How to Settle a Lawsuit Out of Court

By Lisa R. House
A close-up of a handshake and paperwork on a desk.
Dean Sanderson/iStock/Getty Images

When you settle a dispute out-of-court, you are using a process called Alternative Dispute Resolution, or ADR. You can settle out-of-court several ways, including mediation, arbitration and court-mandated settlement conferences. You can also try to resolve a dispute on your own without lawyers or the court system. Risk, cost, personal exposure, time, confidentiality and liability are things to consider when deciding whether to settle your dispute out-of-court. Whatever method you choose, it is important to put the final agreement in writing.

Informal Methods

Lawsuits can take months, if not years, to finally go to trial. Trials can be costly, lengthy and stressful. Before filing a lawsuit, you could try to talk to the other party on your own, especially if the dispute involves a family member, co-worker or friend who you will likely see or do business with in the future. Even if you hire an attorney, your attorney can still settle the matter for you through informal negotiations before filing a lawsuit.

Formal Methods

If a lawsuit has been filed, you can settle at any point before the jury returns a verdict. Mediation is where a neutral person, called a mediator, is used to resolve a dispute outside of the courtroom between two or more people. The mediator talks to each side separately and tries to help the parties reach an agreement. A court-mandated settlement conference is another formal method and is generally ordered by the judge to help the parties resolve the case prior to trial. A judge, sometimes the one assigned to the case, acts as the neutral person. Arbitration is another formal way to settle a dispute out-of-court. Like in mediation, a neutral person, called an arbitrator, is used; however, unlike in mediation, the arbitrator does not try to help the parties resolve the issues. The arbitrator acts more like a judge, who listens to both sides and makes a decision.

Benefits of Settling Out-of-Court

Settling out-of-court, whether formally or informally, can be faster, less stressful and cheaper than going to trial. It is also confidential and less formal because, whatever method you choose, the negotiations are done outside of the courtroom. Settling out-of-court can also help you stay on good terms with the other person, which is important if you need to deal with the person again in the future, whether personally or professionally.

Get Your Agreement in Writing

Whatever method you choose to resolve your dispute, it is very important to put the agreement in writing. If a lawsuit has not been filed, you want something in writing to prove the dispute was resolved and both parties agreed to the terms. If a lawsuit has been filed, the settlement agreement not only needs to be in writing, it must also be filed with the court, so the court knows the case has been resolved. Once the court acknowledges and approves the settlement, the case is officially over.

About the Author

Based in New York City, Lisa R. House has been actively involved in the health and fitness industry for more than 20 years. She is a Tough Mudder Finisher, triathlete, ballroom dancer and former fitness competitor. Her certifications include Zumba and NASM. She holds a Master of Science in nursing from The Ohio State University and a Juris Doctorate from Capital University Law School.