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Please excuse my severe lack of knowledge in the world of law, as I am brand new, and am happy to edit my question should it not be correct in any fashion.

This is a rather broad question. Suppose I am suing my employer for mistreatment at work (no lunch break, poor treatment, not fulfilling conditions of employment contract, etc.). How does my lawyer calculate a monetary amount on which to settle in the lawsuit? I saw a case recently of this variety, and the plaintiffs reached a settlement $1.3mil. How did the parties involved calculate $1.3mil exactly?

I know this question is rather broad. I am not asking for the correct amount to ask for when suing someone, for that is subjective and different for each case. Rather, I am asking about the process. How do lawyers calculate how much to ask for in a lawsuit, and do they take into account just the prices of physical damage and money lost (e.g. damage to property, money lost from opportunities missed, etc.), or do they also factor in an amount to compensate for other factors? In the above example, I seriously doubt it cost a group of employees working for minimum wage $1.3mil to be mistreated at work, so how did they settle on $1.3mil?

  • This is not really a question about law or (in my opinion) suitable for this site. Lawyers look at the relative parties strengths and pocketbooks, how egregious the claims are, and try and get as much as they can. (They also take into account damage to reputation of the parties and possible effects of punitive damages) – davidgo Aug 10 '16 at 7:12
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    @davidgo I think there is an excellent question about damages awarded in cases here. It's definitely suitable for the site here. – Zizouz212 Aug 11 '16 at 0:25
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Settlements are brought about by an analysis of the relevant litigation risks.

To take a simple example, suppose both sets of lawyers agree that the plaintiff will likely collect about $2.6 million if s/he wins the lawsuit, and that the chances of prevailing are about 50-50. That would produce a settlement figure of $1.3 million (0.5 x $2.6 million).

The main reason that settlements fail is because the two sides don't agree on the above parameters. For instance, if the defense felt that the plaintiff would be awarded no more than $1 million, it would not settle for $1.3 million. Or it may agree with $2.6 million as the potential liability figure, but feel that the plaintiff's chances of winning are only one in three.

  • This is the biggest factor. Some of the other big considerations include: ability of a defendant to pay, the urgency of the person seeking money's need for money, the risk that a bad decision in this lawsuit could impact future lawsuits, anticipated litigation costs if litigated on the merits (and the ability of the parties to pay those fees if incurred), anticipated delay due to litigation, the impact of the pending lawsuit on a party's other business or personal activity, and the chance of getting something a court couldn't give you at trial (e.g. an apology or getting a wrongdoer fired). – ohwilleke Aug 2 '18 at 20:50
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If a civil claim settles this means that the parties negotiated an agreement and the court did not make a ruling.

You agree on a figure by ... agreeing on a figure. Just like you and the used car dealer negotiate a price for the car you want to buy.

However, unlike this sort of negotiation where either party can walk away with no consequences, a civil claim usually has the threat of a lawsuit up ahead which will cost both parties a lot of money to run and will cost the loser heaps more than a negotiated settlement. Therefore each party's BATNA (best alternative to a negotiated agreement) is coloured by the risk of fighting and losing a lawsuit.

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