It is not quite as simple as that. If you are a celebrity, or somebody in the public eye (an MP even), then your personal reputation will be important to you. If somebody wants to sue you, then it can cost you a great deal of money to stick up for yourself in court. For example, look at how much Max Mosley spent on lawyers relative to the sum which the News of the Screws had to pay him. Therefore it is often cheaper to make a settlement rather than enjoy your day in court. In the old days, Private Eye often paid up, even if their allegations were true, because they could not afford to contest a case. The likes of Robert Maxwell and James Goldsmith often took advantage of this. Even if you win, the other party may not pay up the costs of the action, so there is little point in laying expense upon yourself (that was an issue in the case between Mohammad Fayed and Neil Hamilton).
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