Understanding the Settlement Process
for Personal Injury Cases
Barry: That’s a question I get a lot. As a starting point you need to make sure that the insurance company has what it needs to evaluate the case on their end. Typically that’ll include things like your medical records, your medical bills, as well as any supporting documentation like photographs witness statements, or a police report. If the case is in suit those things get turned over to the defense lawyer as part of the pretrial discovery process and it’s up to them to transmit that stuff onto the insurance company. The bottom line is that the insurance company has to have some type of a basis for making an offer. The adjuster isn't going to offer you any money money without a reason for doing so.
The injured party needs to start by making a settlement demand. Ultimately the process is under your control and it’s up to you to say how much money you want to settle it for. The insurance company is also happy to have delay built into the case because it is how they make money how they make money is by taking premiums for investing in the stock market, real estate, or junk bonds or whatever is profitable for them and paying out as little of the claims as possible. The other reason that they wait for you to make a settlement demand first is that they want internal valuation as to what they think is fair settlement value of your case might be and they be really happy to see you underbid that.
It’s a funny process because once we hit on what a fair range of settlement value is it’s almost a little bit like selling the house you’re going to want to put in a higher bid and let them negotiate down a little. Let's just say that you want to sell your house for $100,000. Now if you want to put your house on the market for $110,000 and somebody came in at $103,000 you’re going to be as pleased as punch. The practice in our field is that if you want to hundred thousand dollars for your case then you’re going to have to ask for a settlement that is way above that like $275,000. Why that’s the case it’s something that’s never made a lot of sense to me but it is what it is but it is what it is. If I wanted $100,000 and I started off with 110, the insurance company is going to think that I really want $40,000.
We don’t start thinking about settling your case until you’re either all better or as good as you’re going to get. In other words if you’ve made a full recovery or is full of a recovery is you’re going to make for that injury. The nature and extent of your injury is one of the three key variables that we talked about earlier in terms of evaluating a case for settlement. I don’t begin to think about that until I really know the answer those questions are.
When the point of settlement demand comes it’s going to vary from case to case. Some cases are suitable for pre-suit resolution and others really are not. There are going to be opportunities all along the lifeline of the case from prior to being filed and including all the way up to the case has been tried And is up on appeal. This may be a good time to discuss settling a case.
Ultimately you have to get to a number where the client is willing to except it and the insurance company is willing to pay it to finish settling the case. There’s no process by which anyone can be ordered to accept the settlement offer that’s not voluntary. There are a lot of processes that are used to try to reach that point where they’re willing to pay a certain amount and you’re willing to except a certain amount. One of these processes is mediation where are you use a retired judge or another lawyer to act as a mediator to help reach a respectable point. Sometimes there are judges that are willing to act as a mediator in what's called a pre-trial settlement conference. One thing that you need to keep in mind is that these negotiations are a one-way ratchet. What are you reduce a settlement demand there are no grounds for increasing it at some point down the road unless there’s some type of changing circumstances that really justifies it. Just because the case is going on and you’ve incurred or case file expenses, is not the kind of justification that you want. You want to be very careful as you make these moves downward from where the initial demand is to where to we are they’ve offered money that is with in your settlement range.
One important thing to keep in mind is a lawyers have an ethical obligation to inform clients about any type of settlement offer that’s being made. Even if that offer is one that I would never recommend to the client in the end is the clients case, it’s the clients life, it’s the clients decision regardless of whether or not I agree with it.