Calculating settlement discounts is the process of determining the financial benefit a party can receive by resolving a legal dispute before trial. For example, if a plaintiff has a claim for $100,000 and the defendant offers to settle for $70,000, the plaintiff would receive a settlement discount of 30%.
Calculating settlement discounts is essential because it allows parties to estimate the potential financial consequences of settling a dispute. By understanding the principles involved in calculating settlement discounts, parties can make informed decisions about whether to accept or reject settlement offers.