New Study Shows Going to Trial Doesn’t Necessarily Pay

The New York Times recently reported on a new study of civil lawsuits. The study included about 2,000 cases that went to trial between 2002 and 2005 and the findings are scheduled for publication in the September issue of the Journal of Empirical Legal Studies. The study’s focus included information about whether or not it was financially better for plaintiffs and defendants to settle or proceed to trial. Here are a few of the study findings:

The decision to go to trial was more often a mistake in the cases where lawyers had a financial incentive to go to trial, such as when the lawyer was paid a share of the amount won at trial.

The study did try to contemplate factors such as a lawyer’s years of experience, education and law firm size; however, the results show the more significant factor as case type. Such as, cases with contingency fee arrangements commonly are associated with a plaintiff’s poor decision to go to trial and when defendants make poor decisions, it tends to be in cases where insurance coverage is not available.

The cost to plaintiffs, when choosing to go to trial instead of settling, was, on average, about $43,000 (although this amount does not include all legal costs for all cases studied). Although defendants tended to make a better financial decision regarding settlements than plaintiffs, the average cost to them when they did make a mistake about going to trial was higher at over $1 million.

In the study, trial outcomes over 40 years until 2004 were evaluated and the survey found that poor decisions to go to trial have become more common. For more settlement issues, visit the defense and settlement section of our blog.