Comment by baq
Lawsuits will take years by which time the company will either be gone or swimming in cash.
Lawsuits will take years by which time the company will either be gone or swimming in cash.
That is just one customer, and also it is not just lawyers, Contingent liabilities(potential amount for settlement) when it escalates from possible to probable, in GAAP that means it changes from mere footnote to a line item in P&L which needs to be financed and managed and affecting their margins well before the actual settlement is decided.
Lawyers have to paid now till then.
Companies settle much faster typically to reduce some of this costs, it ends up being cheaper.
Also many of these will be resolved through their arbitration clauses that would be present in the contracts. Arbitration is much faster and usually appeal proof