SETTLEMENT CONSIDERATIONS IN PERSONAL INJURY
Despite the impression of many Americans about the number of personal injury cases going to jury trial, the reality is that the vast majority settle at some point between the accident and a jury verdict. Though you may hire an attorney to handle your case, it’s important to understand settlements and settlement negotiations to obtain the best result possible. In the end, the client and not the lawyer must make the critical decisions of whether to settle and for what amount, so this knowledge is critical.
The first thing to understand is that vehicle property damage will normally be handled separately from personal injury damages of the same accident because insurance carriers separate the two and will resolve separately. The vehicle claim is normally resolved without lawyer involvement. The lawyer would have to work on contingency unless you were to pay his hourly fees, so he would collect 1/3rd of the damage amount offered for property damage. The insurance carriers normally handle the property damage among adjusters, and the amount is a liquidated damages amount for repairs or total loss amount by Blue Book value. Having to pay a lawyer for property damage is not going to be worth it in almost all cases of resolving property damage.
For personal injury, the injured and non-liable party’s attorney will usually reach out to the liable party’s insurance carrier (sometimes directly and sometimes through the liable party). Usually, lawyers will send the initial law enforcement determination of liability (in South Carolina, the FR-10) and medical bills along with a demand. Normally, the lawyer will demand the limits of the liable party insurance to settle the case, particularly as most drivers will have the $25,000.00 limits and medical bills will normally run at least $3-4,000.00 if the injured party was taken by ambulance to the emergency room for evaluation. A reason the lawyer will likely demand limits is to keep his position to come down if and when the insurance carrier sends a counter-offer. Understand that if the limits are high and the medical bills are low the initial demand may not be the limits but still a liberal amount.
The insurance carrier will determine liability (note: The FR-10 report would not be admissible in court as the law enforcement officer has not been deemed an “expert” in accident reconstruction, and so even if the FR-10 determines liability the insurance carrier may still dispute). Then the insurance adjuster will look at the medical notes and bills and consider associated damages like pain and suffering. He may also consider lost wages if that evidence is sent from the attorney. The insurance adjuster, if he has accepted liability, will likely make a “low ball” counter-offer of a number just above the bills presented. Then the injured party can come down to a lesser number from the initial demand in a counteroffer. In most cases, if the injury isn’t something permanent or involving prolonged treatment (like a broken bone) a good settlement would normally be 2-3 times the medical bills. That can vary substantially based on the venue being traditionally pro-plaintiff or not.
If the parties are not able to settle, the injured party makes the decision about bringing a lawsuit. It’s important to understand that in bringing a lawsuit a party will start building up debt in litigation costs that will come out of his 2/3rds of any settlement or jury award. Therefore, if the settlement is anywhere near the insurance policy limits it’s probably best to consider settlement.
Throughout the litigation, process parties can and do settle. In fact, in South Carolina parties are required to attempt “mandatory mediation” if they haven’t settled before trial. This involves an outside mediator attempting to help parties find common ground, and many cases are settled at mediation. Importantly, parties can talk to each other openly at mediation without having to worry that the information could be used at trial. Settlement negotiations are confidential. Even if cases are not settled at mediation, they can still be settled afterwards and with the benefit of what is learned through discovery and at mediation. In fact, many cases settle even during trial before the jury goes to deliberation. The benefit of mediation is that the parties have control over the process. Juries can be very unpredictable, so become a risk for both parties.
Remember that you, and not your lawyer makes the key decision of whether to settle or not. Keep abreast and be ready for settlement decisions at any time.