In the vast majority of civil cases, the matter settles before a trial. But that doesn’t mean that settlement is always the right choice. In fact, sometimes it’s anything but.
An out-of-court settlement is a private agreement that ends a legal dispute without a judge’s ruling. Typically, one party agrees to pay compensation, and the other agrees to withdraw the claim. There’s no courtroom and no chance to revisit the outcome later.
This article explains the main disadvantages of out-of-court settlements so you can weigh your options.
Loss of the Opportunity for Full Compensation
Settlements involve negotiations. This means that the total amount awarded rarely reflects total legal liability. Instead, it depends on risk tolerance, time constraint, and what the parties are willing to give up to settle.
If you are dealing with serious injuries, ongoing disability, or ongoing loss of income, settling early—or settling for too little—can lead to a situation where the settlement amount falls short of your true damages. Courts make decisions about damages based on evidence and expert reports and rely on laws about comparable cases. So, settling means accepting something other than what may be truly owed to you because you are accepting the other party’s offer of payment.
In some instances, plaintiffs accept less than they deserve because they have the feeling they cannot simply afford to wait. But when the settlement agreement is signed, that is it. If the situation becomes worse, there is no additional money coming to you.
No Public Record or Legal Precedent
When someone does something wrong, victims want others to know about it. It’s only natural to want to protect others from experiencing the same pain as you did. However, if you settle, you may not get that sense of satisfaction.
In many cases, out-of-court settlements are confidential. You cannot share the facts of your case or the terms of the settlement you agreed to with anyone else. There’s no formal record of what happened either. And because there’s no involvement from the public (like in a trial), there’s no further accountability in cases of professional negligence or systematic failure. The wrong may be resolved in private, but it’s never acknowledged in a way that could protect others or influence future cases.
Potential for Unfair Pressure
Settlement processes are not all equal. One side may have greater leverage through finances or legal rights, as providers like insurers and employers often do. When this occurs, the weaker side may feel like they have to agree sooner rather than later.
We understand. It is difficult to think clearly when you’re under a lot of stress from litigation. Settlement is sometimes a way to end things once and for all. However, if the terms do not match the immediate impact of the harm done (or you leave important things out so the process will speed up), you might end up with a result that is one-sided.
A decision made under pressure doesn’t usually lead to a favourable outcome. In the moment, it might seem like your best bet, like the easiest path to peace and normalcy. But it will come at a cost.
Limited Ability to Appeal
A trial can be appealed if the judge makes a legal error. A settlement agreement, in contrast, is almost 100% binding. Once you have signed it, it’s done. If new information comes up at a later date, you have limited options when it comes to appealing the matter. This can be a serious disadvantage if your case is complex or if the facts are evolving.
For example, you can’t know what the true, lived impacts of the situation will be with total clarity and confidence when you sit down to sign the settlement. You’re only guessing. You could face medical costs or experience reduced employability. But now that your file is closed, there’s no way to reopen it and fight for the results you rightfully deserve.
In short, when you settle, not only do you bring the matter to an end, but you also relinquish the right to challenge that ending.
Risk of Incomplete Resolution
A single dispute can have a domino effect. It can impact finances and employment. It can rock your reputation or leave you with long-term health issues that impact your quality of life. By nature, settlements aim to simplify all this—to tie everything up in a neat bow. Of course, life doesn’t work that way. There are always loose ends.
Sometimes, a settlement resolves the core legal claim but fails to address side issues that still carry legal or personal weight. In other cases, important terms may be left vague or poorly defined. This can lead to future arguments, strained relationships, confusion, or even more litigation.
You don’t want to end up swapping one problem for another.
Emotional and Psychological Factors
Yes, when you settle, your case will end. It can be a huge weight off your shoulders. But it doesn’t always feel like a resolution. You might not get the closure you need to move on.
For many people, the outcome matters as much as the process. When the dispute involves personal harm or serious wrongdoing, walking away without a ruling can feel like unfinished business. You were wronged, but the “bad guys” walked away without being punished.
Even when the terms are fair, parties sometimes feel they “gave in” rather than stood their ground. Without a chance to speak in court or see accountability play out publicly, the result can feel incomplete.
Is Settling Right for You?
Right now, you might feel like you’d do anything to make the stress go away. A settlement looks attractive. It’s a quick solution, one that would enable you to leave all of this behind you and in the past.
But before you sign that dotted line, you need to know what it is you’re giving up. There’s a lot at stake: your time, your money, potentially your health, and most definitely your future. Get the facts and make a decision that benefits you now and in the long run.
If you’re unsure whether to settle or proceed to trial, get advice you can rely on.