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What is Settlement Litigation?

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  • Written By: Alexis W.
  • Edited By: Heather Bailey
  • Last Modified Date: 28 October 2016
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Settlement litigation refers to the fact that the majority of litigated cases settle outside of court. A litigated case is a case where one party sues another party privately in a civil suit in order to collect monetary damages. This is distinct from a criminal suit, and the purpose of civil litigation is for a wronged plaintiff to receive compensation for various torts or contract breaches. Most often, insurance companies or corporations are the named defendants in litigation, and settlement litigation is a means of limiting risk.

Litigation may take place in many situations, but two of the most common examples arise from personal injury lawsuits and breach of contract cases. An example of a personal injury lawsuit might be a suit where a plaintiff is alleging he was damaged by a defective drug made by the defendant, or a suit where the plaintiff alleges he was hurt in a car accident caused by the defendant. A breach of contract case, on the other hand, occurs when the plaintiff asserts that the defendant did not do what he promised to do in a formal written contract.

In these cases, and other forms of litigation, the plaintiff seeks money. In contracts cases, he seeks money for the damages he suffered due to the non-performance of the promise. In personal injury cases, he seeks money for his medical bills, lost income, pain and suffering and emotional damages resulting from the injury.

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The defendant in these cases may wish to explore the option of settlement litigation. Settlement means that instead of the case going all the way to the jury, and allowing the jury to give the plaintiff the amount of money it feels is appropriate, the defendant offers a set amount of money. If the plaintiff accepts that amount of money offered, then the plaintiff gives up any and all further rights to sue.

Settlement litigation can be a good option for the defendant if he believes he is likely to lose the case, as he may then have a greater degree of control over how much money is given to the plaintiff. Settlement litigation can also be a good option for a plaintiff, as the plaintiff receives a guaranteed payout without having to first prove the defendant's guilt to a jury. Whether settlement will be a viable alternative to litigation depends on what the defendant offers, if anything, and whether the plaintiff chooses to accept that offer.

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