When Settling Makes Sense
A well-known country singer has a famous song called “The Gambler” which floated a line “you got to know when to hold them, know when to fold them”. While he was referring to poker, it can also be applied to any situation in which a person assumes a risk. In any legal case whether civil or criminal the decision to reject an offer to resolve the case, assumes the risk that the result obtained after a trial or hearing will be more favorable then what is being offered after negotiations.
This reminds me of one of the craziest tax cases I ever had. In my thirty plus years of practicing law I have resolved thousands of cases for my clients. When doing so I weigh all of the evidence in my clients favor and all the not so favorable, based on those facts I have advised my clients on whether to fight or settle. Truth be told I like a good fight. However, the most important thing is the most favorable outcome for my client. Ninety-Eight (98%) percent of my clients have followed my recommendation on whether to stay in the fight or settle. Prior to this case, I have never had a client renege on a settlement.
Let me get back to the crazy case. This client was a small business owner who had been audited and assessed $225,000 in liability including penalties. After many months of both administrative and civil litigation, I was aware that my client had some reasonable arguments on why they did not owe that tax liability. However, the records necessary to justify the appropriate tax exemptions were not available. Based on this painful reality, I advised my client that the best course of action would be to settle the case. It took some time to negotiate this case as the first offer that I received was $121,000.
After going back and forth for several months, and having a mediation, I was able to settle the case for $49,000 which was less than one third of the assessed liability. This amount would be paid in installments over 60 months. Based on the facts of the case, this was the best possible outcome. For the first time ever, I had a client renege on a settlement, only to later ask me to salvage it. The truth be told the agency to which the tax liability was owed, never really wanted to settle. Unfortunately, my client reneging was a win for them. Even if a client were to choose to disregard counsel’s advice it is important that they say so at the time of the negotiations. While ignoring your attorney’s advice is reckless, changing your mind after agreeing to the settlement undermines the attorney and the clients credibility. At the end of the day after having a trial the client ended up having to pay the entire amount of tax liability and penalties incurred.
While it is a client’s absolute right to choose to continue to fight without sufficient evidence. It is very important that a client be guided by their attorney. Attorney’s know law and they have experience dealing with procedural and evidentiary issues, which impact each side’s ability to present their case. Juries can be fickle and having a bench trial is no better, as one person is deciding your fate. Going to trial without sufficient evidence is not only a gamble but it is also reckless. This brings me back to the song “The Gambler”. It is important to know when to hold them and know when to fold them. Many times, winning is objectively evaluating your situation, so as to minimize your losses.
This is why listening to your attorney is crucial as in the case at hand paying $49,000 over time would have still been a win. If you need an experienced attorney in West Palm Beach contact Weinberg Law firm
in West Palm Beach. We offer services in Florida and other territories in the country.