In many, though not all cases, a client will receive a settlement offer and have to decide whether to take that offer or to proceed to trial. Making that decision requires a close working relationship between the attorney and the client, but the decision remains with the client.
The attorney has the responsibility to develop a case to receive maximum value and to negotiate the highest possible settlement offer. The attorney also has the responsibility to assess the value of the case and to evaluate each settlement offer in light of that assessment. The attorney has the responsibility to guide and advise the client, but the decision to accept or reject a settlement offer rests with the client and remains an intensely personal decision.
This article looks at several facets of the process that can lead to the decision to take or reject a settlement offer, including building the case, the mechanics of making a settlement offer and the timing of making a settlement offer.
Maximizing a Settlement Depends Upon Building the Case
Settlements adhere to a simple formula: the stronger the case, the greater the settlement offer.
As a personal injury attorney, an essential part of my mission is to maximize the compensation my clients receive. To achieve this goal, I have to build the strongest case possible. This requires working with my clients, investigating the case, researching the case law and constructing the strongest possible arguments on liability and damages. In every aspect of the case – from finding and interviewing witnesses to gathering public records to preparing the complaint to conducting depositions and trying the case – an attorney has to ask, “How can I perform this task to help my client receive the most money possible?”
A defendant or the defendant’s insurance company will offer to settle a case as a way of avoiding the risk of paying out even more at trial. Therefore, an attorney must demonstrate both the strength of the case he or she can put on at trial as well as a willingness to go to trial.
The willingness to go to trial is important. If the defendant or the insurance company thinks a plaintiff wants to avoid trial, that will reduce the offer they make to settle the case. I am a trial attorney. I enjoy going to trial and thrive on the victories I have achieved there for my clients. It is my experience as a trial attorney and my willingness to take cases to trial that helps improve the settlement offers I can attain for my clients.
Assessing a Settlement Offer
Before soliciting a settlement offer, it is important that an attorney assess the value of each case. An attorney should assess the value of each case for the client and not wait to receive a settlement offer. If an attorney waits to receive a settlement offer before assessing the case, then the insurance company is driving that assessment and that is not in the best interest of the plaintiff.
In my practice, I prepare a written assessmentthat looks at our ability to prove liability and the value of the damages. Using a combination of legal and financial analysis, I estimate a present value of the case, which takes into account the probability of proving liability and damage amounts. The present value is not a prediction of what the case will bring at trial – exact predictions are not possible given the vagaries of jury decisions – but an estimate of what the case is worth.
Once we establish the current value of a case, we need to determine the settlement equivalency. The settlement equivalency starts with the current value of a case at trial and then subtracts the estimated trial expenses and the impact of inflation on a case.
Let’s look at an example. Suppose a case assessment estimates the current value of the case to be $100,000. Let’s say we estimate that the trial expenses will total $10,000 (including filing fees, paying for a doctor and an expert to testify and preparing trial materials). Let’s say that we will anticipate a two year wait for the trial and that inflation is two percent per year. To determine the settlement equivalency we would start with the $100,000 current value and subtract the trial expense ($10,000) and impact of inflation ($2,700) to reach $87,300. That means that a settlement offer of $87,300 would be equal to receiving a $100,000 award at trial.
I provide each client with a settlement equivalency table that will help them assess the value of any settlement offer.
The Mechanics of Making a Settlement Proposal
As I explained above, I do not make a settlement demand until I finish investigating a case and complete a detailed assessment. Sometimes I have to wait to complete that assessment until after my client’s condition stabilizes. For example, I have a client injured in a police invasion of her home. More than a year later, she continues to suffer headaches and receive treatment from her doctors. We cannot assess the damages she has suffered until her condition stabilizes.
Once I complete the assessment, I review it and my recommendations on how to proceed with my client. Once I have my client’s approval, I can then move forward with making a settlement proposal.
Many attorneys make a simple proposal bin conversation or a letter that states the amount of money needed to resolve the case. Over the years, I have evolved that bare bones approach into a full-fledged settlement package that I prepare for each case.
Based on the case assessment prepared for my client, the settlement package includes my review of the facts of the case, my assessment of liability, my assessment of the damages and a settlement demand, which is the amount of money we will need to settle the case. I attach all the medical records and supporting evidence that the defense will need to assess the case. I put all this information in one place because I want to make it easy for the insurance company to assess the case and make a counter offer to my settlement demand. I have found insurance adjusters to be very receptive to this approach and it has enabled more early resolution of cases as well as speeding up the process. I believe that it also helps raise the value of the settlement offers that I receive for clients.
The Timing of Making a Settlement Proposal
If an individual has a claim or even a potential claim against a defendant, the insurance company may offer a settlement as a way of resolving the matter before the individual hires an attorney. Once an individual hires and attorney, the defendant or insurance company usually waits until the attorney makes a settlement demand.
If possible, I like to send the settlement proposal to the defense prior to filing suit. At that point, neither side has incurred much in legal fees or expenses. Settling early enables the insurance company to save money by avoiding the cost of going to trial and that gives them more flexibility in settling the case. If we can settle before filing the lawsuit, we create the proverbial win-win for both sides. In recent weeks, I have settled four cases within approximately six months of receiving them because of this approach.
Of course, one cannot settle every case early. One cannot make the other side enter into settlement talks and even if they do, one cannot make them offer a settlement amount that provides fair value to my client. Some defendants never enter settlement talks. For example, most of the companies that provide insurance for taxis in New York City refuse to discuss settlement until the eve of a trial. Most medical malpractice cases require completing depositions before the defense will consider settlement talks.
If we cannot settle the case early, then I file the lawsuit and aggressively pursue the case through the courts. If the case does not settle prior to filing suit, there will be future opportunities to settle the suit. Some junctures that often result in settling a case include:
- Just prior to depositions. Depositions can drive up legal fees for the defendant or the insurance company. If the defense has enough information, they may settle the case before incurring the expenses of conducting deposition.
- After completing depositions. The depositions may answer questions about the case. I settled a recent wrongful death/medical malpractice case after conducting depositions of the nursing home nurses and therapists whose answers made clear the liability of the defendant. Depositions will also reveal how a person – the defendant or the plaintiff – will perform on the witness stand and a good or poor performance may lead to a settlement. I remember once case where I the defense lawyer admitted, “I can’t put this guy on the stand,” and we settled the case within a week.
- A change in adjusters or attorneys. When the people handling a case change, it creates an opportunity for a new pair of eyes to assess the case and that can lead to a settlement.
- The eve of trial. Sometimes the defense or an insurance company does not really focus on a case until the eve of trial. A judge may also intervene to coax a settlement offer from the defense. Faced with the facts of a case and the expense of a trial, the defense may be willing to settle.
It is important to pursue the two paths of resolution of every case: prepare as aggressively as possible for trial while looking for settlement opportunities. The more forceful the trial preparation, the more likely a settlement opportunity will present itself.
The Decision to Settle Always Rests with the Client
As an attorney, I do all I can to maximize the compensation from a case, which includes negotiating the largest possible settlement offer. I also have the responsibility of assessing each case to determine its value. I can advise a client on the value of a case and the risks and rewards of going to trial. I can advise a client if we are likely to receive a greater or lesser value at trial than a given settlement offer.
In the end, each client decides what is best for him or her. For example, I recently settled a case that may have brought more at trial, but my client was between jobs and short on cash, so she took the settlement offer. In another case, a woman hurt in a bicycle accident did not want to wait for a trial and go through depositions, so she took a settlement now even if she may have won slightly more at trial. In a car accident case, the defense made a sizeable offer, but my client wants more and would prefer to wait for the case to go to trial.
I hope you have found this information helpful. I do need to remind you that this information offers general guidelines. If you have questions about a specific case, you should consult an experienced personal injury lawyer in New York. I will be glad to answer your questions and assist you. You can call me at 1-800-660-1466 or email me. You can also visit my websiteor read more on my blog, New York Law Thoughts.
Carol L. Schlitt
New York Personal Injury Attorney
This material is intended for informational uses only. It is not meant as legal advice. To receive legal advice, you should consult an attorney. Remember, each case has a unique fact pattern. Past results do not
guarantee future outcomes.