Clients string out litigation costs because delayed settlement is financially smarter?

Marshall Grossman, a partner at Bingham McCutcheon, is quoted in Litigation 2009, Fall 2009 at 30. He perceives that clients in these malignant economic times may be more reluctant to start lawsuits because of the expense. But, if sued “they are much more anxious to litigate and defer settlement consideration until the last minute. That’s because they generally believe that it is more cost-effective … to litigate rather than use their resources to settle the case.”

When interest rates slump near zero, how can bleeding litigation and discovery costs make fiscal sense? Maybe a company with cash flow problems would rather pay law firms and stretch out cases, but most companies should strive to find a fair settlement and be done with it.

If Grossman’s perception is true, early case assessment would be a joke and cycle time reduction wrongheaded. If true that clients would rather spend on litigation fees than consider settlement, budgets of legal departments would engorge. If he’s right, how can a CEO hold a general counsel responsible for a legal budget over-mastered by CFOs and business considerations?