Deciding whether to settle or litigate enforcement actions

All parties facing the risk of an enforcement action must make the difficult decision of settling the charges or fighting them in litigation or an administrative proceeding. Both options provide distinct advantages and disadvantages. By settling, a party can resolve charges without admitting or denying the allegations and can minimise public coverage of potentially lengthy litigation and trial. But litigating, while stressful and expensive, can end in public vindication or even a novel change in the law that could be advantageous to a defendant’s business or industry. Parties are motivated by different factors. For some, the primary goal might be limiting public scrutiny and reputational damage, while for others, the decision making is driven by a cost calculation weighing the prospective costs of a trial and potential damages against the costs of an anticipated settlement and potential penalties. Is there ever a right case to litigate? What factors should a party carefully examine when making the decision of whether to settle or litigate? And how do recent challenges to the power of Administrative Law Judges impact the analysis? This article provides an overview of principal considerations that parties facing an enforcement action should keep in mind as they evaluate whether to settle or litigate, especially during a climate in which regulatory agencies and administrative proceedings are facing increasing programmatic and reputational pressure. This article is included in The Business and Management Collection (https://hstalks.com/business/).