It is risk aversion by both parties. You never know how a jury trial will go, so if both parties can negotiate a settlement they are willing to live with, it ma

It is risk aversion by both parties. You never know how a jury trial will go, so if both parties can negotiate a settlement they are willing to live with, it makes both parties happy without having to deal with the extreme consequence on either side. I would relate it somewhat to what insurance gives you. There, you are paying a fee to help stave off extreme expense.