Settling Personal Injury Cases – Only One Thing Matters

Negotiations in a personal injury case are rarely symmetrical. In order to settle the case, the plaintiff typically has to reduce his demand significantly more than the defendant has to increase his offer. In most negotiations the ratio is about 2 to 1. That means for each dollar offered the plaintiff needs to reduce his demand by two dollars.

Clients frequently bemoan the fact that they’ve reduced their demand significantly more than defendants increased their offers. Sometimes this is a function of demanding too much at the outset. But it typically relates back to "industry custom" for personal injury negotiations.

A significant exception exists when the defendant carries low insurance policy limits. Typically in these cases the plaintiff, irrespective of his damages, will demand policy limits. Often the limits are paid by the insurance company. If they aren’t, the insurance company implicitly "opens up" its limit and basically indicates that regardless of how much insurance coverage the defendant purchased, its going to pay any judgment entered against the defendant.

The only thing to take into consideration when negotiating a personal injury claim is how the defendant’s offer relates to the probable result at trial. It’s irrelevant as to how much the demand has been reduced or the offer increased.

We have a lot of clients who want to evaluate offers based on how much it will cost to buy a new truck or how much is needed to pay off an existing mortgage. External factors are emotionally relevant but they are not truly material to the decision whether or not to settle a personal injury claim. The only valid basis for determining whether a case should or should not settle is the relationship between the offer and the probable result at trial (minus the cost of trying the case).