I'm going to go with 2A. The city decides to settle for like $50,000-75,000 (wild guess). This would be a great deal for Pat. But Pat is stubborn and stupid and refuses to accept the settlement. So it goes to trial and Pat loses, getting no money but owing his new attorneys money.
At least, that's my on-the-record prediction. Reading the whole document, it's pretty obvious that no serious attorney gave Pat and Niki the time of day on this ridiculous case, so they had to settle for an attorney stupid enough to actually put his name at the end of this foolish lawsuit. Anyone competent would be embarrassed to write their client is a victim of domestic terrorism at the hands of online "bullies" while providing literally zero evidence to support that claim.