Often when dealing with a civil matter either as plaintiff or defendant, a settlement proposal will be made by the opposing side. Depending on the merits of your matter, the proposal can be either welcomed with delight, or rejected with disgust.
What I have learned thus far, is that to settle is not accepting that you do not have a good case or defense. It is merely weighing up the risk that you run in proceeding. In any litigious matter there are various aspects that you cannot control or predict the outcome of. To settle a matter, you are simply limiting the risk of the unknown, and taking control of the outcome.
In my experience, it is always better to have control over the outcome, even if it means there is a certain premium linked to having that control. Not too long ago I was faced with a settlement proposal where the client had to make a decision on whether or not to abandon a certain part of her claim. If she accepted the settlement, she would still recover 100% of the capital, but write off a portion of the interest. As she was the only witness that could prove her claim, she was right at the center of the case. In considering the settlement proposal, the question that had to be answered was whether or not she could live with herself if we lost, knowing that her testimony in the witness box was the determining factor.
It is irrelevant as to what the outcome of the specific matter was, but is an interesting question to ask yourself what you would have done if you were in her shoes.