The Seven C's of Settlement
Many people, particularly those who have never experienced first-hand what it is like to be a party to litigation, are quick to threaten to file a lawsuit at the first sign of a business dispute. However, as most lawyers and experienced litigants will readily tell such people, there are many reasons not only to avoid lawsuits if possible, but once involved in a lawsuit to try to reach a settlement with the other side.
At a settlement conference that I recently attended, the settlement judge explained to the parties and their attorneys what he called “the seven c’s of settlement.” His explanation, which I believed helped that case to settle, was as follows:
- Control by the client. It is oftentimes said that a good settlement is one where both sides are not “happy.” While that may be true, the biggest advantage of a settlement is that the settling parties have complete control over the negotiated resolution, as opposed to being forced to accept a decision made by a judge or jury, which is ultimately totally out of their control.
- Containment of costs. There is no avoiding the fact that litigation is expensive, and that the costs can easily spiral out of control if the opposing side is particularly aggressive. By settling, a party can avoid having to spend the money required to litigate.
- Certainty of outcome. A settlement leaves nothing to chance, as the terms will be exactly what the parties have agreed to. This is much different than the outcome of a lawsuit, which no matter how strong the facts, or how good the lawyering, always has a certain degree of uncertainty, given the imperfections of the legal system.
- Confidentiality. Except in rare instances, lawsuits are open to the public, which can potentially be very harmful to the reputations of the parties involved. Conversely, most settlements are fully confidential, which avoids such potential harm.
- Creative solutions possible. Following a trial, there will be a winner and a loser; however, in the context of a settlement, the parties are able to fashion a creative solution to their dispute, whereby neither side fully wins or fully loses.
- Continued relationship between the parties possible. Normally the relationship between the litigants, whether it is a personal relationship or a business relationship, is collateral damage to a lawsuit, and by the end of the case the relationship is forever damaged or lost. Settling, rather than litigating, allows the parties the opportunity to continue their relationship, which may be of greater significance than whatever else is at stake in the lawsuit.
- Closure. Lawsuits do not necessarily end, even when a judgment is rendered, in that the losing side can continue the case for months or years by filing appeals. However, when a case is settled, it is over as soon as the settlement agreement has been signed, bringing much desired “closure” to the litigants. While there are certain disputes which legitimately cannot be settled, the vast majority of disputes can be, and should be settled if the parties recognize the advantage of the “seven c’s of settlement.
About the Author: David Allen, a partner in the Phoenix law firm of Jaburg Wilk, has been representing clients in both transactional and litigation real estate and business related matters for over thirty years. He is licensed as an attorney in both Arizona and California, and is also a licensed Arizona real estate broker. Got a real estate law question for David? Contact him directly.
Originally published on ASREB.com