Out-of-court Settlement: What Should You Know About It?

people shaking hands

It happens now and then. You figure in an accident, are dismissed from your job illegally, fight for a child’s custody, or experience land disputes. Instinctively, filing a case comes first in your mind.

But embroiling in a legal battle is no easy feat. It is stressful, worrisome, and costly. Look at these figures to get an idea of the actual cost of pursuing a case.

  • The lawyer’s fee ranges from $50 to thousands of dollars per hour, depending on the location.
  • The contingency fee is between 33% to 40% from the final personal injury settlement.
  • Filing of civil lawsuit costs $200.
  • Child custody filing fees cost between $200 to $400.
  • A lawyer’s fee for an illegal dismissal case is between $100 to $600 per hour.

If you think you cannot afford these rates, then an out-of-court settlement might be your best option. Here’s how cases can be settled extrajudicially.

1. Face-to-face Negotiation

When you choose for a face-to-face negotiation, you have to make sure that the following conditions are met:

  • The other side is aware of the problem.
  • They acknowledge the responsibility.
  • You have tried to come to an agreement to remedy the problem.
  • There is a signed document of agreement with a witness’s signature.

It is better to secure an attorney’s draft to avoid loopholes. However, face-to-face negotiations don’t work well all the time. For instance, you were bitten by someone’s dog, suffered medical malpractice, defamed, or other intentional incidents, and your adversary refuses to compensate. Consulting a personal injury attorney can help you with your claims.

2. Mediation

If you can’t settle matters through face-to-face negotiation, mediation is another choice. This is applicable mostly for family disputes or persons having ongoing relationships. It is also suited for small court claims. Mediation aims to build understanding where court cases can otherwise create bitterness.

In mediation, a third party helps you come up with an agreement. The final agreement will not come from them, but they need to provide advice about your options until you reach a final agreement. The court won’t require you to submit a final resolution, but you still have to undergo the process and give it a try.

Mediation comes with a price depending on your geographical location. The fee ranges from $50 to $300 per hour.

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3. Conciliation

This is intended to build a positive relationship between conflicting parties through a conciliator who meets them separately. It is less formal in nature and used mostly in civil law countries. The conciliator impartially assists the parties by facilitating their negotiation to come up with a satisfactory agreement.

How does it differ from arbitration? Unlike arbitration, it is a friendlier proceeding. Its main goal is to determine if there are rights that have been violated and find ways to restore them.

How about an arbitrator and a conciliator? How do they differ? A conciliator is supposed to be neutral. The parties are not required to come up with a solution. Instead, the conciliator will develop and propose the terms of the settlement. The parties involved would afterward come to the conciliator to seek guidance and make decisions based on the conciliator’s proposals.

On the other hand, a mediator who is assumed to be impartial and neutral does not only focus on the traditional notion of faults. They are not actively involved in creating solutions. Instead, they act as the partner of the conflicting parties in finding the best solutions to serve their interests.

4. Arbitration

This is similar to mediation. In arbitration, the disputing parties come together with a third party to discuss a solution to their problem. It is based more on legal matters rather than personal issues, usually for money-related cases.

The arbiter, known as the third party, will make a legally binding decision on the case. Like in litigation, the warring parties have no control over the decision. The arbiter’s decision is called an “award” that is in accordance with the law. If the arbiter fails to apply the law, the judge has the right to overturn the decision.

5. Demand letters

These are formal notices that demand another person or a corporation to do the following:

  • Fix a problem
  • Pay a sum of money
  • Honor a contractual agreement

Demand letters provide the recipient a chance to perform obligations before they get to court. But they have to comply according to the specified terms within a specified time frame. They should also have a clear understanding of the sender’s demands and how to settle them. In case of non-compliance, the demand letter can be used in court. The judge should be satisfied that the sender’s terms were reasonable.

These are some ways cases can be settled out of court. Whether you choose any of them, the interests of all concerns should be your foremost consideration.

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