An estimated 95% of lawsuits brought in Michigan are settled out-of-court, without ever going to trial. Trial preparation is expensive and fears of excessive verdicts are a major motivating factor for small businesses to settle matters. A settlement amount might not always be palatable because it is lower or higher than expectations, but it removes the unknown variable of an unpredictable jury or judge from the equation.
Both the Michigan Rules of Evidence and the Federal Rules of Evidence recognize the vital importance of settlement discussions between two or more parties involved in active litigation. The specific settlement rules recognize the need to afford protections to parties before they enter into settlement discussions. The litigants will only arrive at a meaningful settlement if they are assured that they can speak freely without any offers, admissions, or other details being used against them at trial, should a settlement not be reached.
The relevant Michigan Rule precludes the admission at trial of any of the content of the settlement discussions, any amounts offered to settle the case, or any discussion of liability. This protection allows the parties to speak freely without the fear of a jury learning of a settlement offer and possibly using it as a floor for its verdict.
Before commencing settlement discussions, it is important that your attorney inform the other party that you are undertaking settlement discussions pursuant to the Rules of Evidence and require all participants sign a document signifying their understanding of the purpose and inadmissibility of the discussions.
This article was written by , Senior Associate at Demorest Law Firm.
