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Advantages and Disadvantages for Corporations on Settling Lawsuits vs. Going to Court

By Greg Kohn

If your business or corporation is facing the possibility of litigation or has already been sued, you probably have a million questions, including whether you should settle or go to court. You might be asking, Do I seek guidance from a business lawyer near me or try to handle the situation on my own?

This blog will cover the advantages and disadvantages for corporations of settling lawsuits vs. going to court. A New Jersey personal injury attorney could help you evaluate the pros and cons of each option and determine what is best in your situation.

Advantages for a Corporation Settling a Lawsuit Rather than Going to Court

There are several advantages to reaching a settlement with the plaintiff instead of getting your day in court. For example:

  • Settling a lawsuit can save you money on legal fees and possibly reach a lower payout to the plaintiff. Face it: Litigation is expensive. Most businesses do not have a deep well in the budget for attorney fees. Also, the plaintiff might settle for less money than you might get ordered to pay by a jury if the plaintiff knows that juries are unpredictable. They might follow the long-held principle that “a bird in the hand is worth two in the bush.”
  • You might be able to reach settlement terms that a judge would not order if the case goes to trial, like a requirement that the terms of the settlement be kept confidential.
  • Court files are a matter of public record. Your competitors could find damaging information that they could use against you, including the jury verdict.
  • Reputation. A good business reputation takes years to build, but only a moment to destroy. A quiet settlement out of court can protect your reputation, particularly if you include a nondisclosure agreement in the terms of the settlement.
  • You can get back to what you do best – running a corporation.

Still, sometimes litigating the claim is the best option.

Disadvantages of Settling a Business Lawsuit

There can be some downsides to settling a claim against your company, including the following:

  • Many people believe that “when there is smoke, there is fire.” They will assume the worst about a company that gets sued. The only way to kill the rumor mill might be to take the case to trial.
  • If your industry is prone to frivolous lawsuits, you might need to send a message that you are not easy prey. You might have to litigate questionable cases to make it clear that getting money out of your company will be a long, expensive challenge.
  • You never know when a jury will want to play Santa Claus and award the plaintiff an exorbitant amount of money, thinking that corporations are rolling in money. That outcome is always a risk of going to trial.

If you embark on fighting the case in court and then change your mind as the lawsuit develops, remember that lawsuits do not prevent settlements. You can still negotiate and reach a lawsuit settlement.

Should You Settle or Go to Court?

This question requires an analysis of the strength of the claim against your company, the evidence you have to defend your corporation, the type of lawsuit, and the unique facts of your situation that could impact the consequences of each option. You should seek the guidance of an experienced New Jersey personal injury attorney to help you determine your legal strategy. Reach out to our office today for help.

About the Author
Greg Kohn is a partner at Nagel Rice and specializes in complex civil litigation cases, including professional malpractice, personal injury, class actions, wrongful death, products liability, and commercial litigation.  He has extensive experience representing clients in both state and federal court. Greg has tried many jury trials to verdict and has recovered over $50 million in settlements and verdicts in all types of personal injury matters including automobile accidents, wrongful death cases, slip and falls, and other catastrophic injury cases. Greg also handles medical malpractice cases, involving misdiagnoses, wrongful birth, and delayed cancer diagnosis. If you have questions regarding this article, you can contact Greg here.