Settlement of Litigation: A Critical Retrospective
Files
Description
“If someone sues you, come to terms with him promptly while you are both on your way to court; otherwise he may hand you over to the judge, and the judge to the constable, and you will be put in jail. I tell you, once you are there you will not be let out till you have paid the last farthing.” Matthew 5:25 Few topics in the area of civil procedure arouse greater interest, or stimulate more ingenuity in the design of legal rules, than settlement of litigation. As the costs of litigation have grown, settlement outside of court becomes more appealing. If only parties could be induced to resolve their disputes privately, social resources could be directed to purposes more useful than litigation. Settlement is cheap; litigation is expensive. Since both accomplish the same result – resolution of a controversy between parties – proper social policy would seem to encourage settlement and discourage litigation. As illustrated by the quotation from the gospel, the desirability of settlement has been recognized for thousands of years. Yet parties continue to bring lawsuits and to carry them through to final judgment by a judge or jury, notwithstanding the costs they incur by doing so. Why do more cases not settle, and what, if anything, should the legal system do to induce a higher rate of settlement? The present article examines these questions by means of a review of current literature in the economics of civil litigation. Part I of the paper introduces the standard economic model of litigation developed over the past twenty years. Part II considers possible reasons why cases do not settle despite the implication of the standard model that parties can ordinarily make themselves considerably better off by settling rather than going to trial. Part III addresses the public policy considerations for and against settlement. Part IV considers a number of existing or proposed devices designed to enhance the probability of settlement.
Source Publication
Reforming the Civil Justice System
Source Editors/Authors
Larry Kramer
Publication Date
1996
Recommended Citation
Miller, Geoffrey P., "Settlement of Litigation: A Critical Retrospective" (1996). Faculty Chapters. 2041.
https://gretchen.law.nyu.edu/fac-chapt/2041
