Frequently, a plaintiff's attorney will come to the bargaining table demanding a large sum of money. The refrain goes, "this is my number and my client will not settle for a penny less. If the carrier does not write this check, and soon, we'll see you in court." The subtext being delivered is it is much cheaper to settle for a known amount today than lose in court for a much larger amount later. The question is, if the defendant calls the attorney's bluff, do plaintiffs win big in court? Well, yes and no.

The full context was published in the Journal of Empirical Legal Studies. Yes, there really is a journal with that title. The authors concluded that for most plaintiffs, passing on a settlement offer frequently netted less cash at trial, than the offer itself. Put a different way, the coauthor, Randall Kiser stated, "The lesson for plaintiffs is, in the vast majority of cases, they are perceiving the defendant's offer to be half a loaf [splitting the difference], when in fact it is an entire loaf or more."

When one party makes an offer, it's rejected, and the parties march off to court, generally one party has made the wrong decision. (The only time both parties make the right decision is if the verdict matches the settlement. But, even there, there are additional costs in lawyers' fees, time, and effort).

Defendants erred by going to trial far less frequently than plaintiffs; respectively 24% versus 61%.  But, when defendants erred, their mistakes were more costly. On average, the mistake cost plaintiffs a minimum of $43,000. On the other hand, the average defendant, when mistaken, incurred much greater loss- $1.1 million.

The study noted that factors such as years of experience as a lawyer, the size of the firm, and even the rank of a lawyer's law school were not determinative in predicting the decision to go to trial. The type of case, though, was important. For plaintiffs, contingency arrangements augured a greater chance for getting it wrong. For defendants, high error rates were noted when insurance coverage was unavailable. 

The conclusion is that passing on an offer is frequently the wrong decision for plaintiffs. But, when it is the right decision, plaintiffs do indeed win big. Of course, statistical information is not necessarily the ideal predictor without knowledge of the specific facts and circumstances of an individual case. But, what do you expect from a journal titled Journal of Empirical Legal Studies!

Download your free copy of the Medical Justice case study; "Expert Witness Accountability - Silencing the Hired Gun."