Most cases settle out of court before proceeding to trial. However, not all cases settle for what they should. Sometimes, the plaintiff ends up settling the case for a lot less than the case is worth. Other times, the defense pays a premium to resolve the case. How are you supposed to know if the settlement offer being made is fair?
Some say that the measure of a good settlement is when both parties walk away from the settlement unhappy. This means that the defendant paid more than he wanted to pay, and the plaintiff accepted less than he wanted to accept. Several factors can provide guidance on whether the settlement should be accepted. In general, if you can get close to judgment value of the case in settlement, then it should be considered a very good settlement.
One of the first considerations that attorneys and clients should factor in is the chance of prevailing on the issue of liability. If the other side is clearly at fault, then a settlement offer should not be decreased because of the risk of losing the case. If the plaintiff has only a 60% chance of prevailing on liability, he may want to consider taking 40% less in settlement.
However, some cases do not involve clear cut issues of fault. Often, the fault involved in a personal injury action may be spread around. In other words, more than one party or person may be responsible for the plaintiff’s injuries.
In cases involving the fault of more than one party, any settlement offer must account for that fault. This is difficult if one of the parties at fault is not solvent or otherwise cannot make a contribution toward settlement. Fault of the plaintiff must also be factored into any settlement offer if the plaintiff is partly responsible for his own injuries. Thus, if the fault of others, including the plaintiff, is reasonably evaluated to approximate 20%, then the settling defendant should offer close to 80% of the plaintiff’s damages in settlement.
Another important factor to consider in assessing the fairness of a settlement offer is the venue (the court jurisdiction) in which the action is pending. Some jurisdictions draw from jury pools that are more conservative or liberal than others. If the court in which the case is pending draws from a more liberal jury pool, then the settlement offer should take that factor into account by being on the higher end of the range of possible judgments to account for the fact that liberal juries award more money to injured persons.
Most settlement offers will not take into account judicial interest. Judicial interest is awarded to the plaintiff who wins at trial. In an old case, the interest on the judgment can be substantial. However, most defendants will not pay interest in the settlement.
Unfortunately, the financial need of the plaintiff can result in a diminished recovery. Defendants know that in some cases, they can simply “wait it out,” and the plaintiff will take a lot less now because he cannot afford to wait the period of years before the case proceeds to trial. If the defendant knows that both the attorney and client are willing to wait as long as it takes to recover the maximum amount of money, then they are more willing to present a higher settlement offer.
In serious injury cases, you should consult with an attorney before accepting any settlement offer made by the other side.
FAQs
In general, if you can get close to judgment value of the case in settlement, then it should be considered a very good settlement. One of the first considerations that attorneys and clients should factor in is the chance of prevailing on the issue of liability.
How do I know when to settle a lawsuit? ›
Here are four instances where settlement is probably a better idea than taking the case through a lengthy court process:
- Your claim is against someone close to you. ...
- Trial expenses will amount to more than those from a positive outcome. ...
- Your time is not worth it. ...
- The outcome of the case is unpredictable.
With experience helping clients in the areas of sexual harassment, wrongful death, personal injury, entertainment law, and criminal defense, the Los Angeles office is particularly well known for Managing Attorney Brian Dunn's work in civil rights and police brutality.
Why does defense offer settlements? ›
Cases are often settled at the courthouse door because that is the longest the defense can delay before running the risk of a trial. Defense attorneys are risk adverse; they would rather settle a case than run any substantial chance of losing the case. This is related to the public relations aspects of litigation.
What is a good settlement figure? ›
How Much Should I Expect from a Settlement? A good settlement offer should not only be able to cover your hospital bills and legal fees, but it should also be equivalent to close to a years' worth of your current wages, especially in cases where your injuries may be permanent or cause some kind of disability.
How much money should I ask for in a settlement? ›
Ask for more than what you think you'll get
There's no precise formula, but it's generally recommended that personal injury plaintiffs ask for about 75% to 100% more than what they hope to receive. In other words, if you think your lawsuit might be worth $10,000, ask for $17,500 to $20,000.
At what point do most cases settle? ›
On average only 5% of our cases go to trial and that is because most cases do settle at some point before trial. Cases may settle very early in the case, at a settlement conference, at mediation, at the eve of trial, or even in the middle of trial. Deciding whether to settle is a calculated risk.
What is the usual result of a settlement? ›
The result of a settlement agreement involves the responsible party paying a certain amount to compensate for the damages caused to the victim.
Who ultimately decides whether to accept an offer to settle a case? ›
You alone managed your injuries, pain, suffering, and ultimately your recovery. You alone have the right to decide when you should settle your claim.
What type of cases did Johnny Cochran represent? ›
After working for two years as a prosecutor for the city of Los Angeles, Cochran pursued a private career. His clients included celebrities such as Michael Jackson, Tupac Shakur, and Jim Brown, and he represented victims of police brutality.
As the Managing Partner of The Cochran Firm Orlando, Channa Lloyd concentrates and focuses her practice in the areas of family law, motor vehicle accidents, commercial motor vehicle accidents, wrongful death and civil rights violations.
When was the Cochrane firm founded? ›
The Cochran Firm is a law firm in the United States founded in 1968 by Johnnie Cochran in Los Angeles.
How do you win a settlement negotiation? ›
Try to stay level-headed. Keeping the conversation polite and respectful will improve your chances of reaching agreement. It is also important that you take time to prepare yourself before those negotiation talks begin. Good preparation will give you more confidence going into mediation or settlement discussions.
Is it good to accept a settlement offer? ›
Generally, you should accept the offer only after you know the cost of your damages and understand your future care needs. If the settlement offer is fair and can help you avoid going to court, accepting it could resolve the matter.
What happens when you agree to a settlement? ›
Once both parties sign a settlement agreement and it is legally binding, the paperwork will go to whoever is responsible for compensating the victim's damages—usually the at-fault party's insurance company. They have time to review the agreement and approve the payout—or disbursem*nt of funds.
What is a reasonable full and final settlement offer? ›
If you come into a lump sum and are interested in using that money to make a debt settlement offer, you will first have to work out how much money to offer. Ultimately, a 'reasonable' amount to offer as a full and final settlement is whatever your creditors are willing to accept.
How much should I offer to settle? ›
Offer a Lump-Sum Settlement
Some want 75%–80% of what you owe. Others will take 50%, while others might settle for one-third or less. If you can afford it, proposing a lump-sum settlement is generally the best option—and the one most collectors will readily agree to.
How do you determine the value of a settlement? ›
To determine a potential settlement value, they first combine the total of medical expenses to date, projected future medical expenses, lost wages to date and projected future lost income. The resulting sum is then multiplied by the pain and suffering multiplier value to produce a projected settlement amount.
