How are settlements determined?
In deciding whether to settle the case, the total damages must be considered. Then, each party must evaluate his or her chance of winning. The final factor that must be considered is the collectability of the defendant. The defendant’s financial situation is certainly a factor, especially if he or she may file bankruptcy. Once these factors are analyzed, the real question for the plaintiff is, how much money will the plaintiff take to avoid the risk of going to trial and possibly ending up with nothing? That is the target settlement amount.
