When to Settle
August 11th, 2008 by Shalini
The New York Times recently published an article about a soon to be published study that found that in a majority of cases, plaintiffs would have been better off settling rather than going to trial. The study, to be published in the September issue of the Journal of Empirical Legal Studies, encompasses 2,054 cases in California that went to trial from 2002 to 2005. Among the more provocative findings in the study are the following:
- Plaintiffs with contingency fee arrangements made poorer decisions about going to trial
- On average, getting it wrong cost plaintiffs about $43,000; For defendants, who were less often wrong about going to trial, the cost was much greater: $1.1 million
August 13th, 2008 at 3:51 pm
I wrote about the study in the NYT article last week in my blog, Pittsburgh Legal Back Talk. The NYT article, while it contains some interesting information, didn’t tell us enough to enable us to draw any meaningful conclusions. We will have to wait until next month for the study report to be published.
Nevertheless, there is a well-documented reason why plaintiffs with contingency agreements may make poor settlement decisions. According to a fascinating book I have just begun to read called “Predictably Irrational” by Dan Ariely, we are hard wired to be risk averse. We are more afraid to take chances when we have something to lose (more attorneys fees) than when we have no expenses, such as in a contingent fee arrangement. Look for a full review of the book and a full discussion of the subject soon at http://www.pittsburghlegalbacktalk.com/.