Hotz has said all along that any leftover donations would go to the EFF. If he used part of those funds to get good lawyers, and those lawyers told him that his case couldn't be won in a way that would strengthen the right to jailbreaking, the the right thing for Hotz to do was settle ASAP and pass along the leftovers to the EFF.

How would the typical Hotz donor feel if he fought the case all the way, only to win on a technicality that didn't establish any meaningful precedent that could protect future hackers?

EDIT: Hotz also took donations for a duration of two days before he stopped, deciding that he had enough to cover short-term legal expenses, and he didn't want to have too much money lying around in case Sony won.