Most Plaintiffs Who Reject Settlement Offers Do Worse at Trial

Here's a story from the ABA Journal Online (8/11/08):

By Debra Cassens Weiss

The gamble of going to trial doesn’t pay off for most plaintiffs, according to a study of more than 2,000 civil suits from 2002 to 2005.

Sixty-one percent of plaintiffs who turned down settlement offers ended up faring worse at trial, according to a New York Times story on the study. The average settlement offer was $48,700 and the average award at trial was $43,000, a difference of $5,700.

Defendants were wrong in just 24 percent of the cases, but for them the cost of a bad gamble was must larger. The average plaintiff’s settlement demand in those cases was $770,900 and the average verdict was $1.9 million, a difference of more than $1.1 million.

Plaintiffs were more likely to make poor choices about going to trial in contingency fee cases. On the defense side, defendants were more likely to make poor choices when there was no insurance coverage.

The study will be published in September in the Journal of Empirical Legal Studies