Understanding a litigation settlement


A litigation settlement is an agreement between two parties to a civil lawsuit.

A litigation settlement usually specifies that the party bringing the claim (the claimant) will drop the claim (either wholly or partly) in exchange for a monetary sum paid by the party against whom the claim is brought (the defendant). A litigation settlement is commonly referred to as out-of-court settlement and requires specialist legal help.

How do litigation settlements work?

The ability of the parties to negotiate a compensation settlement and avoid further litigation is a vital litigation procedure. In fact, the vast majority of litigation cases reach an out-of-court compensation settlement.

It is the court’s view that every case which seeks compensation should reach a compensation settlement, rather than go to full trial. To that end, the Civil Procedure Rules (CPR) includes pre-action protocols which guide both parties in a litigation dispute towards communication:

  • In English law, litigation settlement offers are often brought under part 36 of the Civil Procedure Rules (CPR). A part-36 offer operates like any other settlement offer, in that if accepted it allows the parties to stop litigation in exchange for an acceptable compromise
  • However, a part-36 offer has an advantage that if the offer is rejected, and the court eventually rules in a way equal or more favourable to the offering party, that party is likely not to have to pay the other party’s legal costs which accrued after the offer was rejected

What cases usually settle outside of court?

Most personal injury claims and many clinical negligence claims settle out of court. Before settling a claim it is necessary to determine that the medical report and prognosis given by the expert doctor is correct and clear, as the compensation offered in settlement is usually a one-time offer, and should the prognosis turn out to be incorrect, it is unlikely to be possible to obtain further compensation at a later date.

As well as negotiating a settlement with the defendant, there are other types of alternative dispute resolution that can be used in personal injury cases. These vary in cost and procedure but will invariably be cheaper than going to court and involve less stress and worry for those involved.

In the negative, alternative dispute resolution procedures are sometimes not binding on the parties involved and can mean lower compensation is given than would be if the parties went to court.

Using a solicitor

If you are currently considering making a litigation settlement offer, or accepting one, you should definitely consult your solicitor, and could even seek a second solicitor’s opinion. Accepting a settlement usually means you are legally barred from making future claims against the defendant on the same matter.

You should therefore ensure that you are completely happy with the terms of the settlement, and that you are fully aware of what your claim is worth, and what your chances are of success if the claim is not settled.

For more information on using alternative dispute resolution, see our information page on mediation.

Do you want to settle your dispute outside of court to avoid the court costs? Contact Law works with solicitors experienced in negotiation for your injury who we can recommend to you free of charge. Please call us on 0800 1777 162 or complete the web-form above.

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