"We'll see them in court" is a mood, not a strategy. Whether to fight a commercial dispute or settle it is, at bottom, a pricing question — and it can be worked through with the same discipline you would apply to any other investment decision. The inputs are uncertain, but the structure is not.
Start with an honest view of the merits
The first input is the probability of winning — not as your team feels it in week one, but as a cold reading of what you can prove. Merits assessments made in anger run high. The useful question is narrower: which facts can we establish with documents and witnesses we actually control, and which parts of our story rest on assertion? Under Swiss law, the party alleging a fact generally has to prove it; damage in particular must be substantiated, not just asserted. A strong sense of grievance with a thin file is a weak case.
Value what is actually recoverable
The claimed amount is rarely the relevant number. Discount for the parts of the claim that are hard to prove, for heads of damage a court is unlikely to accept, and for interest and currency effects. Then apply the most overlooked filter: enforceability. A judgment against a counterparty that cannot pay, or whose assets sit in jurisdictions where enforcement is uncertain, is worth a fraction of its face value. The right question is not "what could we be awarded?" but "what would we actually collect, and when?"
Subtract the full cost of fighting
Litigation costs come in layers. Court costs, which the claimant typically has to advance. Your own lawyers, over the whole life of the matter including a possible appeal. And the Swiss principle that the losing party compensates the winner cuts both ways: if you lose, you will generally also owe the other side a contribution to its costs.
On top of the visible costs sits the invisible one, which is often larger: management time. Executives reconstructing events, gathering documents, preparing for hearings, sitting in strategy calls — time not spent running the business. Disputes also have a way of freezing commercial relationships and complicating financing rounds and M&A processes, where pending litigation shows up in every due diligence.
Time changes the number
Commercial litigation is measured in years, not months, once appeals are counted. Money received years from now is worth less than money received today, and any forecast should be discounted accordingly. Duration also compounds every other cost: fees, distraction, relationship damage. An early settlement at a discount can beat a larger judgment later — even before adjusting for the risk of losing. The reverse holds too: a defendant with time on its side, no reputational exposure and good lawyers may rationally prefer the slow route — which is worth knowing when you read its offers.
What the spreadsheet misses
Some factors resist quantification but belong in the decision. A relationship you need to preserve argues for settling; so does confidentiality, since a settlement stays private where a judgment is less so. The portfolio effect argues the other way: if you face many similar contracts, settling one weak claim generously can invite ten more, and a reputation for folding has a price. Occasionally you genuinely need a judicial answer to a question that will keep recurring. And sometimes the counterparty's offer is not a settlement but a test.
When settling early is rational — and when it is not
Settle early when the expected value of a judgment, net of costs, time and distraction, sits below a credible offer on the table — or when the downside, however unlikely, is one the business cannot absorb. Fight, or at least wait, when the claim against you is one of a class you have to defend, when your case is strong, the counterparty solvent and the costs bearable, or when early offers are simply probing.
The discipline is to write the analysis down before positions harden, and to revisit it as the case develops — settlement value moves with every procedural step. We prepare this kind of dispute pricing with clients at the outset, so that the decision to fight is a decision, not an accident. If you are weighing one now, we are happy to think it through with you.