Bar News - October 19, 2016
Alternative Dispute Resolution: Personal Injury: Opening Helps Pave the Way for Settlement
By: Blake Sutton
Editor’s note: A longer version of this article was originally published in the Winter 2011 edition of the Trial Bar News. It has been updated and republished with permission.
Plaintiffs often don’t understand how the insurance company has evaluated their case – and therefore resent the whole process. Of course, such feelings reduce the chances of settlement. The following general explanation, delivered by defense counsel, has proven helpful in helping the plaintiff understand how cases are generally valued.
“Please understand that the defense does want to settle this case, and is here to make you a fair offer. The purpose of this opening statement is to explain to you how my client has arrived at what it feels is fair. I don’t expect you to necessarily agree with our view, but hopefully you will see that we have not just picked some number out of a hat.
“First, what is meant by a ‘fair offer’? What it does not mean is that you are going to get enough money that you would have willingly traded it for the pain you have suffered and the health you have lost. That just never happens, either in a settlement or jury trial. That may seem unfair, but it really is not. If plaintiffs were awarded anywhere near what their injuries were worth to them, the whole system would go broke in a week. Then there wouldn’t be any insurance at all.
“So what ‘fair’ means to all insurance companies is that they will pay what they believe to be the fair market value of a plaintiff’s claim. All companies calculate that fair market value in about the same way.
“Simply stated, calculation of insurance premiums is a two-step process. The insurer determines the percentage chance that it will have to pay a claim on a particular individual’s policy. Then it predicts the average amount it must pay on that claim. Then it multiplies the two together. In a personal injury case, the insurance company calculates the percentage chance that the plaintiff will win if there actually is a trial, and then calculates how much will be awarded if the plaintiff does win. Then it multiplies the two. So, for example, if someone is calculated to have a 50 percent of winning, and the average verdict is thought to be $100, the settlement value of the case would be $50. The basis for these calculations is the thousands of cases in the insurance company’s databank, not only the cases it has tried but the jury verdicts reported by others.
“It is worth noting that the professionals – the plaintiff’s lawyers, the defense lawyers, and the insurance companies – all usually come up with pretty similar figures for the settlement value of cases. If that were not so, most cases could not settle, and almost all do. Usually the two sides are in the same range, and the difference is small enough that it can be bridged, and the case can settle.
“Before we talk about how my client has applied this basic formula to the unique facts of your case, a few general comments about personal injury cases are in order. First, it must be said that this is a bad time to be a personal injury plaintiff. In the last 20 to 30 years, a great deal of suspicion of plaintiffs has built up in the general public. The result is that cases are not worth nearly what they were worth back in, say, the 1980s. There are more defense verdicts now, and the verdicts for plaintiffs are lower than they used to be. Your own lawyer and the mediator surely will agree that this is so, and it means that cases settle for less money than they once did.
“One could say that a plaintiff comes before the jury with two strikes against her. That doesn’t mean that a given plaintiff can’t hit a home run, but the odds are not so good. The first strike is about liability, or fault. Here, many jurors are looking for a reason to believe either that an accident didn’t happen or that the defendant really didn’t do anything wrong. If that’s what they decide, the plaintiff’s case is lost.
“The second strike is about damages. Many jurors are looking for a reason to believe that the plaintiff’s injuries were not caused by this accident, or are less serious than claimed. Furthermore, jurors often doubt that any significant injury occurred, if there is no objective evidence of it, such as an X-ray or MRI. They often disbelieve that a particular medical condition was caused by the accident, if the plaintiff ever had treatment before for that condition. There have been cases in which jurors decided that a plaintiff had suffered no new injuries, based on nothing more than one or two treatments in the same part of the body, years before the accident. That may not be good medicine, but it is often how jurors think.
“Jurors may decide to compensate a plaintiff for medical bills, but add very little for pain, suffering and loss of enjoyment of life. Often, jurors only award significant sums for non-economic losses when they want to punish the defendant for terrible behavior. Terrible behavior is relatively rare, and is not to be found in this case.
“All of these factors are very familiar to the insurance companies, and to all the lawyers who work in this area of the law. No one of them necessarily applies to the facts of your case, but some of them surely do. Hopefully, you will keep them in mind as we go on to discuss the particulars of your situation.”
The intended result of this kind of opening statement is two-fold: First, it can calm some of the plaintiff’s fears that he or she is being mistreated; and second, it puts the plaintiff on notice of the risks if the case were to go to trial.
Blake Sutton is a mediator, arbitrator and civil trial attorney.