Business LawBusiness Litigation

Does negotiating in my lawsuit make me look weak?

In a word, No. It makes you look rational.

Disputes happen. When they cannot be resolved, lawsuits happen. For better or worse, they are often a necessary part of doing business. At some point, if a dispute cannot be resolved, you have to have a third-party step in, and the best format we have derived for that, is lawyers, judges, and juries.

However, there is one way the parties can grab that power back, retain control over their dispute and their resolution, negotiating a settlement. The key to me is that negotiations are a parallel process to the litigation itself. That means we should not be litigating with settlement as a strategy, we should be litigating with winning at trial as a strategy and realize that often settlement is a buy-product of that strategy.

Won’t any offers to settle get used against me in my case?

No. Settlement Negotiations cannot be used for that purpose.

Wis. Stat. 904.08Compromise and offers to compromise. Evidence of furnishing or offering or promising to furnish, or accepting or offering or promising to accept, a valuable consideration in compromising or attempting to compromise a claim which was disputed as to either validity or amount, is not admissible to prove liability for or invalidity of the claim or its amount. Evidence of conduct or statements made in compromise negotiations is likewise not admissible. 

The negotiations are not admissible, which means to a certain extent, settlement negotiations are really just an exercise in game theory. If you are the Plaintiff, how much money can we get them to pile up on the table for settlement? Only when you believe you have exhausted what they would pay (regardless of whether that amount is fair or reasonable) do you have to make a real decision, “Is that enough?” If yes, take the settlement and move on. If no, continue to prepare for trial.

The flip-side is true on the defense side. At some point, there is a dollar amount that is worth more than the uncertainty of proceeding. While game-theory and human nature requires that the number be reached as a result of a back and forth negotiation, the end result is still that there is a number every Defendant is willing to pay to resolve the case. Is that enough for the Plaintiff, there is only one way to find out, play the negotiating game. If your top dollar is not enough for the Plaintiff, prepare for trial.

How do we get to a good settlement?

Prepare for trial.

Si vis pacem, para bellum – “If you want peace, prepare for war.”

Every decision in a case should be about how does this progress our case for preparing to win at trial. No doubt some lawyers take a shotgun or war of attrition approach. They use the tools of litigation to wear out your the other side, run up their costs, and generally make the process as miserable as possible. I cannot deny this can have an effect on litigants, but I do not believe it is the most effective. I find that when we can push the case forward, advance our issues and prepare our best arguments for trial, that has a much greater effect on the outcome of the case than any kind of sideline tactics to run up costs.

The biggest lever for settlement is not attorneys’ fees, it is uncertainty of the outcome. The more we can narrow down the range of outcomes, or start to demonstrate where we can improve the outcome for our side, the more valuable a settlement becomes for the opposing party. That, in my mind, is the key to getting a good settlement. For reasons that are beyond the scope of this article, people need to negotiate to get there. It almost never works to just flop out your best and final offer.

[Someone I really like who has put a lot of thought into behavioral economics questions like this is Dr. Richard Thaler (a summary of his research that won him the nobel prize is here). His book Misbehaving is a very worthwhile read.]

In any event, trust me, negotiation is a necessary part of the game.

What if I cannot afford to take my case to trial?

Then you are in a lot of trouble. Once the other side catches wind of the fact that you are only in this for a quick settlement, and have neither the will nor the ability to see it through, the value of your case (Plaintiff or Defense) just got much, much worse.

This is precisely why we have started offering flat fee litigation. Our goal was not to create a cheaper form of litigation (I don’t believe that is compatible with what we just discussed, the way to get the most value from your dispute is to prepare for trial) but rather to create more predictable litigation. We can tell you exactly what your fee will be for each stage of the case all the way through trial. It can be budgeted for, evaluated, and thus weighed against settlement to make the best decision possible for your business. Learn more here at www.hallingcayo.com/flatfees.

Whether you choose to go with a flat fee, an hourly fee, a contingent fee, or a hybrid mix of some sort, I still believe that the best way tot get a good settlement is to be ready for trial.

Si vis pacem, para bellum