A bad settlement is better than a good (won) lawsuit. Lawsuits are expensive, time-consuming, stressful and risky (their outcome cannot be predicted with complete certainty).
Always try to reach an agreement. A significant proportion of civil lawsuits can be resolved through settlement with a little goodwill and a minimum of decency. Use a lawyer with the appropriate experience as a mediator to bring the parties to the table and help them work out the most appropriate solution. This can save a lot of time, money and stress.