How Do Lawyers Negotiate Settlements?
Settlement negotiations in a personal injury case are pre-trial discussions among the parties to reach an agreement on damages. A good settlement usually serves the best interests of all parties and yields faster compensation than a trial verdict. Insurance companies often refuse to pay fair settlements unless they know they could lose in court. Understanding how personal injury settlements are negotiated can help you make informed decisions throughout the process.
Settlement negotiations in a personal injury case are pre-trial discussions among the parties to reach an agreement on damages. A good settlement usually serves the best interests of all parties and yields faster compensation than a trial verdict. Insurance companies often refuse to pay fair settlements unless they know they could lose in court. Understanding how personal injury settlements are negotiated can help you make informed decisions throughout the process.
What Is Settlement Negotiation in Personal Injury Cases?
Settlement negotiations are an alternative dispute resolution process that can save both parties time, money, and stress by avoiding a trial. When you take a case to trial, you open the door to a lengthy discovery process and create uncertainty for all parties. If you are the injured party, you lose the case and end up with nothing. Even if you win, the insurance company could appeal, and another trial could result. It could take years to recover compensation—if you get any at all. If your case settles, you recover compensation without the risk of appeals.
Who Is Involved in Personal Injury Settlement Negotiations?
Typically, settlement negotiations involve the injured parties, the defendants, and their legal representatives.
Steps in the Personal Injury Settlement Negotiation Process
The settlement negotiation guide below will help you understand the requirements for obtaining a settlement and why the process takes time.
1. Initial Case Evaluation
A personal injury lawyer must determine how much a case is worth before initiating settlement discussions. An attorney must investigate the incident and the injuries to calculate the case value. The information the attorney will need includes the nature and severity of the injuries, how long it will take to recover, the cost of medical care, earnings before the accident, future earning capacity, and the emotional toll of the injury.
2. Demand Letter
The demand letter generally marks the beginning of settlement negotiations. It will include details about the incident, a description of the injuries, an itemized damages list, and a specific dollar amount required to make the injured party whole. The liable parties have multiple options. They could:
- Pay the damages in full.
- Deny liability and refuse to pay.
- Make a counteroffer.
- Ignore the letter.
3. Counteroffers and Response Strategies
A counteroffer is a rejection of the other party’s offer with a new offer in its place. In most cases, an insurance company’s initial counteroffer is significantly lower than the case value. It is common for cases to go through a series of counteroffers before a settlement is reached.
4. Mediation and Arbitration
Mediation is an informal process in which a neutral third party helps both sides reach an agreement. The court may order mediation, and some states require it. Mediation can be beneficial in complex cases, especially if negotiations become heated.
Arbitration is an alternative dispute resolution process. Some jurisdictions require arbitration before trial for matters valued below a certain threshold, while others allow judges to order it at their discretion. In some cases, private arbitration is required by a contract signed by the injured party before the incident at issue.
In arbitration, both sides present their cases in front of a panel in a similar fashion to a trial, although the rules of evidence are typically more relaxed. Many jurisdictions allow appeals, with or without grounds, which move the cases to a trial track. However, in other forums, the decision is final, and there is no right to appeal. Cases resolved in such forums are generally confidential and legally binding.
Strategies Lawyers Use to Maximize Settlement Value
Negotiating a fair and reasonable settlement is both a science and an art. A skilled negotiator will be able to justify the amount they are demanding and communicate in a way that facilitates cooperation. It takes patience, knowledge, persistence, and advocacy skills to get the results a client deserves.
Building a Strong Case with Evidence
The insurance company won’t settle if it thinks it can avoid paying. It will blame the victim, minimize the injuries, and, if possible, deny the claim. An attorney must gather evidence that would stand up in court, such as forensic evidence, medical records, eyewitness statements, expert witness reports, and video evidence.
Leveraging Legal Precedents and Case Law
The threat of losing in court is the most significant leverage an injured party’s attorney can hold over a stubborn insurance company. During case preparation, the best attorneys research prior court decisions, verdicts, and settlements to determine the likelihood of a client winning at trial. An attorney can use these during discussions to convince the insurance company that settling is in its best interests.
Timing and Other Negotiation Tactics
The long-term impact of an injury may not be apparent for weeks or months. It is wise to wait until an injury stabilizes before calculating a case’s value. It is impossible to calculate the long-term costs without knowing all the resulting damages. In these cases, an attorney must wait to start settlement negotiations until the client reaches their maximum medical improvement.
An effective negotiator approaches settlement negotiations with a collaborative mindset. Rather than thinking of negotiations as a win-lose contest, looking for a win-win solution is usually more productive. A skilled negotiator will understand the case from the other point of view. A little empathy and understanding can keep communication open and make the other side more amenable to offering a fair settlement.
We Can Help Negotiate Settlements
The process of negotiating a settlement includes an initial case evaluation, a demand letter, and a series of counteroffers. An effective personal injury attorney must obtain strong evidence, rely on court precedent, and take a collaborative approach to get the best results.
Contact us today to get help negotiating your personal injury settlement if you or your loved one is injured.
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