Civil litigation and Alternative Dispute Resolution (“ADR”) go hand-in-hand. In fact, more often than not, litigation resolves via some sort of ADR like private mediation or settlement conference instead of via trial (close to 90% in California). Many clients file suit, or find themselves named in a lawsuit, and think jury trial and civil judgment. When in fact, litigation is more often about a constant and on-going evaluation and monitoring of 3 factors: 1- probability of “losing” versus “winning”; 2- amount of gain or loss at issue; and 3- cost to reach the end result. Often times the most challenging part of a civil litigator’s job is communicating an accurate evaluation of those factors in the face of the client’s own expectations and beliefs about the facts of their particular case.
Litigation Study
A NY Times article discussed a recent study of 2,054 state court trials from 2002 to 2005 which has some interesting results regarding litigation and some form of ADR, and how, when and why litigation ends up where it does. One of the observations from the study is that how much it will cost you to settle versus go to trial depends on whether you are a Plaintiff or a Defendant. As the study revealed, when Plaintiffs made the wrong choice (decided to go to trial and ended up with less than what they were being offered) it costs them on average, $43,000; while it costs Defendants on average of $1.1 million. Interestingly, the study also tracked trial outcomes over the last 40 years (until 2004) and found that poor decisions to go to trial have actually become more frequent over time.
The Cost of Going to Trial