Holding your nose, writing the check--and moving on.

YOU'RE summoned into the boss's office for the bad news. A former employee has filed suit against the company.

Claims to have been passed over for a management slot.

Claims that the one who got the job was less experienced.

Claims to have made less money than the person who had her job in the past.

Claims that the company was abusive. whatever that means.

The boss looks at you, as if to study your reaction. At least that's what you think he's doing.

At first, you react by being defensive. Ridiculous, you blurt out, citing the specific reasons she did not get promoted. The boss listens, nodding his head but quickly cutting the session short, saying that the company attorney will review the claims and sort things out. He just wanted to offer a heads up.

You walk out of his office a bit dazed. The defensiveness is quickly turning to anger. How dare this person make these claims that you know are untrue? It's extortion, plain and simple. She probably realizes that the company has bucks--and the insurance and will pay out.

That night, tossing and turning in bed, your defensiveness and anger turn to reflection. Could the company have done anything different to avoid this mess'? What would have been so bad about promoting this person--even if you found her to be only an average worker and had become convinced that the other candidate would have done a much better job?

As for other claims, you start to wonder about the corporate culture and whether there was anything direct or inadvertent that would have aroused such bad feelings. Did some assistant manager make an off-color remark? Did the guy in the next cubicle have an X-rated videogame? Did she manage to get hold of a payroll roster? She never mentioned anything, so how were you supposed to know something was wrong? Short of bugging everyone's desk, there is just so much a company can monitor, right?

In the end, all matters of defensiveness, anger and reflection take a back seat to the most important consideration--moving on.

Some disputes are relatively easy to untangle. A customer doesn't pay his bill. A vendor substitutes the type of material you selected for a cheaper grade. An order isn't delivered on time. With electronic documentation al most every step of a business transaction, there's often no place to hide.

But when the allegations involve mistreatment or inattention or simple bad judgment, the claims become murkier to prove. A workplace of most any size is a collection of disparate personalities thrown together for over 40 hours each week. Even in the best of companies, there inevitably will be misunderstandings, jealousies and maybe a bit of backbiting. The question is whether any of this constituted a deliberate and calculated mistreatment of the employee.

In this case, the lawyers assure you, it didn't. And yet, they also point out that defending the charges will take months, if not years, of deposition and discovery before even reaching a courtroom. That means many hours away from your desk. Instead, you'll be stuck in some lawyers' conference room, answering the same sets of questions over and over again. And there's no telling how a judge and jury might respond to either side. The plaintiff might be very convincing. The defense might not be.

So, they tell you, it's time to cut a deal. Your insurance company agrees. The offers go back and forth, there are a couple of "last and final" warnings that each side volleys, and finally everyone agrees on the number.

The number that will make it go away.

There's a part of you that's relieved, of course. But there's another part that's appalled. You're convinced more than ever that this person deserves not one thin dime--that if anything, she should be paying the company for all the trouble (and cost) it has gone through to defend what you consider to be a frivolous lawsuit. Perhaps most galling is the implication that because the case is being settled, the defense has implicitly admitted some sort of responsibility, if not outright guilt.

That's me perception with settlements--the company has something terrible to hide and is willing to take out its big, fat checkbook in order to keep those naughty secrets from reaching public view. And, indeed, that's sometimes true. Consider the stuff that pharmaceutical companies and automakers and hospitals and power plants would rather not come out in an open trial--stuff that's turned into movies, where the typically faceless company is ruthless, greedy and unethical.

But there are times when companies of all types and sizes find themselves in a really bad spot, through no fault of their own. That's why you hear corporate executives rail at how the legal system has gotten out of control. That's why businesses are so intent on having their new workers sign arbitration agreements that prohibit them from suing.

And in the end, that's why it often makes more sense to settle rather than risk the distortions and treachery of a full-blown trial. Hold your nose, take a big gulp, and write the check.

Mark Lacter is editor of the Business Journal.