Negotiating a Personal Injury Settlement

If you are an accident victim and are getting nervous about the possibility of going to trial, you should know that, by some estimates, more than 95 percent of all litigation filed in the U.S. ends up settling.

No matter the possibilities, it is important to talk about the possibility of settlement. A lawyer will most likely tell the client what the settlement value of the case is likely to be. If you wonder how your lawyer reaches that figure, here is an outline of the basic steps in determining the monetary value of a personal injury case.

Step One: Calculate Special Damages

In California, as in most states, these are “compensatory" damages that compensate the plaintiff for monetary losses that one can calculate or project to a reasonable degree. These damages can be either past or future damages.

Examples of past special damages include lost wages and out-of-pocket medical expenses. So long as the plaintiff has complete records of doctor visits, pharmacy receipts and similar items, this calculation will be fairly simple.

Since future damage calculations require projections and probabilities, it is crucial to consider personal factors such as age, health, education level and work history. In most cases, it is also important to consider the general economic outlook, prospects for industry and earnings of others in the same field.

Step Two: Calculate General Damages

General or non-economic damages are those to which one cannot readily assign a monetary value. Non-economic damages can include physical pain and suffering or mental anguish, humiliation and embarrassment, harm to reputation and loss to the victim’s partner of the victim’s companionship and support (loss of consortium).

For purposes of settlement discussions, many attorneys will use an amount equal to between 150 percent and 500 percent of medical special damages, depending on the severity of the injuries. 

Step Three: Adjust the Claim Value

Adjusting the claim value requires consideration of numerous factors, including the degree of the defendant’s culpability as well as the trial location and any defenses that may be available. For example, if the injuries are worse from the victim's delay in seeking medical treatment, that can lower the settlement value of the case. 

Last But Not Least – Make The Settlement Offer and Negotiate

Generally, the plaintiff’s lawyer makes the first offer, though it is almost always negotiable.  There may be significant conversations back and forth, but the defendant (particularly if there is an insurance company involved) may also choose to settle quickly.

Trials are stressful and expensive for both sides, and juries are notoriously unpredictable. In many cases, only the pressure of an approaching trial date is sufficient to get the parties to agree. Indeed, it is not at all unheard of for settlements to be reached even after a trial has begun. 

Aggressive – But Reasonable – Legal Counsel

While the vast majority of U.S. lawsuits settle, you must have a lawyer who is not afraid to go to trial if your case winds up being among the few that do not. As such, when interviewing potential counsel, consider how many cases he or she has actually tried.

A low number may suggest a reluctance to devote the time and effort required to try even relatively routine cases. On the other hand, a lawyer with a “take no prisoners" attitude and reputation may be less adept at negotiation.

NOTE: This is for informational purposes only and does not constitute legal advice.