be valid for a single court, or specific group of courts (again not knowing the actual numbers makes it hard to judge), but extending those results for all of NYC or throughout the US seems questionable, especially given their professional interest in advising people when they should settle.

  50. shepd says:

    Oh no, the McDonald’s case.

    My take on it: I buy 10% acid from a store. It’s strong acid, and anyone with a brain knows it will burn me seriously, if not kill me. I spill it on myself due to my own stupidity (I was running with it down the hallway from the chemistry lab and decided to see if I could jump down the stairs at the end, rather than use the railing and go one at a time) and I’m lucky: I don’t die. However, I chemically burn 50% of my body.

    But wait! It turns out they gave me 100% acid! Now I have an excuse to sue for lots of $$$, right? Because, you know, I figure it would be only very likely, rather than incredibly likely to cause serious and permanent skin damage, if not death.

    Comparison to this case: Lady dangerously transports (it *IS* dangerous to transport paper cups with hot liquids between your legs) known-to-be-harmful (fresh coffee at any regular temperature is known to cause serious and painful burns) substance, and harms herself (the amount is not important as the circumstances of her self-harm indicated that “cooler” coffee would have caused similar damage, she took over 20 seconds to relieve herself of her now steaming clothing). Store is at fault because substance was not served at a “safe” temperature where it would normally cause 3rd degree burns within 0.05 seconds (ask your pediatrician how long it takes 160 deg F water to burn) but rather it was served at an “unsafe” temperature of 190 deg F where it would cause 3rd degree burns in 0.01 seconds. Because we all know human reaction time is usually 40 ms, that’s why we only leave 3 inches between cars on the freeway, rather than 3 seconds… yeesh. What’s next? Suing the car company for your accident injuries because your bumper is 1 inch longer than what the manual said and therefore you were 0.04% more likely to have an accident?