Pre-trial settlement: Who's for two-way offers?

Abstract

This paper reviews the use of cost shifting devices intended to encourage pre-trial settlement. Both the well-known instrument of judicial offers (tenders) and the more recently introduced pursuers' offers are discussed. Numerical examples are provided and experimental evidence is reviewed. Both sources create some doubts regarding the efficacy of such devices in encouraging settlement. There is a strategic aspect of negotiating that is encouraged by these rules. In essence, these arrangements impart a certain amount of power to one side or other. This influences the level of settlement (if any), but may also reduce the probability of reaching a settlement. Abandoning such arrangements, while somewhat contrary to conventional views may well be a positive step in encouraging pre-trial settlement.