A new study, which is to be published in the September issue of the Journal of Empirical Legal Studies, concludes that personal injury plaintiffs – victims of accidents, medical malpractice, legal malpractice, etc. – and plaintiffs in contract disputes typically improve their outcome by settling. The mistake of turning down settlement offers and proceeding to trial, and doing worse than the offer, was typically made in contingent fee cases.
The findings were based on a study of 2,054 cases that went to trial from 2002 to 2005. One of the authors did note that the vast majority of cases do settle — from 80 to 92 percent by some estimates — and there is no way to know whether either side in those cases could have done better at trial.
Defendants made the wrong decision by proceeding to trial far less often, in 24 percent of cases, according to the study; plaintiffs were wrong in 61 percent of cases. In just 15 percent of cases, both sides were right to go to trial — meaning that the defendant paid less than the plaintiff had wanted but the plaintiff got more than the defendant had offered.
On average, getting it wrong cost plaintiffs about $43,000. For defendants, the cost was much greater: $1.1 million.