Settlement

A settlement is an agreement in which the parties to a lawsuit resolve their dispute without a trial. Settlements often involve the payment of compensation by one side and, per the federal courts’ own glossary, usually no admission of fault. Judges often encourage settlement to avoid the cost and uncertainty of trial, and most civil cases in federal court end in settlement or other resolution before trial.

Example: In 2016, a federal district judge approved the $20.8 billion settlement resolving civil claims against BP arising from the Deepwater Horizon oil spill — announced by the Justice Department as the largest settlement with a single entity in U.S. history.

Common misconception: A settlement is not a ruling on who was right. Because the parties agree to the terms themselves, a settlement resolves the case without any court finding of liability.

Sources: Settlement, Glossary of Legal Terms, United States Courts; Justice Department press release: United States and Five Gulf States Reach Historic Settlement with BP