Everyone gives lawyers shopworn advice. One piece is to settle your clients' disputes early. No one disagrees: litigation today is more disappointing than ever, and very few pieces of litigation ever get to trial. But does that frequent advice work? Most settlements occur far too late, after both sides have sunk or wasted huge sums on the lawsuit. An increasing number of suits are just abandoned, or dismissed for want of prosecution.
So why do so few suits settle earlier? In the first few months, the parties could invest all the money which they are going to pour out on discoveries, interlocutory steps, and trial preparation. Invest it in what? An amicable settlement, not throwing the money away. Remember, few cases go to trial, so usually preparing for trial is largely wasted money.
8 Bad Myths
There are probably a host of reasons why litigants delay settlement efforts. An astute writer once observed that there is only ever one reason for doing something; all the other reasons are reasons to do nothing.
However, here is my nomination of 8 leading myths which impede timely settlement.
People assume there is no special time to settle. Almost all steps in litigation have deadlines, but there is no deadline for settling, until the final verdict of the trial judge (or the Supreme Court). Lawyers and clients rarely feel any incentive to do much before a deadline.
People assume settlement requires bonhomie. It takes 4 people to settle: 2 clients and 2 lawyers. Sometimes more than 4. Every one of them has a veto. The clients often hate each other, and today sometimes the lawyers do too.
Clients assume settlement means abandoning big parts of their legitimate rights, not gaining something.
Everyone asks what is a good enough offer; no one asks the fundamental question: whether the parties are better off to settle or go to trial.
Clients do not understand that litigation daily is becoming more and more unattractive in all respects. They often do not believe any such warnings. Most lawyers are afraid to give advice which is really strong, and do not know how to make their advice vivid or easy to understand.
Only the lawyer in charge of the file can settle. Who runs litigation? Barristers, who are used to it and to its delays and disappointments, and less used to negotiating. Not solicitors, who are used to making compromises and moving quickly.
Recent research repeatedly proves something disturbing. Even non-emotional intelligent experienced clients (and lawyers) usually make a number of common grave mistakes in valuing their options. Especially valuing trial vs. compromise.
Clients wrongly assume that their litigation expenses build an investment or an entitlement. But in fact they are wasted sunk costs which are gone forever, leaving nothing behind but burning resentment. Those who do not know their World War One history are condemned to re-fight wars of attrition and exhaustion in court.
Simple Concrete Solutions
What can you do about this? A host of things might help, but here are 4 simple steps.
Buy or prepare a video or pamphlet for all your firm's litigation clients. It will explain vividly some of the major dangers and heavy expenses of going to trial (or even having long discovery processes or chambers motions). And it will show some of the advantages of a settlement;
Diarize a deadline (such as 6 months from commencement of action) to get authority from your client to make serious offers and start negotiating;
Diarize another deadline (such as one year) to bring in a fresh negotiator, such as one of the solicitors in your law firm;
Diarize another deadline (such as 14 months) to press hard for mediation, and negotiate the name of a mediator. A hired mediator for a one-day mediation is not expensive, even with some preparation and client coaching beforehand.
– Hon. J.E. Côté
The Commentaries are intended to call the attention of lawyers to promising or threatening developments in the law, in civil procedure, in developing their skills, or simply to describe something curious, funny or intriguing.
Justice Côté recently retired from the Court of Appeal of Alberta and currently acts as an arbitrator, mediator, or referee under Rules 6.44 and 6.45 of the Alberta Rules of Court.