Negotiating a Personal Injury Settlement

As a seriously injured accident victim, you’ve probably been waiting months for your day in court. At the same time, though, if you have already been through a deposition, you know the defendant’s lawyer is not your friend and have had a taste of testifying under oath. Take that and add a jury, judge and spectators to the tableau and it can become downright intimidating.

However, those nervous about going to trial can take comfort in the fact that it is not likely to happen. Indeed, by some estimates more than 95% of all litigation filed in the U.S. ends up settling before then.

Most likely, your lawyer has spoken with you about settlement. He or she may have also thrown out some numbers as to your case’s settlement value, but may not have explained how that number was determined.

Here is an overview of the typical calculation process in personal injury cases.

1. Determine the Victim’s “Special” Damages

Most states consider these to be compensatory; that is, amounts that compensate the victim for his or her actual financial costs, to the extent they can be calculated or reasonably estimated. Special damages may be for both past and future expenses.

Examples of past special damages:

  • Lost wages.
  • Out-of-pocket physician’s charges.
  • Uninsured prescription or non-prescription medications

Provided the plaintiff has kept reasonably good records of expenditures, special damages incurred to date are really just the total of all these items.

Future special damages are more speculative, but reasonably reliable estimates are possible. Factors include the nature and severity of the injury, age, overall health, amount of education and earnings history. Since the general economic forecast may affect the victim’s employment prospects, it is also a factor.

2. Calculate a Reasonable “General Damage” Amount

These are also known as “pain and suffering” or “non-economic” damages. The victim’s spouse or life partner may also claim damages resulting from loss of the victim’s companionship and support (called “loss of consortium"). For settlement purposes, lawyers typically take the total special damages and multiply them by a factor of between 1.5 and 5.

3. Adjust of the Total Settlement Value

Because it is the most subjective part of the process, this is where an attorney’s experience and judgment are indispensable. Adjustments are based on various factors that may affect the outcome if the case goes to trial. These may include:

  • Whether the victim or a third party was partially responsible for the accident
  • Whether juries and judges in the jurisdiction in which the trial will occur are known for favoring either plaintiffs or defendants
  • Any defenses that may be invoked by the defendant, such as medical complications resulting from the  plaintiff’s failure to seek prompt treatment. 

Make The Offer

The plaintiff’s lawyer usually makes an initial demand, and the defendant’s counsel ordinarily makes a counteroffer. Depending in part upon the strength of the case, negotiations may continue for some time.

Trials and trial preparation are time-consuming and expensive pursuits for all parties, and juries are unpredictable. For these reasons, serious settlement discussions may not occur until the case is scheduled for trial.