Litigation Risk

What is a Litigation Risk?

A litigation risk is the likelihood of winning a personal injury lawsuit in court (rather than settling out of court) is usually assessed by your attorney; the risk of attending court since there are unpredictable factors, like getting a strict judge, poor witness presentation, a sudden surprise from the defendant, last-minute evidence, etc. Going to court is risky, and can sometimes present an unfavorable outcome for a party involved in litigation. 

According to The American Bar Association(ABA), litigation risk is defined as “the probability that legal action will be taken, or that a lawsuit will be filed and subsequently prosecuted, to determine a legal outcome.” As such, litigation risks encompasses various factors that could impact the outcome of a lawsuit, including legal issues, evidence, procedural considerations, and potential financial consequences that are used to determine if it would be beneficial to bring a case to court, or attempt to negotiate and settle outside of court. 

Litigation risk is often determined by examining the strength of legal arguments, evidence, court precedent, and the costs and resources. As it is difficult to know how a court may rule, it can be difficult to determine if it is better to go to court or settle outside of court. Therefore, understanding litigation risk is essential for individuals, businesses, and legal professionals to make informed decisions about pursuing or defending against legal actions.