Settlement Strategy vs Trial: Evaluating Risk and Managing Legal Costs in Hospitality Suits

Hospitality businesses — restaurants, hotels, bars, and event venues — face a steady stream of liability claims: slip-and-fall accidents, foodborne illness outbreaks, liquor-liability claims and more. Choosing between a settlement strategy or taking a case to trial is critical for controlling exposure and managing legal spend. This article focuses on the U.S. hospitality market (with examples from New York City, Los Angeles, Chicago, Miami and Las Vegas) and provides a practical framework for evaluating risk, estimating costs, and making informed decisions.

Why the choice matters for hospitality defendants

Hospitality defendants face unique exposures:

• High frequency of premises liability and intoxication-related claims.
• Often-cited compensatory damages for lost wages, medical costs and pain-and-suffering.
• Reputational impact that can drive settlement pressure (online reviews, social media, insurance underwriting).

A deliberate settlement strategy can contain costs and reputational damage; trial can vindicate a business but often carries higher, less predictable costs and the risk of a large adverse verdict.

Key cost categories to evaluate

When analyzing settlement vs trial, quantify these line items:

• Attorney fees: Defense counsel hourly rates vary by market and firm. In major markets (e.g., NYC, LA), partner rates commonly range several hundred to more than $1,000/hour; associates correspondingly lower. Expect lower rates in secondary markets (Chicago suburbs, Phoenix, etc.).
• Discovery expenses: Depositions, document hosting, ESI collection and review. Single deposition packages often cost $300–$1,200 (reporter, videographer, transcript, travel) depending on length and rush needs.
• Expert witnesses: Typical subject matter expert fees vary widely. Engagements often include a retainer and hourly consulting/testimony rates. Per industry reporting, many experts bill in the $300–$1,000+/hour range and a retained expert can cost several thousand dollars for a case; trial-ready experts can cost $10,000–$50,000+ for preparation and testimony depending on complexity and location (Expert Institute analysis).
• Mediation/arbitration fees: Using commercial neutrals (e.g., JAMS, AAA) adds administrative fees and neutral hourly rates. Administrative fees and neutral rates vary by case size and neutral; expect mediator/neutrals fees often in the hundreds to thousands per party per day, with top neutrals billing several hundred dollars per hour or more (see major ADR providers such as JAMS: https://www.jamsadr.com).
• Court filing & service costs: Federal civil case filing fee is currently $402 for initiating a civil action in U.S. District Court; state court fees differ by state and county (U.S. Courts fee information).
• Trial day costs: Trial logistics (jury fees, exhibits, trial technology, travel) and witness attendance can push trial-only incremental costs into the tens of thousands even before appeals.

Settlement vs Trial — comparative snapshot

Estimating costs: sample hospitality scenario (New York City)

Scenario: A NYC restaurant faces a slip-and-fall claim asserting $250,000 in damages.

Estimated defense budget ranges (approximate, NYC market):

• Pre-litigation investigation + negotiation: $5,000–$20,000
• If suit filed: motion practice, discovery & depositions: $25,000–$100,000
• Trial preparation and 3–5 day jury trial: $75,000–$300,000+
• Expert witness(s) (medical, biomechanical): $10,000–$60,000+
• ADR (mediation with commercial neutral): administrative + neutral fees $1,000–$10,000+ depending on provider and neutral chosen (JAMS/AAA rates and administrative fees vary by case and mediator — see JAMS for panels and fee structures).

Decision point: if plaintiff’s settlement demand is $60,000 and defense estimates a 40% chance of losing at trial with expected indemnity of $250,000, the expected value of going to trial (EV) is: 0.4 * $250,000 = $100,000 plus trial defense costs (say $150,000) = $250,000 EV. Compare that to settlement plus defense costs for settlement (e.g., pay $60,000 + minimal defense costs $20,000 = $80,000). Purely economic analysis favors settlement. Adjust for non-economic values (principle, publicity) accordingly.

Risk factors that push toward settlement

• Weak factual defenses (video shows fall caused by restaurant negligence).
• High plaintiff medical bills and strong causation.
• Multiple plaintiffs or potential for punitive damages (reduced leverage).
• Significant negative publicity risk (social media traction).
• Repeat incidents that heighten insurer pressure.

Risk factors that support going to trial

• Clear and persuasive defense evidence (surveillance footage, credible witnesses).
• Insurer reserves and policy limits that allow defense to litigate.
• Desire to avoid precedent or third-party liability exposure.
• Low plaintiff credibility or questionable causation.
• Strong potential for a defense verdict based on local jury tendencies.

Strategies to manage legal costs (practical playbook)

• Early case assessment: deploy focused investigation and surveillance to evaluate merits before expensive discovery.
• Structured settlement authority: obtain firm settlement caps from carrier and require early settlement authority lines to avoid administrative delays.
• Use targeted discovery: limit scope to critical custodians and records to reduce e-discovery burden. See related best practices in Discovery Best Practices in Restaurant and Hotel Cases: Documents, Electronically Stored Information and Depositions.
• Consider early mediation with an experienced hospitality-neutral to limit fees and exposure; bring critical experts for early assessments. See ADR options at Alternative Dispute Resolution and Mediation Options for Faster, Cheaper Resolutions.
• Use motion practice strategically to narrow claims or obtain dismissals — see tactics at Motion Practice and Pretrial Tactics That Can Short-Circuit Hospitality Claims.
• Negotiate fee-shifting or cost-sharing provisions in settlement talks where appropriate (e.g., plaintiffs pay certain limited costs if they fail to beat settlement offer).

Choosing ADR vendors and experts — costs vs value

• ADR providers: JAMS and AAA are widely used in hospitality cases. Expect administrative fees plus neutral hourly rates; top neutrals in NYC/LA charge premium per-hour rates. Confirm mediator/neutrals’ hourly and day rates before scheduling.
• Expert selection: prioritize trial experience in hospitality-specific matters (foodborne illness, slip biomechanics, liquor-service standards). Expect retained-expert budgets to range widely; weigh cost against expected impact on verdict versus leverage in settlement.

Final decision framework — a checklist

• Estimated exposure (damages demanded vs likely award)
• Probability of plaintiff verdict (realistic, evidence-driven estimate)
• Estimated total defense & trial costs (discovery, experts, trial)
• Non-monetary risks (reputation, precedent)
• Insurer appetite and settlement authority
• Availability and cost of ADR options

If expected cost to litigate (probability-weighted verdict + defense costs) materially exceeds negotiated settlement cost, settlement is typically rational. If the business places high value on principle, precedent avoidance, or deterrence and has insurer support, trial may be justified.

Sources and further reading

• U.S. Courts — Court Fees (civil filing fee): https://www.uscourts.gov/services-forms/fees/court-fees
• Expert Institute — Expert witness fee overview: https://www.expertinstitute.com/insights/expert-witness-fees/
• JAMS (ADR provider): https://www.jamsadr.com

Related internal guides:

• Litigation and Defense Strategies for Hospitality Liability Claims: From Pleading to Trial
• Discovery Best Practices in Restaurant and Hotel Cases: Documents, Electronically Stored Information and Depositions
• Alternative Dispute Resolution and Mediation Options for Faster, Cheaper Resolutions