What is a settlement amount in legal terms?

A settlement amount refers specifically to the compensation agreed upon by parties to resolve legal claims outside of court. When two parties in a legal dispute come to an agreement, they negotiate a sum of money that one party pays to the other to conclude the matter without the need for further litigation. This is often seen as a way to avoid the uncertainties, time, and expenses associated with a trial while also providing the claimant with some form of compensation for their claims.

This understanding distinguishes it from fees paid for legal representation, which concerns payments made to attorneys for their services, but does not directly address resolving a dispute itself. Similarly, monetary awards for damages in a trial refer to amounts determined by a judge or jury after a case has been heard in court, which is distinct from an out-of-court settlement. Finally, costs incurred during court proceedings relate to the expenses associated with the legal process, such as filing fees or costs for expert witnesses, rather than the negotiated amounts to settle a claim. Therefore, the correct definition of a settlement amount is the compensation paid to resolve legal claims against members.