Cameron Miranda
The vast majority of cases settle out of court, with less than 5% going to trial. This is due to a variety of factors, such as the potential for a larger settlement, the desire to avoid high attorney fees, and the unpredictability of trials. In some instances, defendants may also believe that settling would be detrimental to their public image or encourage similar lawsuits. Additionally, settlements can create new legal standards and force industries to reevaluate their practices. For example, the $206 billion settlement against big tobacco companies in the 1990s changed how tobacco could be advertised and funded anti-smoking campaigns. While most cases settle, there are still instances where high-profile cases go to trial, such as the lawsuits against former President Donald Trump by major law firms, which resulted in mixed outcomes.
| Characteristics | Values |
|---|---|
| Percentage of cases that settle in big law | 80% (anecdotal evidence from a small housing law firm) |
| Percentage of personal injury cases that settle | 96% |
| Percentage of all cases that settle | 95% |
| When cases settle | after meditation/informal negotiations, the week before trial, after trial documents are filed, after jury selection |
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What You'll Learn
Personal injury cases
The majority of personal injury cases are resolved through settlement rather than trial, and the vast majority of personal injury claims settle. Specifically, over 95% of all cases and almost 96% of personal injury cases settle out of court. A survey by Nolo.com found that about two-thirds of readers (67%) received compensation through a settlement, while only 4% saw their case go to trial. This is typical of personal injury cases, with fewer than 1% of such cases filed in federal court from 2019 to 2023 going to a jury verdict.
Settlements are an agreement for the plaintiff to take a specified sum in exchange for not pursuing the case in court. The plaintiff risks receiving a lower amount than they might be awarded by a jury, but they also avoid the uncertainty and expense of a trial. The defendant, meanwhile, can avoid the potential for a much higher verdict and the negative publicity of a trial.
Personal injury settlements can range from $3,000 to several million dollars, depending on factors such as injury severity, medical treatment costs, income loss, liability clarity, insurance policy limits, and location. The median settlement amount in federal personal injury cases from 2013 to 2022 was $75,000, while another survey found an average of $52,900. However, in more than 40% of these cases, plaintiffs received $5,000 or less. It is important to note that settlement amounts are not always made public, and each case is unique, so professional legal guidance is essential for securing fair compensation.
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Settlements vs. going to trial
While popular media often portrays legal cases as culminating in dramatic trials, the reality is quite different. Most cases, especially in personal injury law, are settled out of court. This is because going to trial can be expensive and unpredictable, and settlements guarantee some kind of award.
For example, in the case of a lawsuit worth $50k, a defendant will likely pay more than that in attorney's fees, so it makes better business sense to settle. On the other hand, if a case is worth millions, defence lawyers will advise their clients to force the plaintiff to go to trial and make them earn their money.
Settlements can also be beneficial for the defendant, as going to trial can be seen as admitting fault, which may be bad for their public image. Additionally, a settlement may prevent other plaintiffs from bringing similar lawsuits.
In some cases, however, going to trial is inevitable. Catastrophic cases, for instance, often go to trial. Cases that are more about setting a precedent than financial gain are also likely to be tried in court. These cases often involve issues such as environmental concerns, religious or First Amendment rights, Fourth Amendment rights, or contract disputes.
While there are no hard and fast rules for determining which cases should be settled and which should go to trial, it is important for plaintiffs to choose a legal team that understands these nuances and can effectively negotiate a settlement or argue their case in court.
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Big Tobacco lawsuits
The Tobacco Master Settlement Agreement (MSA) was signed on November 23, 1998, between the four largest US tobacco companies and the attorneys general of 46 states. The settlement was reached to resolve dozens of state lawsuits seeking to recover billions of dollars in healthcare costs associated with treating smoking-related illnesses. The MSA's primary purpose was to reduce smoking rates in the US, especially among youth. This was to be achieved by raising cigarette costs, imposing payment obligations on tobacco companies, and restricting tobacco advertising, marketing, and promotions.
The MSA has had a significant impact on smoking rates in the US, with cigarette consumption dropping by more than 50% between 1998 and 2019. Additionally, regular smoking among high school students decreased from 36.4% in 1997 to 6.0% in 2019. The MSA also established the Truth Initiative, an organization dedicated to creating a culture where youth and young adults reject tobacco. The Truth Initiative is responsible for campaigns such as Truth and maintains a public archive of documents resulting from the MSA cases.
The MSA faced criticism for allegedly favoring major tobacco companies over smaller independent growers and sellers. Some argued that certain restrictions on pricing made it challenging for small growers to compete with "Big Tobacco." However, supporters of the MSA refuted this argument, claiming that the settlement was necessary to address the public health crisis caused by tobacco use.
In addition to the MSA, there have been other significant lawsuits against Big Tobacco. In 2006, the American Cancer Society and other plaintiffs won a major court case, with Judge Gladys Kessler finding tobacco companies guilty of deceiving the public about the deadly effects of cigarettes and secondhand smoke. As a result, tobacco companies were mandated to run corrective advertising campaigns and post signs in retail stores disclosing the truth about the dangers of their products.
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Pharmaceutical settlements
In 2012, GlaxoSmithKline paid a $3 billion settlement, the largest pharmaceutical lawsuit settlement in United States history. The settlement was reached after the manufacturer pleaded guilty to promoting two drugs for unapproved uses and failing to report safety data about a diabetes drug to the FDA. The drugs in question included Paxil, Wellbutrin, Avandia, and Advair. Glaxo's settlement included the largest civil False Claims Act settlement on record.
Pfizer paid a $2.3 billion settlement in 2009 over unlawful prescription drug promotions regarding its pain medication, Bextra. The settlement included a record-breaking $1.3 billion criminal fine. Allegations claimed that Pfizer created fake doctor requests for medical information to send unsolicited information about unapproved uses and dosages. Pfizer also allegedly offered kickbacks and other benefits to doctors to entice them to prescribe its drugs.
In 2011, a pharmaceutical manufacturer agreed to pay a $950 million settlement and pled guilty to a criminal charge over the marketing and sale of the painkiller Vioxx. The drug was approved by the FDA in 1999 and remained on the market until 2004. In 2019, a class-action settlement of roughly 25,000 lawsuits was reached after patients using the blood thinner Xarelto claimed they were not warned about the side effects of the drug, including internal bleeding, wound leakage, and infections.
Many other large pharmaceutical companies have reached substantial settlements with individuals and their families after some pharmaceuticals were found to have harmful and unforeseen side effects. These settlements can be a powerful tool to hold corporations accountable and change how similar cases are handled in the future.
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Trump's impact on Big Law
President Trump's impact on Big Law has been significant, with the administration taking aim at high-profile law firms and issuing a wave of executive orders that targeted their practices and clients. This led to a unique dynamic in the legal world, with smaller practitioners and litigators stepping up to challenge the administration's agenda while some big firms chose to settle or acquiesce to Trump's demands.
Trump's executive orders against Big Law firms were seen as an attempt to punish and intimidate them. The orders created uncertainty and made it challenging for these firms to conduct business as usual. Some of the targeted firms, such as Perkins Coie, successfully challenged the orders in court, with judges ruling them unconstitutional. However, other firms chose to settle and agree to the administration's demands, which included providing pro bono legal services to favoured causes and engaging outside counsel to oversee hiring practices.
The impact of Trump's actions extended beyond the targeted firms. Some Big Law firms became reluctant to take on pro bono cases that could put them at odds with the administration. This created an opportunity for solo practitioners and small law firms to fill the gap, volunteering their time to challenge the administration's agenda. This dynamic showcased the resilience of the legal profession and the commitment of lawyers to uphold the rule of law, even in the face of intimidation.
While the majority of cases in the legal system tend to settle through mediation or informal negotiations, the Trump administration's approach to Big Law was unusual and created a unique landscape for legal practitioners. The situation also highlighted the potential for smaller firms and solo practitioners to play a significant role in challenging executive power and protecting the interests of justice.
In conclusion, President Trump's impact on Big Law was complex and far-reaching. While some firms bowed to pressure, others resisted, and the dynamic that emerged showcased the legal profession's ability to adapt and defend the rule of law. The episode also underscored the importance of access to justice and the critical role played by lawyers of all sizes in holding powerful entities accountable.
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Frequently asked questions
Although there are no specific statistics for big law, it is estimated that over 95% of all cases and almost 96% of personal injury cases settle out of court.
Cases settle out of court for a variety of reasons. One reason could be that the defendant believes that settling would be admitting fault and would be bad for their public image. Another reason could be that the plaintiff wants to avoid the unpredictability of a trial and guarantee an award. Additionally, settlements can save defendants money on attorney's fees.
Large settlements can have significant implications. They can act as a reference point for future lawsuits, influencing how similar cases are handled and shifting expectations. They can also send a strong message to corporations and pressure insurance companies. Large settlements may even lead to changes in industry practices and regulatory rules.
