When Should My Business Settle A Case?

Tough question, right? Not really. Your business should settle its case if the cost and exposure of moving forward with litigation substantially outweighs the cost of the settlement that can be achieved. So we’re done here, right? Not really. The difficulty, of course, is in accurately assessing the cost and exposure of moving forward with the litigation. In doing this assessment, it is critical for the attorney and management to work together.

Here are some of the factors that need to be considered:

1. The anticipated cost of the litigation;
2. The likelihood of success;
3. The total exposure in the event of a bad outcome in the litigation;
4. The potential disruption and/or harm to business operations, goodwill and public relations; and
5. The ability to obtain business related advantages in the settlement.
6. The effect a settlement and/or adverse verdict may have on other litigation and/or business matters.

Each of these items requires an open and honest dialog. When all is said and done, whether or not to settle is simply another business decision. A business must go about this rationally and utilizing good judgment, just as it would with any other business decision.