Monday, August 11, 2008

Study suggests trials too risky; are lawyers really to blame?

It is no surprise that nearly 90% of all civil cases settle before they ever get before a jury. The New York Times is reporting on a study by Randall L. Kiser, principal analyst at DecisionSet, a consulting firm that advises clients on litigation decisions, who wondered if the decision to proceed to trial and forego settlement is the correct one in the 10% of cases that are tried.

In a study to be published in the September issue of the Journal of Empirical Legal Studies, he concluded that plaintiffs are much better off taking the offer that is on the table instead of risking it all by going to trial:

That is the clear lesson of a soon-to-be-released study of civil lawsuits that has found that most of the plaintiffs who decided to pass up a settlement offer and went to trial ended up getting less money than if they had taken that offer.

"The lesson for plaintiffs is, in the vast majority of cases, they are perceiving the defendant’s offer to be half a loaf when in fact it is an entire loaf or more," said Randall L. Kiser. ...

Defendants made the wrong decision by proceeding to trial far less often, in 24 percent of cases, according to the study; plaintiffs were wrong in 61 percent of cases. In just 15 percent of cases, both sides were right to go to trial — meaning that the defendant paid less than the plaintiff had wanted but the plaintiff got more than the defendant had offered.

The article suggests that lawyers are to blame by not giving clients the proper advice. Our jobs, however, are not to make the decision for our clients whether to settle or try a case. In fact, it would be unethical to do so. Instead, our role is to provide our clients with as much relevant information as possible, lay out the risks and rewards inherent in the options, and let them make an informed decision. If we think they are making the wrong decision, our job is to try to persuade them to what we think the right decision is, until they either come around to our way of thinking, or we determine that they will not.

The article also suggests that lawyers are driven by high fees and not good results for their clients. I respectfully disagree. Clients are relationships, not cash cows that can be milked dry in every case. The best way to build such a relationship is not by draining every nickel from a client on every matter, but by being cost effective. Part of being cost effective is understanding when it is time to fish, and when it is time to cut bait.