As a personal injury lawyer who has tried over 100 personal injury, wrongful death, product liability, and medical malpractice lawsuits, I am frequently involved in cases involving multiple defendants. These defendants may be in cahoots with each other or at odds. Usually, there is an unspoken agreement among defense counsel to not point the finger of blame at each other. That is a recipe for a favorable plaintiff’s verdict. Despite this, defendants occasionally break ranks with their co-defendants and enter into settlement discussions with me. This leads to a very complicated web of considerations.
Laws vary from state to state but generally speaking when one of multiple defendants settle, the remaining defendants are entitled to a set off. This means that if you settle with one wrongdoer for, say, $1,000,000, the first $1,000,000 of “new money” obtained at trial from the remaining defendants is offset. This is to prevent the plaintiff from double-dipping. So, under this scenario, the plaintiff would have to recover at least $1,000, 001 in order to recover any damages at trial in excess of the original $1,000,000 settlement.
The setoff creates a couple of incentives. First, it makes it less likely that the remaining defendants will settle. Not only do they have a $1,000,000 cushion, but they have an “empty chair” to focus their blame on. While defendants are not likely to cast blame on one another during the course of litigation, as soon as one of the defendants settles, the other defendants try to deflect blame on the settling wrongdoer in order to avoid liability. Their job is made easier by the fact that the settling wrongdoer entered into a settlement, which is a tacit admission of fault. That defendant will not be present at trial to defend itself either.
When a settlement is reached, courts vary in what information the jury learns. In some cases, the jury is not told about a settlement at all. In other cases, the jury is told about the settlement but not the amount of the settlement. In still other cases, the jury learns the amount of the settlement. Often this determination is not made until the time of trial, so trial lawyers are left guessing as to how to handle a prior settlement right up to the last minute.
My conventional wisdom is that an empty chair creates an easy out for the remaining defendants. They indignantly cast all blame on the defenseless defendant who already showed their wrongdoing by settling out. There are two ways to protect against this. First, only settle with one defendant when that defendant pays near the full settlement value of the claim. Then, the outcome at trial is insignificant. In fact, it can encourage the trial lawyer to “swing for the fences” against the remaining defendants. Second, you can insist on one settlement. Borderline actors may be willing to chip in smaller sums to the main defendant’s settlement that result in resolution of the case in full.