Should You Settle or File a Lawsuit?
There are so many different paths to take tactically when pursuing a personal injury lawsuit. But, in the end, our lawyers present our clients with one of two choices: settle the case or keep moving forward. In a personal injury case, there are six critical times where the settle or move forward decision is presented. Each one presents its own opportunities and pitfalls.
6 Settlement Inflection Points
- Immediately After the Accident/Malpractice
Invariably, this is the worst time to try to settle a case. Insurance companies are simply not going to offer anything resembling fair value at this stage. There are few absolutes in deciding to settle a claim. But this is one of them. Settling a case shortly after an accident, or incident in the case of medical malpractice claims, is just plain foolish. You will get pennies on the dollar.
- After Submitting a Demand Package to the Insurance Company
Few malpractice cases settle at this stage. But this is the stage at which most personal injury car accident cases settle. Should you settle your accident case at this point or go to the next step and file a lawsuit? Obviously, it depends on the offer and the facts of the case.
But the take-home message we give to our personal injury clients over 90% of the time is that the amount of money awarded by the jury as opposed to offered by the insurance company is going to be higher. How much higher? The gap is likely to be related to the size of the case. The more severe the injury is, the larger the gap between the settlement offer and the real value of the case. Our lawyers have obtained settlements that are 40 times the pre-suit settlement without going to trial.
Again, we are talking primarily about motor vehicle accident and premises liability cases. In medical malpractice cases, there is rarely any offer even in clearly meritorious lawsuits until the pretrial litigation process ends.
- After Filing a Lawsuit
After a lawsuit is filed, another potential opportunity to settle your case arises. At this point, the insurance company realizes both you and your lawyer are serious about pursuing the claim beyond the settlement stage. Often, a different offer comes after the lawsuit has been initiated.
This logic holds even greater force for companies that do not have in-house counsel and instead have to hire outside lawyers. These lawyers are more expensive for the insurance company so, as a consequence, why is outside counsel less likely to initiate settlement talks? Let’s just say that outside attorneys get paid by the hour.
Obviously, for most personal injury cases, you can hire a lawyer to file your lawsuit and begin the necessary preparations to get your case ready for trial. The downside to this is obvious: attorneys' fees that can cost 40% of your recovery. It is no small consideration. If you are filing a lawsuit in a serious injury case, there is no doubt that you need a lawyer. There are, in Maryland and elsewhere, complexities to filing a lawsuit and marshaling evidence that would be virtually impossible to do without a good deal of experience. It is not just victims: lawyers who try to handle personal injury cases with just a little bit of expertise often screw up their cases beyond repair because they don't understand the technical requirements of what has to be done.
How many cases settle almost immediately after a lawsuit has been filed? This depends on how litigation adverse the defendant or insurance company is. State Farm and Allstate are unlikely to reevaluate a case at this point. Progressive, GEICO, and Nationwide are more likely to increase their offer just because a lawsuit has been initiated.
- Pre-Trial Conference/Mediation
Before a trial, lawyers and parties are required in Maryland and in most jurisdictions to attend a pretrial. The pretrial conference is typically between a few and several months before trial. It is the first opportunity for everyone to sit down and discuss settlement. In many cases, there are also opportunities after the discovery phase of the lawsuit to have a mediation where both sides sit together and try to reach a settlement. Most personal injury lawsuits -- medical malpractice claims in particular -- settle during or shortly after a pretrial conference or mediation. There is wisdom in settling the case during a medication. But as I write this, our clients recovered more than $650,000 more in the last two larger cases we settled in the few weeks because they walked away from the mediation. Sometimes, you have to really show the defendant you are willing to try the case. Both of these clients were willing to try the case and the result for both was a much larger settlement.
- The Courthouse Steps
If a case cannot reach a settlement, the final gut check comes on the day of trial and throughout the trial. Our law firm has settled many of our larger cases just before the trial begins or, as is more often the case, in the middle of the trial. Your leverage is highest for settlement when letting the case go to trial. The downside is the risk of a complication at trial and the costs associated with trying the case, most notably the cost of bringing medical doctors to testify.
We have settled cases that we have won and cases that we have lost after a verdict, usually because either our lawyers or the defense counsel believes there is a real risk of reversal of the verdict on appeal. In large verdict cases, the Plaintiff sometimes looks for an immediate resolution of the case as opposed to waiting for the case to drag through the appellate process.
At some point after we file a lawsuit and get into the litigation process, most of our clients receive at least one settlement offer before the case is scheduled for trial. This forces them to make another major decision: accept the settlement offer or roll the dice and let the jury decide. Our law firm always gives our clients plenty of meaningful guidance on what we think is in their best interests under all of the circumstances. But the client has to make the call in the end based on their own personal risk tolerance, financial obligations, or willingness to endure a trial (which is fun for some clients and absolute torture for others). We try to keep in mind that we have lots of cases -- our client has just the one. For clients that are risk adverse, it sometimes makes sense to settle for less than the median or average settlement value because there is so much money on the line they simply do not want to take the risk.
The prevailing wisdom is that if a case goes to a jury, one or both of the parties have miscalculated. On average, the statistics suggest that the average jury award if about twice the amount of the final pre-trial settlement offer. Of course this does not take into account cases in which the plaintiff loses and gets not nothing.
Our firm’s track record is actually much better than this statistical average. Our average result in jury trials is more than 10 times the amount of the pre-trial settlement offer. On numerous occasions, we have won verdicts for our clients over a million dollars when the settlement offer was zero.
The most obvious benefit to accepting a settlement is you eliminate the risk of getting nothing at all if you go to trial and end up losing. The amount of attorney’s fees and expenses will also be much less if you avoid a jury trial. Most contingency fees go from 33% to 40% if a case goes to trial. If your case involves expert witnesses, the expenses (which come out of your award) could double or even triple. This means that even if you go to court and the jury awards twice the amount of the settlement offer, you might actually end up getting less money in your pocket.
Surprisingly the answer is YES. Going to trial can often double or triple the attorney’s fees and expenses that will come out of any money you are awarded at trial. So even if you go to trial and get a verdict that is twice as much as the pre-trial settlement offer, you could actually end up with less money in your pocket.
Around 97% of all civil cases that get filed end up getting resolved before a trial. An estimated 85% of these cases get resolved with a pre-trial settlement. So only 3 out of every 100 tort cases actually go to trial.
Our accident and malpractice lawyers handle personal injury accident and malpractice cases in Maryland but also throughout the country. If you or a loved one has suffered a serious personal injury as the result of the negligence of someone else, call our personal injury lawyers at 800-553-8082 or get a free online consultation.
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- What type of injury do you have? This is critical in determining the settlement value of your claim. On this page, we look at almost every type of injuries and how insurance companies, judges, and juries have valued these claims.
- Taking a look at the value of YOUR personal injury case. How do you figure out what your claim is worth and, in serious cases, how does the cap on noneconomic damages factor into that calculation
- Get the secrets insurance companies do not want you to know because they do not want you to understand your rights and get the full value you are entitled to receive