I think not taking them to court may be a bad move. I doubt that they will ever become your loving neighbors, so the idea that somehow not pushing the issue will improve relations seems mute. I agree with some of the other posts. Their dogs came into your yard and killed your chickens and caused injuries requiring vet care. Their dogs are responsible thus they are ultimately responsible.
My understanding is that you had you chicken roaming in your yard when they were attacked - right? If that's the case, how would the location of the chicken coop have anything to do with it? Are you required to keep them in their chicken coop/run all the time? My guess is that the coop is supposed to be far enough away from neighbors houses that they chickens will not disturb them in the mornings when they start crowing (if you have roosters anyway). But, if you are allowed to have them loose this issue seems irrelevant.
Like the others said, lawyer or not, they are responsible for damages caused by their dogs. My grandparents had a dog in their back yard - fenced in. The dog had never gotten out before, but one time it got out and ran out into the road after a lady riding her bike. The dog was a big dog and it scared the lady. She lost control of her bike and wrecked, breaking her hip in the process. The dog never actually touched her, but they sued for medical bills, pain and suffering, and the husband added to the suit for lack of 'spousal attention' if you know what I mean. They won the case. They won because the dog caused the situation. They got over $250,000! The dog did cause the accident and thus my grandparents were responsible - they argued based on the the fact that the dog had been fenced and had never gotten out before, but that didn't change or negate the costs to this lady. I think the husbands added cost in the case was a little extreme, but whatever...
Point is, if you 'let them off' they will not have learned to respect the law, your property, and their resposibility the keep their dog contained. If they want the dogs, it is their responsibility to make sure they cannot get out and cause harm to anyone or anything else.
The vet bill is good enough to veryify time frame. Like someone else said, I'd tally costs involved in bringing them up, expected egg production value, proportional cost of ckicken coop/chicken run, etc... Maybe they will take those costs into account, maybe they won't, but I'd try.
Let these people know you will not tolerate this and that you will not settle for petty offerings. Small claims court is not that time comsuming to deal with - I'll used it before on other issues. Just explain your case and back it up. I'd imagine the judge will rule in your favor.
That's my 2 cents!
