Last Thursday's NYTimes featured an interesting article on a study evaluating outcomes after a plaintiff forgoes a settlement in favor of a trial. The study shows that plaintiffs in civil trials end up getting less out of a trial than they would have had they accepted a settlement offer.
I have some theories on why this might be the case:
1. As the article indicates, lawyers have an incentive to try to collect fees that are contingent on winning in court or to bill for all the hours required to prepare and go to trial.
2. Defendants may be willing to offer a premium to plaintiffs in order to avoid trial. Defending oneself in a public forum might lead to embarrassment, mistakes and further litigation or an extended proceeding, which may eventually result in a settlement anyway.
3. Plaintiffs who perceive they have been wronged may attach too high a value to their right to sue.
Here is the article: http://www.nytimes.com/2008/08/08/business/08law.html?em
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