Most cases settle out of court before proceeding to trial. However, not all cases settle for what they should. Sometimes, the plaintiff ends up settling the case for a lot less than the case is worth. Other times, the defense pays a premium to resolve the case. How are you supposed to know if the settlement offer being made is fair?
Some say that the measure of a good settlement is when both parties walk away from the settlement unhappy. This means that the defendant paid more than he wanted to pay, and the plaintiff accepted less than he wanted to accept. Several factors can provide guidance on whether the settlement should be accepted. In general, if you can get close to judgment value of the case in settlement, then it should be considered a very good settlement.
One of the first considerations that attorneys and clients should factor in is the chance of prevailing on the issue of liability. If the other side is clearly at fault, then a settlement offer should not be decreased because of the risk of losing the case. If the plaintiff has only a 60% chance of prevailing on liability, he may want to consider taking 40% less in settlement.
However, some cases do not involve clear cut issues of fault. Often, the fault involved in a personal injury action may be spread around. In other words, more than one party or person may be responsible for the plaintiff’s injuries.
In cases involving the fault of more than one party, any settlement offer must account for that fault. This is difficult if one of the parties at fault is not solvent or otherwise cannot make a contribution toward settlement. Fault of the plaintiff must also be factored into any settlement offer if the plaintiff is partly responsible for his own injuries. Thus, if the fault of others, including the plaintiff, is reasonably evaluated to approximate 20%, then the settling defendant should offer close to 80% of the plaintiff’s damages in settlement.
Another important factor to consider in assessing the fairness of a settlement offer is the venue (the court jurisdiction) in which the action is pending. Some jurisdictions draw from jury pools that are more conservative or liberal than others. If the court in which the case is pending draws from a more liberal jury pool, then the settlement offer should take that factor into account by being on the higher end of the range of possible judgments to account for the fact that liberal juries award more money to injured persons.
Most settlement offers will not take into account judicial interest. Judicial interest is awarded to the plaintiff who wins at trial. In an old case, the interest on the judgment can be substantial. However, most defendants will not pay interest in the settlement.
Unfortunately, the financial need of the plaintiff can result in a diminished recovery. Defendants know that in some cases, they can simply “wait it out,” and the plaintiff will take a lot less now because he cannot afford to wait the period of years before the case proceeds to trial. If the defendant knows that both the attorney and client are willing to wait as long as it takes to recover the maximum amount of money, then they are more willing to present a higher settlement offer.
In serious injury cases, you should consult with an attorney before accepting any settlement offer made by the other side.
FAQs
A reasonable settlement in most personal injury cases compensates the victim adequately for their medical expenses, lost income, and pain and suffering. It should cover both current and future costs related to the injury.
Why do lawyers often try to negotiate a settlement? ›
By negotiating for higher settlements, you can show your clients that they deserve justice. You can provide compassionate legal care by working to hold liable parties responsible.
How to respond to a settlement offer? ›
Remain calm and analyze the offer even if you feel like the adjuster is trying to take advantage of you. Ask questions to find out how the adjuster came to the conclusion that they did. Develop and plan your response (which is often called a counteroffer). Respond to the offer in writing.
Why does defense offer settlements? ›
Cases are often settled at the courthouse door because that is the longest the defense can delay before running the risk of a trial. Defense attorneys are risk adverse; they would rather settle a case than run any substantial chance of losing the case. This is related to the public relations aspects of litigation.
What is a good settlement figure? ›
How Much Should I Expect from a Settlement? A good settlement offer should not only be able to cover your hospital bills and legal fees, but it should also be equivalent to close to a years' worth of your current wages, especially in cases where your injuries may be permanent or cause some kind of disability.
What is an acceptable full and final settlement offer? ›
It depends on what you can afford, but you should offer equal amounts to each creditor as a full and final settlement. For example, if the lump sum you have is 75% of your total debt, you should offer each creditor 75% of the amount you owe them.
At what point do most cases settle? ›
Most Civil Cases Settle Prior To Trial.
How to negotiate a higher settlement offer? ›
Tips for Getting the Best Personal Injury Settlement
- Have a Specific Settlement Amount in Mind. ...
- Do Not Jump at a First Offer. ...
- Get the Adjuster to Justify a Low Offer. ...
- Emphasize Emotional Points in Your Favor. ...
- Wait for a Response. ...
- Know When To Engage an Attorney. ...
- Put the Settlement in Writing.
Settling is often cost-effective
Even if an executive or representative of a business believes that the organization is in the right, the cost of business litigation is a major deterrent to full-fledged business lawsuits. The cost of settling, even if the business might win in court, is often lower than going to trial.
Why is the first settlement offer so low? ›
Another reason for these low offers is that insurance companies hope to close the case quickly. They know that the sooner a claim is settled, the less chance there is of new information coming up that could increase the claim's value.
Tips On Negotiating A Settlement Agreement
- Use a solicitor that knows what they're doing. ...
- Consider carefully whether the first offer is reasonable. ...
- Be patient with your resignation letter. ...
- Listen to what your employer has to say. ...
- Be realistic and know your worth. ...
- Don't undervalue yourself.
Once both parties sign a settlement agreement and it is legally binding, the paperwork will go to whoever is responsible for compensating the victim's damages—usually the at-fault party's insurance company. They have time to review the agreement and approve the payout—or disbursem*nt of funds.
Why is settlement better than trial? ›
While settlements offer speed, reduced costs, and predictability, trials can provide potentially higher compensation, public accountability, and the chance to establish legal precedent. Ultimately, the right choice for your personal injury claim depends on your unique situation and goals.
Why do lawyers drag out cases? ›
Legal/Factual Issues Can Drag Out Cases
Disputes around common issues such as fault for an accident or the true cost of medical care and lost wages can cause cases to take longer to settle. These types of disputes often involve important legal and factual questions that need to be resolved before the case is closed.
Is it good to accept a settlement offer? ›
You do not have to accept the settlement offer that the insurance company makes. Accepting an offer right away could be detrimental in some cases, as it may not be enough to cover the cost of your injuries and other losses.
What makes a good settlement? ›
Resources - Early settlers relied upon wood for fuel and building. A site close to woodland was there fore an advantage. Later, resources such as Iron ore, coal and bauxite encouraged the growth of settlements. Linear settlements grow in a line, often along roads, river valleys or the coast.
How much should I offer to settle? ›
Offer a Lump-Sum Settlement
Some want 75%–80% of what you owe. Others will take 50%, while others might settle for one-third or less. If you can afford it, proposing a lump-sum settlement is generally the best option—and the one most collectors will readily agree to.
What is the least acceptable settlement? ›
The bottom end of the Settlement Range is called the Least Acceptable Settlement (LAS). This is the minimum point at which, when making a deal, you still think that the negotiation has been to your advantage. The top end of the Settlement Range is called the Maximum Supportable Position (MSP).
How do you determine the value of a settlement? ›
To determine a potential settlement value, they first combine the total of medical expenses to date, projected future medical expenses, lost wages to date and projected future lost income. The resulting sum is then multiplied by the pain and suffering multiplier value to produce a projected settlement amount.
