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The Uncertain Art of Valuing Cases

Posted by Frank Steinberg | Sep 20, 2016 | 0 Comments

We just saw this report from the San Antonio Employment Law Blog, explaining how Target had the opportunity to settle a personal injury case brought by a customer for $12,000, but apparently would not budge off its offer of $750.  We infer that the low-ball offer (and this was a low-ball offer even by “nuisance value” standards) stemmed from Target's belief that the plaintiff did not have a legally valid claim.  However, the case went to trial where the jury returned a verdict of $4.6 million in favor of the plaintiff.  Given the plaintiff's previous offer to settle for $12,000, that's a $4.588 million mistake by Target.  

The lesson: defendants should not underestimate the risk of taking a case to trial.

That was the second such scenario that we heard about this week.  In another, a judge related the unpublished story of the employment law plaintiff who turned down a high six figure offer from defendant.  She chose to go to trial and won — $25,000.  Not settling turned out to be a high six figure misjudgment.

The lesson: plaintiffs should not underestimate the risk of taking a case to trial.

Juries usually get to the right answer after hearing the evidence.  But juries are independent and often unpredictable things.  It is not uncommon for them to surprise lawyers and judges who have far more knowledge of the law, and more experience in valuing cases.  Settlement negotiations conducted in good faith are often the best way to reach a just result.  This is not to say that every case should be settled.  Some need to be tried to a verdict, come what may.  However, confidence in one's position should always be tempered by an objective look at the range of possible results if the case is turned over to a jury of 6 that is allowed to be the last word on value.  Plaintiffs and defendants alike must understand that they proceed at their own risk.  And, as the examples above illustrate, what are viewed as low-risk claims can become catastrophic to defendants.  At the same time, a plaintiff's victory can unexpectedly become Pyrrhic.  While most whose disputes wind up in court want vindication, they need to appreciate the value of having some control over outcome.

About the Author

Frank Steinberg

Frank is the founder and principal of Steinberg Law, LLC. A Jersey boy born and bred, he focuses on employment litigation and counseling, business litigation,  and aviation law. Following law school and a clerkship in the federal district court Frank spent his early career with large litigation ...


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