The Art of Negotiating Settlements

The vast majority of legal proceedings settle out of court. People would be surprised by the actual percentage of out of court settlements, which in civil proceedings is approximately 96% of cases.

Therefore, only 4% of all claims ever get to trial these days.

We can debate the shift away from trials and towards out of court settlements and the merits of both resolutions.

Negotiation of settlements

The focus of this article, however, is to discuss the negotiation of settlements. It is a lawyer's job to know when is an appropriate time to settle a file and to advise the client accordingly and obtain their instructions. The term "right time" has not been used because there is not necessarily only one window of opportunity in which settlement may be appropriate.

Personal Injury Cases

In personal injury cases, it is critical that all injuries involved have been properly identified, medically assessed and treatment has reached a plateau. This process takes time and involves on-going information gathering and organized record-keeping.

Once the injuries are clear, assessed and treated, it may be a good time to consider reasonable compensation given the facts of the situation. In other words, there are precedent cases that can be used as guidelines to establish reasonable compensation for both physical and psychological injuries.

Negotiating a good settlement

Knowledge is key to negotiating a good settlement. While the precedents only serve as benchmarks, they are a good place to start. The other factor in determining whether a file is ready to be settled is the readiness of the parties involved.

There are many important considerations to be made on both sides as well as business decisions at play and the parties have to be willing and open to negotiate in order for there to be a successful resolution. Any settlement requires compromise on the part of both sides. Settlements can be negotiated orally, in writing or as Rule 49 offers, which carry cost consequences and are outside the scope of this article.

Settlements can be reached at mediation, pre-trial conference or any time before or after these steps in the litigation process. The option chosen depends on timing as well as familiarity with opposing counsel and the file.

Again it is the lawyer's job to select the appropriate strategy, considering the timing and facts of the case, advise the client accordingly and obtain instructions. Settlements often include an offer to settle, minutes of settlement, instructions from the client and releases between the parties.

To conclude

The bottom line in negotiating settlements is that it is definitely an art and not a science, which requires good communication and strategic timing on the part of counsel as well as readiness on the part of both sides.

As the trend towards settlement increases, we may as well be prepared to jump on the bandwagon.