Settlement vs. Trial Cost-Benefit Calculator

ANA›Life Services Authority›National Calculator Authority›Settlement vs. Trial Cost-Benefit Calculator

.calc-container { max-width: 640px; margin: 2rem 0; padding: 1.5rem; background: #fff; border: 1px solid #ddd; border-radius: 8px; box-shadow: 0 1px 3px rgba(0,0,0,0.06); font-family: system-ui, -apple-system, sans-serif; } .calc-container h3 { font-family: Georgia, serif; font-size: 1.15rem; color: #1a1a1a; margin-bottom: 1rem; padding-bottom: 0.5rem; border-bottom: 2px solid var(--ac, #3d5a80); } .calc-row { display: flex; align-items: center; gap: 0.75rem; margin-bottom: 0.75rem; flex-wrap: wrap; } .calc-row label { min-width: 160px; font-size: 0.9rem; color: #333; font-weight: 500; } .calc-row input[type="number"], .calc-row select { flex: 1; min-width: 120px; max-width: 200px; padding: 0.5rem 0.6rem; border: 1px solid #ccc; border-radius: 4px; font-size: 0.9rem; font-family: system-ui, sans-serif; color: #1a1a1a; background: #fafaf8; } .calc-row input:focus, .calc-row select:focus { outline: none; border-color: var(--ac, #3d5a80); box-shadow: 0 0 0 2px rgba(26,74,138,0.12); } .calc-row .unit { font-size: 0.82rem; color: #888; min-width: 30px; } .calc-btn { display: inline-block; margin-top: 0.5rem; padding: 0.55rem 1.5rem; background: var(--ac, #3d5a80); color: #fff; border: none; border-radius: 4px; font-size: 0.9rem; font-weight: 600; cursor: pointer; font-family: system-ui, sans-serif; } .calc-btn:hover { opacity: 0.9; } .calc-result { margin-top: 1.25rem; padding: 1rem 1.25rem; background: #f0f6fc; border-left: 3px solid var(--ac, #3d5a80); border-radius: 0 6px 6px 0; display: none; } .calc-result.visible { display: block; } .calc-result-label { font-size: 0.78rem; text-transform: uppercase; letter-spacing: 0.06em; color: #666; margin-bottom: 0.25rem; } .calc-result-value { font-size: 1.6rem; font-weight: 700; color: var(--ac, #3d5a80); } .calc-result-detail { font-size: 0.85rem; color: #555; margin-top: 0.5rem; line-height: 1.5; } .calc-note { margin-top: 1rem; font-size: 0.8rem; color: #888; font-style: italic; } .calc-grid { display: grid; grid-template-columns: 1fr 1fr; gap: 0.75rem; margin-top: 0.75rem; } .calc-grid-item { padding: 0.6rem 0.8rem; background: #f8f9fa; border-radius: 4px; border: 1px solid #eee; } .calc-grid-item .label { font-size: 0.75rem; color: #888; text-transform: uppercase; letter-spacing: 0.04em; } .calc-grid-item .value { font-size: 1.1rem; font-weight: 600; color: #1a1a1a; } @media (max-width: 720px) { .calc-row { flex-direction: column; align-items: flex-start; gap: 0.3rem; } .calc-row label { min-width: auto; } .calc-row input[type="number"], .calc-row select { max-width: 100%; width: 100%; } .calc-grid { grid-template-columns: 1fr; } } .calc-chart { margin: 1rem 0; text-align: center; } .calc-chart svg { max-width: 100%; height: auto; } .calc-chart-legend { display: flex; flex-wrap: wrap; justify-content: center; gap: 0.6rem 1.2rem; margin-top: 0.6rem; font-size: 0.8rem; color: #555; } .calc-chart-legend span { display: inline-flex; align-items: center; gap: 0.3rem; } .calc-chart-legend i { display: inline-block; width: 10px; height: 10px; border-radius: 2px; font-style: normal; } .calc-related { max-width: 640px; margin: 2rem 0 1rem; padding: 1.25rem 1.5rem; background: #f8f9fa; border: 1px solid #e8e8e8; border-radius: 8px; } .calc-related h3 { font-family: Georgia, serif; font-size: 1rem; color: #1a1a1a; margin: 0 0 0.75rem; padding-bottom: 0.4rem; border-bottom: 2px solid var(--ac, #3d5a80); } .calc-related-list { list-style: none; padding: 0; margin: 0 0 0.75rem; display: grid; grid-template-columns: 1fr 1fr; gap: 0.4rem 1.5rem; } .calc-related-list li a { font-size: 0.88rem; color: var(--ac, #3d5a80); text-decoration: none; } .calc-related-list li a:hover { text-decoration: underline; } .calc-browse-all { margin: 0.5rem 0 0; font-size: 0.9rem; font-weight: 600; } .calc-browse-all a { color: var(--ac, #3d5a80); text-decoration: none; } .calc-browse-all a:hover { text-decoration: underline; } @media (max-width: 720px) { .calc-related-list { grid-template-columns: 1fr; } }

Settlement vs. Trial Cost-Benefit Calculator

Compare the financial expected value of accepting a settlement offer versus proceeding to trial, factoring in litigation costs, win probability, and potential damages.

### Settlement Details

Settlement Offer Amount ($)

Your Legal Costs to Settle ($)

### Trial Details

Probability of Winning at Trial (%)

Expected Damages if You Win ($)

Expected Damages if You Lose ($)(amount you pay / receive if defendant wins)

Your Total Trial Legal Costs ($)

Opponent Legal Costs (if fee-shifting applies) ($)

Fee-Shifting Rule

No fee-shifting (American Rule) Loser pays all fees (English Rule) Winner collects own fees from loser

### Risk & Time Adjustments

Annual Discount Rate (%)Time value of money

Estimated Years Until Trial Conclusion

Risk Preference

Risk Neutral (use expected values) Risk Averse (apply 10% discount to trial EV) Risk Seeking (apply 10% premium to trial EV)

Perspective

Plaintiff (seeking damages) Defendant (defending claim)

Calculate

function setCalc() { const resultDiv = document.getElementById('set-result');

const settlementOffer = parseFloat(document.getElementById('set-settlement-offer').value); const settlementCosts = parseFloat(document.getElementById('set-settlement-costs').value); const winProbRaw = parseFloat(document.getElementById('set-win-probability').value); const damagesWin = parseFloat(document.getElementById('set-damages-win').value); const damagesLose = parseFloat(document.getElementById('set-damages-lose').value); const trialCosts = parseFloat(document.getElementById('set-trial-costs').value); const opponentCosts = parseFloat(document.getElementById('set-opponent-costs').value); const feeShifting = document.getElementById('set-fee-shifting').value; const discountRate = parseFloat(document.getElementById('set-discount-rate').value) / 100; const trialYears = parseFloat(document.getElementById('set-trial-years').value); const riskPref = document.getElementById('set-risk-aversion').value; const perspective = document.getElementById('set-perspective').value;

// Validation const errors = []; if (isNaN(settlementOffer) || settlementOffer 100) errors.push("Win probability must be between 0 and 100."); if (isNaN(damagesWin) || damagesWin 0) { resultDiv.innerHTML = 'Please fix the following:' + errors.map(e => '').join('') + ''; return; }

const winProb = winProbRaw / 100; const loseProb = 1 - winProb;

// --- Net Settlement Value --- // Plaintiff: receives offer, pays own settlement costs // Defendant: pays offer, pays own settlement costs let netSettlement; if (perspective === 'plaintiff') { netSettlement = settlementOffer - settlementCosts; } else { netSettlement = -(settlementOffer + settlementCosts); }

// --- Fee-shifting adjustments for trial --- // Win scenario: what you gain/pay in damages + fee effects // Lose scenario: what you gain/pay in damages + fee effects let winFeeEffect = 0; let loseFeeEffect = 0;

if (feeShifting === 'loser-pays') { // Winner pays nothing; loser pays both sides' fees // If you win: opponent pays their own costs (you recover your trial costs from them) // If you lose: you pay your costs + opponent's costs winFeeEffect = trialCosts; // you recover your costs loseFeeEffect = opponentCosts; // you pay opponent's costs on top of your own } else if (feeShifting === 'winner-collects') { // Winner collects their own fees from loser winFeeEffect = trialCosts; // you recover your costs if you win loseFeeEffect = 0; // you don't pay opponent's costs if you lose } // American Rule: no fee shifting (winFeeEffect = loseFeeEffect = 0)

// --- Gross trial outcomes (before own costs) --- let grossWin, grossLose; if (perspective === 'plaintiff') { // Win: receive damagesWin + recover fees if applicable grossWin = damagesWin + winFeeEffect; // Lose: receive damagesLose (often 0) - extra fee burden grossLose = damagesLose - loseFeeEffect; } else { // Defendant: Win means you pay less / nothing // Win: pay damagesLose (counterclaim or zero) + recover fees if applicable grossWin = -(damagesLose) + winFeeEffect; // Lose: pay damagesWin + extra fee burden grossLose = -(damagesWin) - loseFeeEffect; }

// --- Expected Gross Trial Value --- const expectedGrossTrialValue = (winProb * grossWin) + (loseProb * grossLose);

// --- Subtract own trial costs --- let netTrialValueBeforeDiscount; if (perspective === 'plaintiff') { // If loser-pays or winner-collects, own costs recovered on win if (feeShifting === 'none') { netTrialValueBeforeDiscount = expectedGrossTrialValue - trialCosts; } else if (feeShifting === 'loser-pays') { // Own costs: recovered if win (already in winFeeEffect), paid if lose (already in loseFeeEffect) // So own base costs are already netted via fee effects; subtract only the portion not recovered // Actually: own costs always paid upfront; recovered portion is in winFeeEffect // Net own cost = trialCosts - winProb * trialCosts = loseProb * trialCosts netTrialValueBeforeDiscount = expectedGrossTrialValue - (loseProb * trialCosts); } else { // winner-collects: recover own costs if win netTrialValueBeforeDiscount = expectedGrossTrialValue - (loseProb * trialCosts); } } else { // Defendant if (feeShifting === 'none') { netTrialValueBeforeDiscount = expectedGrossTrialValue - trialCosts; } else if (feeShifting === 'loser-pays') { netTrialValueBeforeDiscount = expectedGrossTrialValue - (loseProb * trialCosts); } else { netTrialValueBeforeDiscount = expectedGrossTrialValue - (loseProb * trialCosts); } }

// --- Time Value of Money Discount ---
// PV = FV / (1 + r)^t
const discountFactor = (discountRate > 0 && trialYears > 0)
? Math.pow(1 + discountRate, trialYears)
1; const netTrialValueDiscounted = netTrialValueBeforeDiscount / discountFactor;

// --- Risk Preference Adjustment --- let riskMultiplier = 1.0; if (riskPref === 'averse') riskMultiplier = 0.90; if (riskPref === 'seeking') riskMultiplier = 1.10; const adjustedTrialEV = netTrialValueDiscounted * riskMultiplier;

// --- Decision --- const difference = adjustedTrialEV - netSettlement; let recommendation, recClass; if (perspective === 'plaintiff') { if (adjustedTrialEV > netSettlement) { recommendation = "Proceed to Trial — Expected trial value exceeds settlement net value."; recClass = "calc-positive"; } else if (adjustedTrialEV netSettlement) { recommendation = "Proceed to Trial — Expected trial cost is lower than settlement cost."; recClass = "calc-positive"; } else if (adjustedTrialEV 0.01) { const target = netSettlement * discountFactor / riskMultiplier; if (perspective === 'plaintiff') { breakevenProb = (target - damagesLose + trialCosts) / denominator; } else { breakevenProb = (target + damagesWin + trialCosts) / (damagesWin - damagesLose); } breakevenProb = Math.max(0, Math.min(1, breakevenProb)); }

const fmt = v => v.toLocaleString('en-US', {style:'currency', currency:'USD', maximumFractionDigits:0}); const fmtPct = v => (v * 100).toFixed(1) + '%';

resultDiv.innerHTML = ` ### Results

MetricValue Net Settlement Value\${fmt(netSettlement)} Expected Gross Trial Value\${fmt(expectedGrossTrialValue)} Net Trial Value (before discount)\${fmt(netTrialValueBeforeDiscount)} Discount Factor (PV adjustment)\${discountFactor.toFixed(4)}× Net Trial Value (time-adjusted)\${fmt(netTrialValueDiscounted)} Risk Adjustment Multiplier\${(riskMultiplier * 100).toFixed(0)}% Adjusted Trial Expected Value\${fmt(adjustedTrialEV)} Net Settlement Value\${fmt(netSettlement)} Difference (Trial EV − Settlement)\${fmt(difference)} \${breakevenProb !== null ? `Breakeven Win Probability\${fmtPct(breakevenProb)}` : ''}

Recommendation: \${recommendation}

Win Probability Entered: \${fmtPct(winProb)}  |  \${breakevenProb !== null ? `Breakeven: \${fmtPct(breakevenProb)} — You need to win more than \${fmtPct(breakevenProb)} of the time for trial to be preferable.` : ''}

`; }

#### Formulas Used

Net Settlement Value (Plaintiff): Net Settlement = Settlement Offer − Settlement Legal Costs

Net Settlement Value (Defendant): Net Settlement = −(Settlement Offer + Settlement Legal Costs)

Expected Gross Trial Value: EVgross = P(win) × Outcomewin + P(lose) × Outcomelose

Fee-Shifting Adjustments: • American Rule: Each party pays own costs regardless of outcome • English Rule (Loser Pays): Winner recovers own costs; loser pays both sides • Winner Collects: Winner recovers own costs from loser only

Time Value of Money (Present Value): PV = Net Trial Value ÷ (1 + r)t where r = annual discount rate, t = years until trial conclusion

Risk Adjustment: Adjusted Trial EV = PV × Risk Multiplier (Risk Neutral = 1.0, Risk Averse = 0.90, Risk Seeking = 1.10)

Breakeven Win Probability (American Rule): p* = (Net Settlement × Discount Factor / Risk Multiplier − Damageslose + Trial Costs) ÷ (Damageswin − Damageslose)

#### Assumptions & References

More Calculators

Read Next

Contingency Fee Vs Hourly Fee Cost Comparator ANA › Life Services Authority › National Calculator Authority › Contingency Fee vs.

Study Time Planner Authority Network America › Life Services Authority › National Calculator Authority .calc-container { max-width: 640px;...

References

Related Authorities

Life Services Authority › Professional Services Authority › Trade Services Authority › United States Authority ›