The study, to be published in the September issue of Journal of Empirical Legal Studies, also has a thing or two to say about the legal profession, and the motivation that sometimes drives it.
Various sources of data were factored into the study, including the outcomes of 554 New York State court trials dating back to 2005. Also broken out in the study, the largest of its kind to date, were outcomes spanning 40 years from 1964 to 2004. The latter revealed that poor decisions to go to trial were actually increasing over time, rather than decreasing. The study authors, including Randall L. Kiser, a lawyer who is not practicing at present, suggest that it's troubling to see the performance of an industry decline over time and experience, rather than improve.Among the findings is the reluctance of some attorneys to deliver news to a client that the client may not always want to hear, most notably the viability of a case and the capacity to handicap trials, something that apparently is not taught. The client, be that person the defendant or the plaintiff, most always thinks they are completely right. One attorney made the point that a good lawyer must have the capacity to admit to a client that a judge or jury may see them differently. Part of it is judgment, and part of it is diplomacy.
Needless to say several in the legal community dismissed the study, noting that statistical evidence means little when stacked against the realities and specifics of a case, the judge and jury involved, and the experience of a lawyer, which is paramount.
Still, according to the study the statistical evidence gleaned from the outcomes of civil lawsuits found that most of the plaintiffs who took a pass with regard to a settlement offer and deciding instead to go to trial, ended up getting less money than if they had cut and run.
"The lesson for plaintiffs is, in the vast majority of cases, they are perceiving the defendant's offer to be half a loaf when in fact it is an entire loaf or more," said Kiser, a co-author of the study and principal analyst at DecisionSet, a consulting firm that advises clients on litigation decisions.
Defendants made the wrong decision by proceeding to trial less often—at 24 percent—vs. plaintiffs that were wrong in 61 percent of cases. In 15 percent of the cases studied both sides were right to go to trial. The defendant coughed up less than the plaintiff had sought, but the plaintiff received a greater sum than the defendant had originally offered.
Of course hindsight is always 20/20, and of the cases that do settle—in the majority at 80 to 92 percent by some estimates—there is no way of knowing whether either side could have done better at trial. These findings were based on a study of 2,054 cases that went to trial from 2002 to 2005.
Overall, it was found that errors made by, or on behalf of defendants, are much more costly than comparable errors by plaintiffs.
Authors of the study suggest that the data, and findings raise provocative questions about how lawyers and clients make decisions, the quality of legal advice and lawyers' motives.
The findings also suggest communication issues between attorney and client, in that lawyers could stand accused of dropping the ball by not adequately explaining the odds to their clients. For that matter, clients may not be properly listening to their attorneys.
Critics have advanced the notion that some lawyers may push for a trial in an effort to collect more fees, especially if there is entitlement to a percentage of the award. The latter would call into question an attorney's true allegiance—is it to his or her client, and the strength of the case? Or to the bottom line of the legal firm?
And how willing is the attorney representing the plaintiff or defendant, to level with their client based on the realities of the case, vs. a client's ideal? Every client is convinced that he, or she is right and wants to wrestle the other party to the mat. But is that wise? Is it realistic? Does the trial, if a trial is warranted, stand a good chance of having a good outcome? How willing is the lawyer to explain to the client that a trial may not be a good idea?
Poor decisions by plaintiffs to go to trial "are associated with cases in which contingency fee arrangements are common," according to the report. "On the defense side, high error rates are noted in cases where insurance coverage is generally unavailable."
There is little doubt that the study, when released next month, will be controversial and will draw the ire of many in the legal community. But the statistical evidence supporting the pursuit of a pre-trial settlement is backed up by human behaviors, according to Martin A. Asher, co-author of the study and an economist with the University of Pennsylvania.
Psychologists have determined that individuals are more averse to taking a risk when they are expecting to gain something, and more willing to take a risk when they have something to lose.
"If you approach a class of students and say, I'll either write you a check for $200, or we can flip a coin and I will pay you nothing or $500," most students will take the $200 rather than risk getting nothing, Asher says.
However reverse the situation, so that students have to write the check, and they will choose to flip the coin, risking a bigger loss because they hope to pay nothing at all. "They'll take the gamble."