Legal Question in Civil Litigation in California

Every case is different, every client's litigation budget and monetary "pain threshold" is different, every attorney's approach to both winning cases and cost containment is different, and so your generalizations may be true for some cases but are also wildly off by orders of magnitude in others. With that said, however, your question seems to be two part: 1. Why is trial so expensive when so much work has been done already, and 2. why do cases settle on the eve of trial when all those expenses have already been incurred. At the risk of badly over-generalizing myself, I will try to give you a high level answer.

On the first component there are a number of factors that make going to trial so expensive. The first is that all the pre-trial work is devoted to investigation. Both due to there being only so many hours in a day, and the economics of not doing work that doesn't yet need to be done on a case that may settle before it needs to be done, very little actual trial preparation is done until shortly before trial. That is why discovery is cut off 30-days before trial, so the attorneys can prepare their trial case without having to work on discovery responses. So at that 30-day mark, most if not all the investigation you are going to be able to do is done (only expert witness depositions come after the 30-days), and none of the work of turning those results into a trial-ready case has been done. Add to that the attorneys fees for being in trial, and you are going at least double the total previous billings for the case, and you can easily wind up billing two and even three times what was billed, between the 30-day mark and when you are done with trial, post-trial motions, and actually have a judgement entered.

Which leads to the second component - so why do cases settle on the eve of trial. Well the first part of my answer is a big part of the reason. After all the work and money that goes into a case from initial filings to 30-days before trial is done, you have a lot more information about the other side's case and you have been forced through discovery responses to take a far closer look at your own case than at any other time in the case, and yet you have done little or nothing to turn all that information into the collection of organized admissible evidence, witness examination notes and planning, pre-trial motions, mid-trial "in the pocket" motions, jury instructions, and opening and closing arguments that make up a trial case. You have all the information you're really going to get to make settlement decisions, and are facing 30-60 days of intense work for the lawyers and intense expense for the clients. What better time to settle? And if you don't settle right at 30-days out, as you pull together your exhibits, your witness interviews, review the depositions and do everything else to prepare for trial, your case comes together more and more clearly, and so does the other side's, until by the time of the Mandatory Settlement Conference you can almost plot out your chances of winning or losing and by how much with mathematical precision (there is even software to help with that analysis). So unless a huge swing in the dollar value of the case depends on a key factual issue on which there is deeply divided evidence that a jury or judge will simply have to make a decision on, the case settles.