In my last three posts, we have been using a hypothetical situation to discuss the various factors involved in settling a personal injury case. In my latest post, our client Jane authorized us to make a $450,000 demand to settle her case. When we met to discuss the demand, I told her not to be disappointed if the insurance carrier for the delivery company offers a lot less than she was expecting. Insurance companies often low ball a claimant early in the negotiating process to lower expectations. The carrier did that here, countering with only $40,000.
Even though she had been forewarned, it shook Jane up. Though she has been back at work as a hair stylist on an almost full time basis, her family racked up a considerable amount of credit card debt while she recovered from her surgery. In an effort to show the insurance company that their offer was out of line, we counter at $430,000. This prompts an angry, posturing phone call from the adjuster – "that's outrageous, you aren't acting in good faith … blah, blah, blah." I respond by going through her undisputed damages, the surgery and her painful rehab. The adjuster ups their offer to $100,000 and tells me that she "expects a similar move" by Jane. We drop our demand to $400,000.
Three weeks later, we have narrowed the gap. The insurance company's offer is up to $195,000 and Jane has dropped her demand to $285,000. My last conversation with the adjuster was short and to the point – she was reaching the limit of her authority to settle the case. Based on experience, I sensed that she can offer as much as $225,000. Jane and I meet to discuss where we are. She has to pay 2/3 of her medical bills (a little more than $9,000) and has a $6,000 credit card bill to pay. Jane is worried about the near future (the next 18 months) if she goes forward with a lawsuit and the long term future if she settles her case. I explain that our firm is in it for the long haul and will do whatever she wants, but that it is a business decision that she and her family must make. We then discuss the pros and cons of settling the case versus going forward with a lawsuit.
- A settlement is certainty – she knows what she is getting and also gets closure.
- Her case will be wrapped up in 30 days.
- She can focus on her recovery without wondering how that will affect the value of her lawsuit.
- By settling, she has compromised – she is not getting full value for her injuries and damages.
- If she moved forward with a lawsuit, she could still settle it at any time, probably for more (though she will incur expenses for depositions, experts, etc.).
- If her situation gets worse than the doctor expected, she could present her case to a jury.
After a long discussion with her husband, she decides to settle her case. Her husband has the chance to buy in to a small business that will bring in more than his disability payments. More importantly, it allows him the feeling of self worth that comes with being gainfully employed. Also, their oldest child graduates high school next year and wants to go to college. A settlement will help her do so.
I go back to the adjuster and tell her that Jane will settle for $250,000. The adjuster tells me that all she can get is $225,000. After some wrangling back and forth, she tells me that she will talk to her supervisor. The next day, the adjuster says that she will offer $235,000, but only if I can tell her that it will settle the case. We are done.
Cum Laude graduate of Cumberland School of Law, Pet Mackey is a civil trial litigation expert who represents plaintiffs in business and consumer tort, contracts and construction, employment disputes and insurance. He is board certified as a Civil Trial Advocate by the National Board of Trial Advocacy, a Certified Alabama Mediator, and an “AV” rated lawyer by Martindale-Hubbell.