Settlement
A voluntary resolution of a legal dispute reached by agreement between the parties, typically involving a payment in exchange for releasing all claims.
A settlement is a negotiated agreement that resolves a legal dispute without a court judgment. The vast majority of civil cases — roughly 95% — settle before or during trial. Settlements are documented in a written agreement (settlement agreement or release) that typically includes: a payment amount, a release of all related claims, confidentiality terms, and non-disparagement provisions.
Settlements offer both parties certainty: plaintiffs avoid the risk of losing at trial; defendants avoid uncertainty, higher legal costs, and public trial. In personal injury cases, the at-fault party's insurance company typically negotiates and funds the settlement. The plaintiff's attorney will deduct their contingency fee and costs from the settlement amount before disbursing the balance to the client.
Signing a settlement releases your right to sue for that matter again — even if you later discover the harm was worse than you knew. Read every clause carefully before signing. Courts typically approve settlements in class actions and cases involving minors to ensure they are fair.
Real-World Example
After two years of litigation, the parties settled the slip-and-fall case for $85,000 the week before trial; the plaintiff signed a full release and agreed never to discuss the settlement publicly.