What Is a Settlement?

There are several types of legal settlements. These include:

• Lump-sum payments: One-time compensation of the entire settlement amount.
• Structured settlements: Ongoing, agreed-upon payments made over time.
• Confidential settlements: An arrangement where the terms of the settlement are not made public.

Each legal case is unique. A qualified attorney can examine your circumstances, review all the options and help determine the best arrangement for you.

How are settlements reached?

Settlements can be reached in a variety of ways, including:

• Negotiations between attorneys: Lawyers for each of the parties negotiate settlement agreements. Each attorney will listen to their client’s desired outcomes and attempt to understand the opposing party’s position. With this information, they can work on establishing an acceptable deal for all parties. This process includes negotiating amounts, evaluating offers, making counteroffers and working toward a favorable resolution.
• Alternative dispute resolution (ADR): ADR is a way to settle disputes out of court, such as through arbitration or mediation. ADR is typically a more confidential and informal process than taking a case to trial.
• Judicial approval: Under Rule 23 of the Federal Rules of Civil Procedure, class actions may be settled only with court approval. Depending upon the jurisdiction where a mass tort is filed, a court may or may not have the authority to oversee and/or approve a settlement.

Settlements can be offered and mutually agreed upon at any point of the process up until a court verdict is reached. A settlement does not establish liability, which is only determined in court. Settlements don’t have to resolve an entire dispute either. Portions can be settled, leaving the rest of the issues to be decided by a judge or jury.

Settlements vs verdicts

A settlement is a binding contract between two parties, typically in writing in a settlement agreement. A verdict is a formal decision made by a judge or jury at the end of a trial. A verdict is generally binding on the parties after the judge enters a judgment based on the verdict.  But it may be appealed and a higher court could overturn it. 

Other resolutions

Arbitration is a formal process where a neutral third party, known as an arbitrator, hears a dispute outside of court and makes a decision. A final verdict issued by an arbitrator is also binding, with limited options for appeal. 

Mediation is a process in which parties may engage in settlement negotiations. In mediation, a neutral third-party helps disputing parties find a resolution. It is non-binding, meaning that the parties are not bound unless they voluntarily agree.
 

Settlements have some benefits and drawbacks compared to other types of resolution.

Pros of settlement:

• Faster resolution compared to trials, which can take months or even years.
• Guaranteed compensation for plaintiffs. 
• Increased likelihood of a positive future relationship between the parties.
• Less expensive than extended litigation or trial.

Cons of settlement: 

• A settlement may result in lower compensation than a trial verdict.
• Confidential terms of a settlement may prevent public accountability for the wrongdoer.
• Judges or juries who decide on the merits of the case might yield a better result.
• When a case settles, no legal precedent is set for future similar matters.

Motley Rice is prepared to take cases to trial and fight for the best outcome for plaintiffs. While smaller firms may not have the resources or institutional knowledge to litigate a case through complex trials, Motley Rice is one of the nation’s largest plaintiffs’ litigation law firms. Our law firm has attorneys with experience in multiple areas of law and represents clients throughout the entire legal process.

Contact Motley Rice today

Motley Rice has played a leadership role in some of the most significant cases to ever go through U.S. courts. We have the experience and depth of resources required to take on challenging, ground-breaking litigation across a wide variety of practice areas. For more information, contact our team by filling out our online form or call 1.800.768.4026.

A settlement conference is a formal meeting where the parties try to resolve their dispute before trial. Its chief purpose is to encourage settlement to avoid lengthy court proceedings. 
Attorneys, plaintiffs, defendants, and sometimes a judge or mediator participate in settlement conferences. If the outcome is successful, the case will be resolved before trial. If it is unsuccessful, the litigation continues.

A settlement fund is money a defendant reserves to resolve a legal claim. These funds are paid to injured parties according to the terms of a settlement agreement. Common cases that use settlement funds include the following:

• Class actions
• Mass torts 
• Cases involving regulatory agencies

What is a structured settlement?

A structured settlement is a financial arrangement where injured parties are compensated in installments instead of a lump sum. People may choose structured settlements because they may provide long-term financial security and help prevent reckless spending.

What is a structured settlement annuity?

When a liable party must pay a structured settlement, they invest in an annuity. An annuity is an insurance product that funds periodic payments via a structured settlement. This is how it works:

• The defendant purchases an annuity from an insurance company.
• The insurance company transfers the payment obligation to an assignment company.
• The assignment company makes guaranteed tax-free payments to the claimant.

A structured settlement offers several potential advantages. Periodic payments help the plaintiff receive a steady stream of income. Payments made to the plaintiff will continue even if the defendant files for bankruptcy. 

A settlement statement is a legal document that outlines the financial details of a settlement. It generally includes:

• Amount to be paid to the plaintiff
• Legal fees and other costs and expenses
• Breakdown of structured payments, if applicable

Motley Rice has a history of taking on complex cases and litigation in many areas, including: 

• Anti-terrorism: Our attorneys have represented clients in litigation against those responsible for the September 11 attacks. 
• Aviation: We’ve represented victims of commercial plane disasters and military helicopter crashes. 
• Consumer privacy: Our firm has advocated for clients in data breach lawsuits, including the Equifax data breach and the Marriott and Starwood hotel breaches. 
• Opioid litigation: Our attorneys have represented state and local governments in litigation against the opioid crisis. 
• Securities litigation: We’ve represented clients in securities fraud cases, shareholder derivative actions, and merger and acquisition litigation. 
• Product liability: We’ve handled numerous cases involving dangerous medical devices, vehicle defects, and other hazardous products. 

Other areas that Motley Rice has experience in include toxic exposure, dangerous medical drugs and devices, vehicle defects, product recalls, personal injury, consumer fraud and environmental violations. We have a history of taking landmark actions for consumers and workers.

Read more about our litigation experience.