Your Trusted And Trial-Tested Team

3 reasons businesses often push to settle pending litigation

On Behalf of | Jan 18, 2025 | Business Law

There are many reasons that businesses may end up embroiled in legal conflict. In some cases, the leaders running an organization initiate litigation to hold another party accountable for misconduct. A former employee may have violated a non-compete agreement, or a vendor may have delivered materials that did not conform to the quality specifications outlined in a contract.

Other times, businesses have to respond to lawsuits. Customers may try to claim that a product was defective and caused injuries. Employees may allege that they experienced harassment in the workplace. The vast majority of business lawsuits settle outside of court or end up dismissed before trial.

Why do organizations often seek to settle legal disputes when doing so is feasible?

To curtail the expense of litigation

Business lawsuits can be incredibly expensive. Even when the organization prevails either by defending against allegations or proving its claims against another party, the cost of litigation can be a major economic setback for a business. While settling might mean absorbing expenses that the business could potentially avoid with successful litigation, the elimination of court costs might make settling the more cost-effective solution.

Reputation protection

An organization’s reputation can easily end up damaged by pending litigation. Complaints about the quality of goods and services that the company provides could draw media attention and could end up reported on by the mainstream media if the case goes to trial. Information about how the company operates could also come out during the litigation process. Lawsuits could change how consumers or prospective employees view the organization or may undermine its ability to monetize trade secrets in the future.

To resolve an issue quickly

Litigation often takes many months, if not multiple years, to resolve. Plaintiffs and defendants have to wait for their date in court and then have to present their case and wait for a judge to rule on the matter. Settlement is often far faster, as negotiations or mediation are often easier to schedule than a hearing in civil court.

Exploring the different ways of resolving pending business litigation can help companies protect against the expense and other secondary consequences of a lawsuit. Organizations often need help developing a lawsuit they intend to file or responding appropriately to the claims of an outside party, and that’s okay.