SETTLEMENT

    The ultimate goal of a personal injury case is to achieve a fair and reasonable settlement prior to a trial. Jury trials cost money, lots of money, along with at least five days of one’s life inside a courtroom, plenty of pressure and stress, and an enormous monetary risk, because no one, and I mean nobody, can ever predict how a trial jury will view and decide a case. Accordingly, there is one and only one reason for a plaintiff to go to trial, because the defendant failed to make a fair and reasonable settlement offer to resolve plaintiff’s personal injury claim prior to trial. 

Case Evaluation

     Properly evaluating a plaintiff’s personal injury case for purposes of settlement and trial requires a party’s objective assessment of liability, damages, costs, and trial. Chapters 10 and 11 provide a detailed analysis of liability and damages.

     A plaintiff’s case evaluation should only be made when plaintiff has fully recovered from every personal injury caused by the accident or plaintiff’s doctors believe plaintiff has reached a permanent state of maximum physical improvement, meaning that plaintiff’s personal injuries will not improve from any additional medical treatment.

     A case evaluation should include the parties’ liability; plaintiff’s personal injuries, medical treatment, and invoices; whether the drivers’ vehicles incurred minor, moderate, or major property damage; attorney fees, case costs, and the legal risk of obtaining a favorable jury verdict at trial.

     An excellent legal method to properly evaluate a personal injury case is to analyze prior jury trial verdicts involving personal injury cases similar to plaintiff’s case. Trial verdicts are commonly published by legal organizations.

Settlement Demand

      Once a plaintiff properly evaluates the case, it’s time for plaintiff to make a written settlement demand upon the defendant and their insurance company if applicable.

     A plaintiff’s written settlement demand should include a summary of the relevant case facts, physical evidence proving defendant’s liability and plaintiff’s damages, and the amount of money plaintiff will accept as a full and final settlement of the case.

      Physical evidence proving defendant’s liability includes the police report, photographs and videos of the vehicles and accident scene, witness statements, and any relevant expert report.

  Physical evidence of plaintiff’s damages includes      photographs and videos of any plaintiff visible injury, plaintiff’s medical records and invoices, lost earnings verification, household services invoices, vehicle property damage repair estimates, and any rental, towing, and storage charges.    

Settlement Negotiations

      Once a plaintiff has made a written settlement demand upon the defendant and their insurance company if applicable, it’s time for the plaintiff to begin settlement negotiations. Here is an excellent settlement negotiation strategy:

     A plaintiff’s first settlement demand should be the largest amount of money plaintiff “hopes” to receive from the defendant. In other words, a settlement that equals plaintiff’s “wishes and desires.”

     If defendant rejects plaintiff’s first settlement demand, plaintiff’s second settlement demand should be the amount of money plaintiff “wants” to receive from the defendant. In other words, a settlement that equals plaintiff’s ultimate “goal.”

     If defendant rejects plaintiff’s second settlement demand, plaintiff’s third settlement demand should be the amount of money plaintiff is “willing” to receive from the defendant. In other words, a settlement that equals plaintiff’s “walk-away” price.

     For example, consider a plaintiff’s personal injury claim that has a case evaluation of $100,000. Plaintiff’s opening settlement demand should be 20 percent higher than the $100,000 case evaluation which equals $120,000. If defendant rejects this settlement demand, plaintiff’s second settlement demand should be equivalent to the case evaluation which equals $100,000. If defendant rejects this settlement demand, plaintiff’s third settlement goal should be 20 percent lower than the $100,000 case evaluation which equals $80,000.

Settlement Conference

     Every trial court has a settlement conference program for parties involved in a personal injury case. Most courts have a mandatory and voluntary settlement program.

     The purpose of a settlement conference in a personal injury case is for the parties to formally meet prior to trial to discuss the possibility of reaching a full and final settlement of the case, thus saving the parties time, costs, energy, and risks of a trial.     

     Some courts have a “mandatory” settlement conference program whereby the trial judge issues a court order requiring the parties, attorneys, and defendant’s insurance claims representative to appear at a settlement conference.

     Virtually every court has a “voluntary” settlement program whereby the trial judge issues a court order formalizes the parties’ mutual agreement to attend a settlement conference.

     Mandatory and voluntary court settlement conferences are normally conducted by a retired trial judge, or active trial judge other than the case trial judge, at the courthouse where the case will go to trial. Courts usually schedule these settlement conferences for one half day in the morning or afternoon or one full court day. Any settlement discussions at either settlement conference are strictly confidential, meaning that any discussions, including settlement offers and counteroffers, cannot be divulged to the trial judge or jury. This confidentiality encourages open dialogue between the parties and settlement judge without any fear of adverse trial repercussions when the parties are unable to reach a settlement.

     Prior to court settlement conference, each party files a written settlement brief with the court for the settlement judge to review before and during the settlement conference. These briefs summarize the case facts, liability, damages, and applicable law, and include evidentiary exhibits the party intends to present at trial.

   At a court settlement conference, the settlement judge often begins by speaking to the parties in a group setting about the nature, parameters, and goals of the settlement conference. The judge then seats each party in a separate private room where each party discusses the case with the settlement judge. This discussion includes the case facts, liability, damages, relevant and admissible trial evidence, prior settlement negotiations, and current settlement offers or counteroffers. This discussion provides the parties a unique opportunity to clarify case facts, issues, and misunderstandings, learn about their case strengths and weaknesses, and hear the settlement judge’s case evaluation and recommended settlement.

     After the parties first meet privately with the settlement judge, the parties begin settlement negotiations. These negotiations routinely involve the parties’ back-and-forth settlement offers and counteroffers made privately to the judge who presents these offers and counteroffers privately to each party, as the parties work towards a voluntary settlement of the case.

     No settlement will take place without every party’s voluntary consent. The settlement judge has no legal authority to demand or force any party to accept a settlement offer or counteroffer. The settlement judge also has no legal authority to issue monetary or case sanctions against a party for refusing to settle the case.

     If the parties reach a settlement, the settlement judge often provides the parties with written verification of  the major terms and conditions of the settlement. The parties then leave the settlement conference and formalize the settlement agreement which is signed by the parties at their respective attorney’s offices. Afterwards, the defendant issues a settlement check to the plaintiff, and the attorneys then file a “dismissal with prejudice” of the case with the court. This dismissal concludes the case.

     If the parties do not reach a settlement, the settlement judge will conclude the settlement conference, and the case will proceed to trial.

Mediation

     The parties involved in a personal injury case can voluntarily agree to a private mediation session with a private mediator not employed by the trial court or involved in the case. This agreement can occur at any time before the commencement of trial.

      Private mediators generally involve retired trial court judges, state appellate and supreme court justices, or lawyers with decades of experience with personal injury cases and trials. Private mediators normally conduct mediations at their business offices located away from the courthouse. Private mediators charge the parties an hourly fee for their services.

     The legal purpose of a private mediation session, and the laws, rules, and confidentiality governing a private mediation, are identical to a court mandatory or voluntary settlement conference.

Arbitration

     The parties involved in a personal injury case can voluntarily agree to a private arbitration hearing with a private arbitrator not employed by the trial court or involved in the case. This agreement can occur at any time before the commencement of trial.

     The purpose of arbitration is to enable the parties to obtain an objective case evaluation from an experienced and competent judge or attorney and thus avoid the attorney fees, costs, and risks associated with a trial.

      The parties must agree on several important matters before they participate in a private arbitration hearing.

     First, the parties must agree upon one or more arbitrators who will hear and decide the case. Private arbitrators generally involve retired trial court judges, state appellate and supreme court justices, or lawyers with decades of experience with personal injury cases and trials. Private arbitrators normally conduct arbitrations at their business offices located away from the courthouse. Private mediators charge the parties an hourly fee for their services.

     Second, when the parties agree to “one” arbitrator, that arbitrator will hear and decide the case. When the parties agree to “two” arbitrators, the parties often agree that a plaintiff monetary arbitration award will equal the average arbitration award rendered by each arbitrator. When the parties agree to “three” arbitrators, the parties often agree that a plaintiff monetary arbitration award will equal the average arbitration award rendered by each arbitrator or the arbitrator’s award that falls between the other two arbitrators’ awards.     

     Third, the parties must agree to a binding or non-binding arbitration decision. With a “binding” arbitration, the  parties agree to be legally bound by the arbitrator’s decision which effectively concludes the case. With a “non-binding” arbitration, the parties agree to be legally bound by the arbitrator’s decision only when all the parties agree to the arbitrator’s decision.     

     Fourth, when the parties agree to a binding arbitration decision, the parties must agree upon the monetary parameters of the arbitration award.  Parties sometimes agree to be legally bound by any amount of money awarded to plaintiff, no matter how high or low. However, parties often agree to a “high/low” monetary award. The legal purpose of this high/low number is to safeguard the parties against an arbitrator issuing an unforeseeable high or low arbitration award. For example, if the parties agree to a $50,000 high award and $10,000 low award, any arbitration award rendered between these two amounts of money will be binding upon the parties. Alternatively, any arbitration award rendered lower than $10,000 will result in a $10,000 arbitration award, while any arbitration award rendered higher than $50,000 will result in a $50,000 arbitration award.

  One or more arbitrators conduct the arbitration hearing similar to a court bench trial where the trial judge hears and decides a case instead of a trial jury. For example, prior to an arbitration hearing, the parties submit written arbitration briefs to the arbitrator similar to written trial briefs for a trial court judge. These briefs summarize the case facts, liability, damages, and applicable law, and include evidentiary exhibits the parties intend to present at the arbitration hearing. At the arbitration hearing, the parties begin by presenting opening statements to the arbitrator, followed by witness testimony and the submission of relevant evidentiary exhibits. The parties then conclude the arbitration hearing with closing arguments. Finally, most arbitrators take a case under submission for several days before rendering an arbitration award.

     Many trial courts have a legal requirement that the parties involved in a personal injury case attend a non-binding arbitration hearing. The legal purpose of this non-binding arbitration is to enable the parties to obtain an objective case evaluation from an experienced and competent judge or attorney and thus avoid the attorney fees, costs, and risks associated with a trial. This arbitration occurs between the filing of a Complaint and the court trial, and takes place at a party’s attorney law office or at the office of an arbitrator randomly selected by the court. Since the arbitrator decision  is non-binding, the parties are not legally bound by the decision, unless all the parties agree to the decision. If any party rejects the arbitration decision,  the case will proceed to trial. If the parties agree to the decision, the trial judge will issue a final court judgment concluding the case. Most courts require the parties to pay for the arbitrator’s services.

Statutory Offer of Judgment

     A party can serve a statutory offer of judgment upon another party. A statutory offer of judgment is a legal mechanism used in a personal injury case whereby a party makes a formal written settlement offer to the other party and the other party either accepts or rejects the offer within a certain number of days.

     The purpose of an offer of judgment is to twofold. First, the party who receives an offer of judgment must evaluate the case and decide whether to accept the offer or proceed to trial. Second, the party who made the offer can receive attorney fees, expert fees, and case costs from the party who rejects the offer and fails to obtain a trial court judgment more favorable than the statutory offer.

     Here’s how a statutory offer of judgment works:   

     A party serves another party with a written offer of judgment for a specified amount of money prior to trial. The party receiving the offer has a statutory time period, usually between 10 and 30 days, to accept or reject the offer.

   If the offer is accepted, the case is concluded without any need for a trial. If the offer is rejected, the case proceeds to trial.

   If an offer is rejected, and the case proceeds to trial, the jury verdict and court judgment will determine the legal ramifications of the offer. For example, if the plaintiff served defendant with an offer of judgment prior to trial, and the trial jury awards plaintiff “more” money than plaintiff’s offer, the court may award the plaintiff money for plaintiff’s attorney fees, expert witness fees, and court and case costs. However, if the defendant served plaintiff with an offer of judgment prior to trial, and the trial jury awards plaintiff “less” than defendant’s offer, the court may award the defendant money for attorney fees, expert witness fees, and court and case costs.

     When a trial court judge considers a party’s offer of judgment after a favorable jury trial verdict, the judge will normally award the party’s fees and costs when the amount and timing of the party’s offer was reasonable and in good faith, the other party’s rejection of the offer was grossly unreasonable and bad good faith, and the fees and costs sought by the party who made the offer are reasonable and justified. The judge’s determination of what is “reasonable and justified” involves a consideration of the attorney’s qualities, character of the work done, legal work actually performed, and the results accomplished by the attorney.

Settlement Disbursement

     When a plaintiff and defendant agreed to a full and final settlement of a personal injury case, or the jury renders a trial verdict favorable to plaintiff, if the plaintiff is represented by an attorney, the attorney will prepare a document for plaintiff to review and sign known as a settlement disbursement, distribution, or breakdown document.

     The purpose of a settlement disbursement document is to provide the plaintiff with written transparency of the settlement or judgment amount and how the money will be distributed to the plaintiff, attorney, expert witnesses, medical providers, and for court and case costs. For example, consider a plaintiff settlement for $100,000. The settlement disbursement for a 33 percent attorney/client contingency agreement might be as follows:

Settlement -            $90,000

Attorney Fees -      $30,000

Medical doctors -   $13,000

Expert Witnesses -  $5,000

Attorney Costs -      $2,000

Client Share -         $50,000