What strategy goes into achieving a settlement?

When Michigan businesses think about how to best compete with other businesses, they typically consider different alternatives and come up with a strategy to achieve their goals. This strategy may have multiple parts to it, and frequently needs some flexibility to adjust to changing circumstances. The world of commercial litigation is similar in this regard, as businesses have a set of objectives they want to achieve in the lawsuit, and a well-designed strategy is needed to accomplish these objectives.

Last week, this blog discussed a settlement that was reached in a billion-dollar business dispute. As noted in that post, a favorable settlement can be obtained in many cases, no matter how bitter the dispute or how much is at stake. In order to obtain a favorable settlement, however, the business needs a well-designed strategy for negotiation.

A case resolution strategy typically begins with an understanding of the objectives of the business. For instance, a business might be facing multiple lawsuits and have a goal of achieving a global settlement that resolves all of the disputes at once so the company can move on with its operations. In other cases, the company might want to litigate the case that has the most favorable facts first, in order to set a precedent for the cases that will follow.

If the company wants to negotiate for a settlement, it must have a good understanding of the facts and law bearing on the dispute. It should also have an appreciation for the risks of pursuing certain options. For example, the business should understand the likely results of proceeding to litigation or the risks of letting a judge or jury decide the dispute. On the other hand, the business should also understand the leverage it has in its favor that can be maximized in order to work out a favorable settlement.

Once the company has a solid understanding of the situation, it can decide how to best share information with the other side to attempt to settle the dispute. There can be a great deal of strategy into drafting communications to the other side, and what information should or should not be shared. Ultimately, the business needs to decide whether it wants to accept a settlement or pursue litigation, based on the facts and circumstances involved.

Source: American Bar Association, "Winning the settlement -- Keys to negotiation strategy," Feb. 14, 2010