Suppose you lent money to someone for an investment. It was money that you had saved up over the years and you expected to have a decent rate of return that would help you in living your life. But then the person didn't pay the interest you agreed to and what's more, the person won't even give you the amount you lent back.
What should you do?
The obvious thing to do, if you have asked for the money and been ignored or told the person won't pay, is to take them to Court and ask a judge to order they give you the money.
The trouble is going to Court is slow and expensive and the person who owes you the money says "I still think you are not right and I should not pay you anything BUT if you will settle the law suit I will give you right now about half of what you are suing me for". It seems foolish to take just half of what you are entitled to but maybe it's not a mistake to take it.
There are many reasons you might want to take less than you are owed.
The first is that it may be the person who owes you the money may not have enough to pay. Getting a judgment for money is helpful but it does not mean you will get paid – you cannot collect money from someone who doesn't have any money. If you can get some money right now that may be better than having a judgment for what you are owed but being unable to collect any of it!
The next reason you might want to settle is the time a civil case takes to get to trial. It can take years – the Courts are very busy and prioritize criminal and family matters. If you need money now it may be better to take what you can get right now and then accept less than what you are fully owed.
Another reason to settle is the cost of a trial. It's very hard to be your own lawyer and conduct a case yourself. But hiring a lawyer is terrifically costly – it is tens of thousands of dollars to go to trial even a short trial. It may be you cannot afford a trial and so must take what you can get. This isn't very fair but it's the reality.
The final reason to settle is because it may be that your case is not as good as you think. Obviously you think you are right but the judge might not agree. Nothing is ever certain in Court and that may suggest settling is a good idea.
Taking less than what you are owed can be a bitter pill but sometimes it makes good sense.