What Are Personal Injury Settlements and Why Are They Beneficial?

Movie fans are familiar with enraged characters who shake a fist and proclaim that they will take a dispute “to the highest court in the land.” The reality is that most disputes are resolved outside of court. Some are resolved before a lawsuit needs to be filed. When suits are filed, most claims settle before trial.

Only about four or five percent of personal injury lawsuits go to trial. Experienced lawyers for injury victims and insurance companies understand the benefits of settling cases.

Benefits of Settling a Personal Injury Claim

Injury victims and insurance companies both benefit from certainty. When they make a settlement agreement, the victim knows exactly how much money he or she will receive, and the insurer knows how much it will pay.

Knowing the amount that will be paid in a settlement helps victims manage their budgets. Injury victims can begin to plan how they should use settlement proceeds as soon as the deal is struck. Waiting for a jury to deliver an uncertain verdict prevents injury victims from making financial decisions until after the verdict is returned.

Settlements also put money into the hands of injury victims more quickly than trials. When fault is clear, cases often settle before suit is filed. Even when negligence or the extent of the victim’s injury is disputed, cases will usually settle well in advance of trial. Some cases settle on the courthouse steps, but even in those cases, settlement avoids delays caused by an appeal or a postponement of the trial.

Injury victims who go to trial are leaving their fate in the hands of strangers. Settlements allow victims to take control of the case by deciding on the compensation they accept as fair rather than leaving that decision to people they don’t know.

Trials entail risk. While lawyers for injury victims and insurance companies have a pretty good idea of the verdict a judge or jury will return, some outcomes are surprising. Jurors may decide they don’t like one of the parties. They may think an injury victim is exaggerating an injury. They may think honest witnesses are giving false testimony. Since there is no way to make a perfect prediction of a jury’s reaction to trial witnesses, every trial involves a roll of the dice.

Settlements guard against unusual verdicts. Lawyers use their experience to recommend settlements based on their predictions of the verdict a typical jury will return. A settlement might prevent an injury victim from receiving a windfall in the form of an unusually high verdict, but it also guards against the possibility of losing the trial or winning an unusually small amount of compensation.

Finally, settlements allow injury victims to get on with their lives. Trials are stressful. Testifying causes victims to relive traumatic events. Most injury victims are intimidated by the prospect of testifying before a jury. Even when victims are comfortable in a courtroom setting, they need to devote time to trial preparation that could be spent on more enjoyable pursuits. Settlements allow injury victims to move forward rather than living in a painful moment.

Reasons Not to Settle

While there are good reasons to settle most cases, some lawsuits need to go to trial. Experienced trial lawyers are never afraid to bring a case before a jury when the outcome of a trial is likely to be significantly better than the best settlement an insurance company is willing to offer.

While experienced lawyers usually see the facts in the same way, that doesn’t always happen. Sometimes the facts are unclear. When no cameras recorded an accident and no neutral witnesses were present, exactly how an accident occurred may come down to two parties telling very different stories. When a personal injury lawyer believes the jury will believe the injury victim and an insurance defense lawyer believes the jury will believe the other party, the injury victim might want to roll the dice and let a jury decide who is telling the truth.

In some cases, insurance companies simply refuse to place a reasonable value on a victim’s injuries. They may think a victim is faking injuries or is in less pain than the victim claims. Insurance companies are usually skeptical of injury claims, but they usually settle because they know a jury might be sympathetic to the victim. In some cases, however, they refuse to acknowledge the validity of an injury victim’s claim. Those cases often need to go to trial.

How Cases Are Settled

Lawyers base settlement recommendations on three factors: knowledge of the facts, a risk assessment, and experience with local juries. They plug those factors into a settlement formula to arrive at a recommended settlement.

A factual investigation allows lawyers to decide whether they will win a case at trial. In some cases, including rear-end collisions, liability is clear. In other cases, including accidents involving pedestrians outside of crosswalks, the fault might be shared. Lawyers use their experience to determine how a jury will allocate fault based on the facts they can prove at trial.

A lawyer’s experience with local juries allows the lawyer to predict how much a jury will award for damages. By comparing the victim’s injuries to cases involving victims with similar injuries, lawyers can estimate the compensation a local jury will likely award based on awards local juries have made in the past.

Risk assessments are based on the strength of the case. Lawyers can rarely be confident of a complete victory. There is always a chance that an injury victim will lose. There is also a chance that a verdict will be discounted to reflect the victim’s share of fault.

With those factors in mind, a personal injury lawyer will determine the amount of money the jury will most likely award. The lawyer will then discount that amount by a risk factor. For example, if the lawyer thinks the verdict will be $20,000 after taking into account the victim’s share of fault, but there is a 20% chance that the victim will recover nothing, the lawyer will view 80% of $20,000 as the settlement value. The lawyer will then subtract the cost that will be saved by not going to trial to arrive at a final settlement recommendation.