From John DeGroote’s Settlement Perspectives
I have an old friend who told me how one of his plaintiffs’ cases — the one sure to go to trial — finally got resolved: ”They kept hitting me with bigger and bigger checks until I had to settle.” He has a great story, but this post isn’t about settling big cases with big checks. It’s about settling smaller cases with even smaller checks.
I recently wrote Non-Binding Arbitration: Get Your Day in Court Without One Day in Court. In that post I wrote how you can use a non-binding case evaluation to break your impasse: ”The arbitrator issued his [nonbinding opinion], the parties immediately used it to frame their negotiations, and — after one more tactic from the other side that I’ll post about soon — we got the case settled.” This post is about that “one more tactic.”
Under the right circumstances you can just send the other side a check to get the dispute resolved — not a big check, not a white flag, and not an admission of liability, but a check that gets your deal done. I know this post will get eyerolls in response and draw choruses of “you can’t do that” from naysayers at every turn, but you can settle cases by sending a small check to the other side. I have seen it work.
On smaller cases where the other side isn’t prepared to walk away, but litigation doesn’t really make sense and a Rule 68 offer isn’t available, consider just sending a check for an amount you think the other side might take to settle the matter, and include an appropriate release on the check itself. Insurance companies have been doing this with minor personal injury claims for years, because it works. The other side can cash their check and claim victory even if they aren’t excited about the amount, you will have settled without capitulating, and no one has to pay lawyers any more.
Why is this tactic effective? I have written previously on why and when Rule 68 works (here and here), and just sending the other side a check works for the same reasons. A check presents the other side with 2 choices: a way to end the dispute today with a modest return but no further investment, or an unknown result that can only happen at an unknown time for an ever-increasing investment. To use an old cliché, a bird in the hand is worth 2 in the bush.
In my earlier post on non-binding arbitration, remember that my case was over an amount too small to really fight over but too big to walk away from. So I wasn’t surprised when no one was happy with the neutral evaluator’s nonbinding opinion. Eventually the other side offered my client the amount the evaluator recommended, and my client attempted to use the evaluator’s number as a “springboard for negotiations,” as Steven Bennett suggests in his article on non-binding arbitration. No dice. The other side didn’t want to pay more than the neutral recommended, and my client wasn’t happy with the evaluator’s number.
As soon as we realized we had hit an impasse and my client began to evaluate its options, a check from the other side, with a complete release unambiguously typed on its face, appeared in the mail. I can’t say my client liked it and I can’t say they didn’t think about suing anyway, but I can say they cashed it.