In an article by Sanford Gage, who is a very good mediator, 9,000 California settlement decisions were analyzed over 41 years comparing rejected pretrial settlement offers and actual trial results. Sixty-one percent of the time, the plaintiffs obtained an award that was the same or worse than the result the plaintiff would have achieved by accepting the defendant’s pretrial settlement offer. The defendant decision error was only 24 percent, and where there was insurance, the error rate was only 21 percent.
However, defendants are NOT perfect. While the average cost of the “decision error” by plaintiffs were $43,100, defendants suffered an average adverse outcome in the amount of $1.14 million! Thus the expected cost of error is more than 20 times greater for the defendant than the plaintiff.