Chapter Thirty-Eight

• Jurisdiction: New York

Chapter thirty-eight

Negotiating Personal Injury Claims With Insurers

E. Stewart Jones, Jr., Esq.

I. Successful Settlement Negotiation Requires Evaluation, Communication and Persuasion

Successful settlement negotiation first requires that the claim be fully and fairly evaluated and a settlement “value range” established. Second, your evaluation must be discussed with your client and, before you commit yourself to your adversary, your client’s approval of the “value range” must be obtained. Third, your appraisal must be “sold” to your adversary.

In implementing the steps necessary to carry out the threefold settlement process, at least six basic principles must be recognized.

A. Personal Injury or Wrongful Death Cases Do Not Have a Precise Settlement Value, No Matter How Compelling the Injury or How Clear the Liability

Cases have a range of value which is, more often than not, broad. The lower and upper limits have a certain definition conferred by appellate precedent but these do nothing more than establish expectations rather than guarantees. You should, therefore, establish a reasonable range of value for the case and remain flexible within the framework of the reasonably high and reasonably low dollar values.

B. Client Must Be Prepared for Reality of Settlement Negotiations Process Early in the Lawyer-Client Relationship

The client’s input is critical to any evaluation of the case’s settlement potential. You should never prematurely discuss with your client the value range for the case or be trapped by the client’s inquiry at the first meeting about the case’s worth. You should, however, ascertain when the information is in and when it is realistic to do so, what the client’s perception of the settlement potential of the case is and his or her position with respect to a settlement. It is a rare client who does not have some ideas and feelings about the “value” of the case. You should learn what those are as soon as you reasonably can and, to the extent necessary, disabuse the client of any inflated notions of the case’s potential value.

Your client must be made to feel good about the way the negotiations are proceeding. If the client has had unreasonable expectations about the case, which have gone uncorrected over a considerable period of time, it will be very difficult to sell a fair and realistic settlement to him or her.

Very early in the professional relationship, the client must be made to understand the virtues of settlement, that settlement means compromise and that the client cannot, and should not, realistically or reasonably expect to obtain a sum of money that would be equivalent to the maximum sustainable jury-verdict potential of the case.

C. Your Adversary Must Be Made to Look Good

Just as your client must be made to feel good about the way the negotiations are proceeding, your adversary must be made to look good throughout the negotiation process. This requires that you demand more than you want and more than you expect to get. You are expected to compromise. With each compromise made on either side, the appearance of having accomplished something on behalf of your respective clients is established.

It is much easier to get to the point where you believe the case should fairly settle if, along that route, you have been able to allow your adversary to appear to extract from you significant concessions.

D. The Best Way to Prepare for Settlement Is to Prepare for Trial

The fact that most cases do settle sometimes lulls attorneys into inadequate preparation of the lawsuit. A case cannot be adequately and justly evaluated for settlement or tried well and fairly unless it is fully prepared. If your adversary senses that you are anxious to settle because you are not prepared for trial, there is no possibility of obtaining a fair settlement for your client.

The old saw that cases that are prepared for trial get settled and those that are prepared for settlement get tried, is premised on the truth of experience. The attorney’s reputation for preparation and willingness to try a case thoroughly is an essential component of the settlement formula.

You must show your adversary that you are prepared, that you have spent money and invested time in order to be prepared and that you are serious about the lawsuit. This is accomplished simply by showing your adversary what you have done and what you have obtained. When you share information that you have acquired, you are demonstrating what you are doing and building up your adversary’s file. This reflects favorably upon you and ultimately will make it easier for the defendants to examine and evaluate their file from your perspective. The easier it is for a defendant to examine and evaluate a file, the more likely he or she is to do so on a timely basis. In sharing your preparation with your adversary, you prepare him or her to settle.

E. Adversary Must Have Same Concept of Facts as You, or at Least Not a Stronger Opinion of the Case

If both sides share substantially the same knowledge, an accurate assessment of the risks to both parties can be made. The parties will invariably have differing opinions as to the impact of the facts or the conclusions to be drawn from such facts. Where both sides are working from essentially the same body of knowledge, however, a settlement can generally be effected that accurately represents the risks to both sides.

F. When Both Sides Come to Realization That Risk in Not Settling Is Out of Proportion to Certainty of Settlement, Case Will Settle

Settling a lawsuit involves a cost-benefit-risk analysis. At each stage of the settlement negotiation process, the negotiator must ask who is running the risk and what are the potential gains and losses of not settling at that point.

Where all the risk rests solely with your adversary, do not settle. Once the risk becomes yours, you should settle. Where the risks of not settling are out of proportion to the potential gain or loss, the settlement point has been reached.

II. Evaluating the Case

There are three elements of the settlement triangle: liability, damages and the capacity to respond to a judgment. Each of these affects the “range of value” of the case and requires an independent analysis in developing settlement arguments and value range.

Do not start to negotiate the settlement until you have firmly decided upon a figure that represents the true settlement objective. That objective must be consistent with the client’s desires. Your analysis must include factors that ordinarily affect the size of the verdict, as well as those that affect the likelihood of prevailing on the liability issues. Before determining the parameters of your settlement posture, you should consider the following:

A. The Liability Issues

What are the chances of the plaintiff losing the case? Is the liability equivocal or is it punishing? Is the occurrence complex or simple? How technical and complicated is the liability proof? Is there a “horror factor” (the defendant’s conduct is egregious or violates some moral taboo)? The “horror factor” arises where the quality of the wrongdoing on the part of the defendant requires corrective deterrence. If it is a case in which the jurors can be made to feel threatened by the conduct of the defendant because, potentially, they are themselves objects of the same conduct and injury, it is clearly a case of aggravated liability. Is there a “smoking gun,” an element of proof that will show a callous disregard for safety or a willingness to assume the risks of injury and death simply in the interests of cost savings? Is there compelling demonstrative proof that can be used to “sell” the jury on the liability issue? Is there one defendant or multiple defendants?

The more compelling the liability and the simpler the case can be made for the jury, the less the case must be discounted for the liability factors.

B. Type of Injury

The magnitude of the harm has everything to do with the value of the case.

Is the injury a catastrophe, not only in the personal sense but also in the extended sense—its effect on others? Were a number of people injured as a result of the negligent conduct? Is there a single injury or multiple injuries to your client? Are the injuries all objective or are there subjective injuries or subjective components to objective injuries? To what extent can demonstrative evidence be utilized to illustrate the injuries and their consequences (day-in-the-life films, prosthetic devices, braces, anatomical reproductions, etc.)? To what extent is there demonstrable pain and suffering (e.g., pain-relieving medication, TENS devices, pain clinics, etc.)? What is the relationship between the plaintiff’s injury and his or her life, work and lifestyle? The identical injury on two similarly aged people who have markedly different life and work styles will have different values. An injury’s impact on a sedentary existence is significantly different from its impact on an active, exuberant lifestyle. The difference between the quality of life pre-occurrence and post-occurrence is a significant, evaluative element.

C. The Age and Life Expectancy of Your Client

The older the client, the less significance permanency has. Where the client is elderly, however, the case likely will be accelerated and given a trial preference. This puts you in a position to tell your adversary “we will see you in court” much quicker.

The adult client who is in, or approaching, retirement is entitled to fully enjoy those “declining” years. Jurors tend to be very sympathetic toward those who have worked hard all their lives and then had their right to a peaceful, healthy and happy retirement taken away.

D. Type of Plaintiff

The status, attractiveness and likability of the plaintiff, and his or her ability to communicate verbally, to express himself or herself, is critically important. Credibility, likability, demeanor, appearance and sincerity all significantly affect the jury’s ultimate judgments...