Settling a Dispute Out of Court

Drawbacks of Litigation

A substantial chunk of a nation’s population must have a scenario to do with litigation at some point in their lives. Such needs may arise out of personal disagreements or business matters with other parties, compelling individuals to knock the doors of courts for justice. It is a widely accepted position that the nature of conventional litigation is somewhat destructive to harmonious arrangements between the parties involved and shuts nearly all doors of future contact. Even apart from the futurist factor, litigations have a lot of drawbacks, including the excessively expensive costs of justice and the undue delays which are typical to nearly all justice systems in the world. For corporations too, litigations pose severe threats to their corporate image and existence in the form of public proceedings and disclosure of internal disputes of the company to unrelated parties. Taking up the litigation route is a dreaded path with several hurdles on the way, which can well be cured by adopting alternatives available.

Settlements: Introduction

Settlement of disputes out of courts can cure the defects entailing conventional litigations. Settlements are compromises reached upon by the parties, either on their motion or through binding or advisory intervention from third parties. Advances towards settlements can be initiated either before the institution of trials or during proceedings too, whenever the parties feel like resolving the matter amicably excluding the adversarial process. Almost 90% of all potential lawsuits are made to be settled between the parties, right before being taken to the courts after all the preparations and arrangements for actively litigating the matter have been made. To incite the adversary party for settlement on your terms, vigorous preparations for strong litigation would be demonstrated, wasting vast sums of time and money.

Advantages of Settlements: Far Inexpensive

Settling matters outside of court is often beneficial for both the parties in terms of time and money which could have been initially understated, then later stretched and subsequently wasted down the drain if the course of litigation were taken up. If it seems that the case would be brought to an end with a deadlock or a somewhat unfavourable position by a judge or jury, opting for a settlement should be your paramount consideration in such a case. The costs incurred in settlement methods are far lesser than what is levied upon pockets in litigations. Although attorneys may be involved even in settlement proceedings, rest of the expenses, including court fees, commissioner and witness costs are cut down to zero in settlements.


Moreover, the parties enjoy secrecy over their controversies, which if disclosed, can cause severe blows to their social and corporate stature, and result in media trials if construed to be in public interests.

Expeditious Grant of Awards

The entire course of settlement procedure, progressing from scratch till the final award of compensations, can all be concluded within a reasonable period. This duration can never be imagined containing litigation from scratch until the passing of final judgment in a typical court of law. Settlements are hence speedy, with unnecessary procedures as found in litigation eliminated from the process and with expeditious advancement of arguments for negotiations between the parties.

Methods of Settlements: Face-to-Face Negotiations

One of the most basic ways of getting into the process of settlement with another party is by way of face-to-face dialogues and negotiations. If the potential plaintiff feels as if the court may rule out an award insufficiently beneficial for him, he may offer the adversary for redressal of the wrongs sustained by him through a proper intimation or notice. In such negotiations, parties may be assisted by their attorneys to reach an agreement that dictates the best interests of both. As a drawback, not all disputes would involve both the parties interested in settlement, which would compel one of them to initiate legal proceedings until the other comes to the negotiation table.

Alternate Dispute Resolution


Arbitration, in simpler terms, is the mutual appointment by both the parties to the dispute of a third-party adjudicator, who is a neutral person and is called an arbitrator. The arbitrator plays the role of a judge but without the judicial command, although his appointment mutually by both the parties renders his decision binding upon them both. Theoretically, the disputants are at liberty to formulate arbitration rules which would apply to their case, taking into account any peculiarities of the matter at hand, however, in practice, most parties adjust with the procedures prescribed by the American Arbitration Association (AAA). 

It can also be argued that arbitration, with the presence of binding authority, essential roles of attorneys from each side, and typical adjudicatory procedures, has a lot in similar to litigation. Before deciding upon the mode of settlement to opt, disputants should be aware of the fact that arbitrators do not have the commanding authority afforded to courts of law and can only award grants of compensation and order specific performance exclusively to the parties involved. 


As opposed to an arbitrator, a mediator doesn’t have the power to pass an embracing judgment or order. He is only supposed to act as a bridge for communication between both the parties and catalyses the procedure, hence providing an optimum environment to allow both the parties to reach upon an amicable solution all by themselves. A mediator may help the parties understand the ultimate motive of mediation, advise them on ways to reach upon a fair agreement, help them identify the source of conflict, suggest solutions and finally persuade the parties to agree upon a specific solution arrived at by both of them.

For any settlement solution which a disputant finds appropriate for is a specific case, the award likely to be reached through negotiation or granted by any extra-judicial forum would still be uncertain. Sometimes, a complainant would have to settle for lesser than what a judge or jury would have offered, obviously because he could ignore the stressful, expensive and time-consuming route of litigation. At other times, adversary parties would have more to offer before a trial starts, which is why most parties attempt to go for an amicable settlement before instituting a lawsuit. Hence, the scale of potential awards or compensation likely to be granted still largely depends upon several different factors and specific circumstances which the case surrounds.

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* This post is for educational and informational purposes only. Please consult your attorney and your financial and tax advisors before making any decisions. Terms and conditions can be found at

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