Suit As An Effective Settlement Strategy
Suit As An Effective Settlement Strategy
by Thomas von Thury, Esq.
Updated October, 2026.
Although lawsuits are often associated with courtroom trials, many civil disputes are resolved through settlement before reaching that stage. This article explains how filing a lawsuit can help preserve legal claims, establish deadlines, encourage negotiations, and create opportunities for parties to resolve their differences without a trial.
Key Takeaways
- Filing a lawsuit does not necessarily mean the dispute will proceed to trial.
- A timely lawsuit can help preserve legal claims before applicable statutes of limitations expire.
- California has different filing deadlines depending on the type of legal claim.
- Filing and serving a lawsuit generally establishes formal deadlines for the defendant to respond.
- Litigation procedures can help parties obtain information and evaluate the strengths and weaknesses of their positions.
- Mediation, judicial arbitration, and settlement conferences may provide opportunities to resolve disputes before trial.
- An experienced business litigation attorney can help determine whether filing a lawsuit is an appropriate strategy.
Most lawyers know that the objective of a lawsuit is settlement, not a trial. After all, one can never absolutely sure what a judge or jury will do. By the time that most clients seek a lawyer’s assistance with respect to a dispute, at least many who come to me, they have already expended considerable time trying to resolve the matter themselves. In those situations my recommendation is almost always to promptly initiate a lawsuit. That is not because I am “sue happy,” but because filing a complaint with a court has two very important consequences: One, it stops the clock on any statute of limitation or laches defense. Two, it forces the other party to respond in a timely manner and you cannot settle a dispute unless there is dialogue.
Regarding One: All claims must be presented to a court within certain prescribed time limits or the claimant is barred from asserting them ever again. Writing letters and making telephone calls, regardless of whether they are responded to or not, is not effective to stop the time limit from running (called tolling the statute). For example, in California, the time within which suit must be brought to enforce on a written contract is four years from discovery of the breach and for claims based on negligence it is three years.1 In addition, a concept known as “laches” precludes a person from obtaining equitable relief such as rescission of a contract or a restraining order if they delayed seeking the court’s assistance.2
Furthermore, evidence can become lost and witnesses unavailable over time and in my experience that seems to benefit the wrongdoer more often than the good guy. It is also important to know that not all evidence is admissible in court.3 Even a deposition transcript is not admissible in California state courts to establish the truth of the statements contained in the transcript unless the deposition witness is also present at trial. If not, then it is hearsay.4
As for Two, once a defendant has been “served” with the Summons and Complaint, they have 30 days to respond in a state court action and twenty-one if it is a federal court case.5 Thereafter, time limits require responding to “discovery” and pre-trial motions within fairly short time periods and, perhaps most importantly, participating in settlement discussions or ADR. Failure to abide by any of these requirements can have serious consequences.6
All cases filed in California state court having a stated value of $50,000.00 or less must be referred to some form of Alternate Dispute Resolution process like mediation or arbitration and the federal courts have similar rules.7 Cases with a value over $50,000.00, Probate Court, and certain other types of claims are exempt from this requirement, but even then most judges will still require that the parties participate in some form of settlement conference before they hold an actual trial. Those settlement conferences, whether they are with a court-appointed mediator or another format, are often very effective. They force each side to take a serious look at their position, listen to the opinion of an impartial third party, and participate in good faith negotiations.
So, filing a lawsuit is an effective means to settle a dispute, which should not be delayed once the parties have reached an impasse in their own discussions.
1) See Code of Civil Procedure §§337 & 338.
2) See California Supreme Court decision in Johnson v. City of Loma Linda (2000) 24 Cal. 4th 61 at 77 (“The doctrine of laches bars a cause of action when the plaintiff unreasonably delays in asserting or diligently pursuing the cause and the plaintiff has acquiesced in the act about which the plaintiff complains, or the delay has prejudiced the defendant.”)
3) See California Evidence Code §§350 et seq.
4) See California Evidence Code §§1200 & 1235.
5) See Code of Civil Procedure §412.20 and Rule 12 of the Federal Rules of Civil Procedure.
6) See Code of Civil Procedure §2023.010.
7) See Code of Civil Procedure §1141.10 et esq.; The Alternative Dispute Resolution Act of 1998 (28 U.S.C. §§ 651-58) requires each U.S. District Court to develop an ADR process.
Copyright, Thomas von Thury, Esq., 2013
Frequently Asked Questions
Can filing a lawsuit help settle a business dispute?
Yes. Filing a lawsuit can establish formal deadlines, encourage the parties to evaluate their positions, and create opportunities for settlement discussions. However, whether litigation is an effective settlement strategy depends on the circumstances.
Does filing a lawsuit mean the case will go to trial?
No. Many civil lawsuits are resolved before trial through negotiation, mediation, settlement conferences, or other procedures. Filing a lawsuit begins a formal legal process but does not prevent the parties from reaching an agreement.
Why is the statute of limitations important when considering a lawsuit?
A statute of limitations establishes the deadline for bringing a legal claim. Missing the applicable deadline can prevent a party from pursuing relief, even if the underlying claim has merit. The appropriate deadline depends on the type of claim and other circumstances.
How long does a defendant have to respond to a lawsuit in California?
In many California state court civil cases, a defendant generally has 30 days after service to respond, although exceptions apply. Different rules govern federal cases and certain types of proceedings.
What is the difference between mediation and a settlement conference?
Mediation generally involves a neutral third party helping the parties negotiate a voluntary agreement. A settlement conference is a structured settlement discussion that may be conducted or supervised by a judge or another neutral professional, depending on the court and circumstances.
When should a business consider filing a lawsuit instead of continuing negotiations?
Litigation may be appropriate when negotiations have reached an impasse, an important legal deadline is approaching, evidence or assets need protection, or the opposing party refuses to address the dispute. An attorney can evaluate whether filing suit is likely to advance the business’s objectives.
The content presented in this article is for general informational purposes only. It is not, nor is it intended to be, legal advice. It does not constitute the formation of an attorney-client relationship. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.
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