"Settling a case" means ending a dispute before the end of a trial. Although popular media often makes it seem like major cases are resolved in relatively short order, in reality, a case can potentially meander through the court system for years. Each side has to take time to investigate the facts of the case and research the law surrounding the case. Initial papers are filed with the court months before trial can begin. All of this time gives the parties room to undertake settlement negotiations.
Trial is a long, expensive process. Most people do not file a suit simply for the thrill of the courtroom experience. Instead, people file suit because they feel they have been wronged in some way, and they cannot find a good solution on their own. Settling a case may offer a way to avoid the expense of trial while still getting some compensation for the wrong that was committed. As far as defending parties are concerned, settling a case may also eliminate the costs of a trial and may also be a way to avoid the risk of potentially greater losses via a jury verdict.
Lawyers and courtroom procedure are not necessary to reach a settlement, although sometimes it can help speed the process. Courtroom procedure provides a formal, structured way for two parties in a dispute to exchange information. Lawyers can advise the parties about their rights.
After each side has enough information, they typically both make a careful calculation. They may consider factors such as how much a trial is likely to cost, how much they stand to gain or lose with a verdict, the chances that a verdict will be reached, and more. If the cost of settling is less than the cost and risk of going to trial, the parties may be willing to settle. One party usually writes the other a demand or offer letter, which outlines the strengths and weaknesses of the case, a calculation of likely damages, and a proposed settlement amount. Then the two parties begin their negotiations, and with any luck, settle the case before trial begins.
For more information on trials, see FindLaw's section on Litigation.
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