Settlement: The wrong question

Most litigation settles. The parties reach an agreed compromise and move on to more productive pursuits. It is rare, therefore, for me to be asked to advise on proceedings without being asked about whether settlement should be explored.

In this post I want to touch on a single issue: I find clients consistently ask the wrong question. The question they ask is “What are my prospects of winning?” Of course the answer to that question is relevant and important to the decision whether or not to fight. It is, however, only the third most important question that a client should ask.

The most important question is “Can I afford to win?” It seems an unlikely question but it is vital. Fighting a case involves cost. The most obvious costs are the lawyers’ fees. In Tribunal proceedings they are generally not recoverable. There are opportunity costs. Employees sat in court are leaving work undone and opportunities uninvestigated. Less easy to define are the costs to working relationships and trust that may arise from subjecting employees to giving evidence in a high stress, hostile and blame-soaked environment. There are risks associated with the popular press practice of reporting the allegation and not the response. You may win the case and still find your interests damaged significantly. Start by asking yourself, therefore, where winning may leave you.

The next question is “Can I afford to lose?” No lawyer with an insurer will ever give you a 100% chance of success. It is important to understand what prospects of success actually mean. If your lawyer tells you that your chances of success are 70% she means that of the 10 judges you might find gazing sceptically at you as the trial beings, 7 would likely find for you and 3 would not. You don’t know whose court you will walk into. You never bet your house at the bookies. Similarly, you should never fight a case you simply cannot afford to lose unless a settlement is genuinely impossible. There are no points for bravery. It might all work out, but if it doesn’t the lawyers move on to the next case, the consequences of your loss are yours alone.

If you can afford to win and you can afford to lose, then, but only then, should you ask about prospects.


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