COVID-19 AND ITS INFLUENCE ON SETTLEMENT NEGOTIATIONS

On January 21, 2020, the first known case of coronavirus was confirmed in the United States. By March 11, 2020, the coronavirus (“COVID-19”) was declared a pandemic by the World Health Organization (“WHO”).  Almost immediately thereafter, a wave of recommendations by the Center for Disease and Control (“CDC”) and other health experts were issued effectively changing our lives as we knew it.  In order to promote social distancing guidelines, states handed down Stay-At-Home orders and required non-essential businesses to close.  As the number of persons infected by this novel virus continues to rise, the economic fallout is yet to be fully seen.  Employees are being laid off, property owners are unable to collect rent, and some businesses will be forced to close permanently. 

The judicial system has not been untouched by this pandemic.  Los Angeles County Superior Court is the largest trial court in the nation.  In response to COVID-19, all courts have been ordered closed and only a limited number of emergency cases will be heard.  If a hearing was scheduled in your case, or you were set for trial, those dates have all been rescheduled.   While the Safer-At-Home order for the City of Los Angeles is currently set to end on April 19, 2020, it is quite likely it will be extended for an even longer period.

The delays and court closures will only increase attorney’s fees and time loss may mean money loss.  

So what does that mean for you and your case?  If you’re the plaintiff in a lawsuit, the uncertainty and risks of trial are even greater given the state of our economy.  The delays and court closures will only increase attorney’s fees and time loss may mean money loss.   Unless there is an insurance company involved, there is a serious risk your defendant may be insolvent by the time your case actually goes to trial.  More than 3 million people have filed unemployment claims.  The government has approved a stimulus package that may help small businesses stay afloat.  Even still, there is sure to be an increase in individuals and businesses seeking protections under bankruptcy laws.

Defendant litigants can also take advantage of the economic uncertainties by initiating settlement discussions.   Reasonable offers to settle are more likely to be met with acceptance to avoid an uncollectible judgment. 

 

The incentives of meeting the other side in the middle are even greater now more than ever.  

Most cases settle before ever reaching trial given the benefits of parties resolving the matter themselves.  The incentives of meeting the other side in the middle are even greater now more than ever.   With so many uncertainties ahead of us, taking control of the outcome of your legal matter may be one of the few things left you can predict.