AN EMPIRICAL STUDY OF THE FACTORS THAT PREDICT SETTLEMENT

Abstract

The study aims to testing hypotheses put forth by scholars and congressmen regarding the factors affecting the likelihood of settlement in a lawsuit. 864 civil cases following the Brazilian Common Procedure and having gone through its mandatory conciliation hearing in a Cejusc were analyzed. The data corroborate the hypothesis, derived from the rational actor model posited by law and economics, that failure to settle can be explained by information failure leading agents to overestimate their victory odds; it is thus recommended that settlement attempts be preceded by bilateral presentations of evidence. These findings contradict the currently victorious view in Brazil that litigators’ behavior is primarily determined by emotion, hence proceedings that provide opportunities for information exchange should be postponed until after the settlement attempt has failed, lest they stir up tensions further. It was concluded that the odds of settlement were among the lowest when the lawsuit concerned contracts with a bank; that plaintiffs who failed to inform whether they were interested in a conciliation hearing (in breach of article 319, VII, of the Code of Civil Procedure) were about as likely to settle as those who voiced disinterest; and that settlement was more likely when the defendant was a natural person rather than a legal person.

Alternative dispute resolution; empirical study; Code of Civil Procedure of 2015; Brazilian Policy of Incentives for Settlement; rational actor model