A personal injury settlement is an agreement between an injured person and the person who injured them, or their insurance company, regarding the payment of compensation to the injured person for their losses. A settlement may be agreed upon before the injured person has even filed a lawsuit seeking damages. Or it may be agreed during the pretrial phase of the lawsuit or while a trial is in progress. It can happen while the jury is deliberating its decision. The only time it cannot happen is after the jury announces its decision.
A settlement usually comes about because the person who caused injury to the victim, whether through their negligence or an intentional act, recognizes that they are liable to pay compensation to the victim, while the injured person asks for an amount that is reasonable because it reflects the true amount of their losses.
Rather than proceed with a trial and spend additional funds on lawyers and the trial process, the person who caused injury to another, the “defendant” in legal terminology, may agree to pay a certain amount to settle the case. Both sides are also interested in avoiding the risk of a trial in which the outcome is always uncertain.
As noted above, settlement may occur at any point during a trial, especially if new information arises that causes one or both parties to reassess their position in the case and seek a settlement to bring an end to the dispute.
What Is the Process of Calculating Personal Injury Settlements?
The settlement process is largely a series of back-and-forth negotiations between the injured person, the “plaintiff” in legal terminology, and the defendant.
For example, one party might suggest a settlement amount at the beginning of the trial. From there, it is up to the other party to accept the settlement offer or respond with a counteroffer.
Generally, the plaintiff wants full compensation for their losses. They want to recover a sum of money that covers all of the elements of an award of compensatory damages. An award of damages should cover the cost of the plaintiff’s medical care, including future care they may need if they have not been restored to full health by the time a trial takes place.
A plaintiff would also want to recover lost wages if they could not go to work for some time because of their health condition or the need to receive care. If their future earning capacity has been affected by their injuries, they would want to be compensated for that. A plaintiff is also entitled to an amount to compensate them for their pain and suffering.
Punitive damages are rarely awarded, but a plaintiff may believe their case is exceptional because a jury might award punitive damages at trial. So they expect the defendant to pay them some money in a settlement as punitive damages.
The defendant constantly assesses the case against them, especially how strong the evidence shows the defendant’s liability. The plaintiff may claim strict product liability, in which the defendant assesses how strong the evidence shows that a product was defective and the defect caused the plaintiff’s injuries. Of course, a defendant also considers the strength of their own case offered to counter the plaintiff’s claims.
Both sides gain access to information about the other side’s evidence through the process known as “discovery.” After a plaintiff files a lawsuit and the defendant answers, the parties seek and provide information about their evidence and what it shows.
The parties can ask witnesses to appear and answer questions under oath in a deposition. The parties can send each other written questions that require answers, called “interrogatories.” The parties can access relevant documents, such as medical records, through requests for the production of documents and subpoenas duces tecum.
These procedures give the parties the information they need to assess their respective positions in the case and make informed judgments about whether they should settle and, if so, for how much.
If the plaintiff claims the defendant was negligent, the defendant assesses how strong the evidence of their negligence is. The defendant also questions whether it is clear that their negligence caused the injuries claimed by the plaintiff. Plaintiffs have been known to inflate their claims of injury, so the defendant wants to ensure the extent of the plaintiff’s injuries is what the plaintiff asserts.
If the plaintiff claims that the defendant caused their injury through an intentional wrong, such as civil assault, civil battery, or trespass, again, the defendant evaluates the evidence that they committed the wrong and that their actions caused the plaintiff’s injuries.
If the defendant concludes that the plaintiff has a strong case and the plaintiff’s evidence is likely to persuade a jury that the defendant is liable for the plaintiff’s injuries, the defendant is more likely to settle.
If the defendant sees that the injuries the plaintiff claims are real and caused by the defendant’s product or conduct, then, again, the defendant may well settle the case. The defendant wants to avoid the continuing cost of paying lawyers and the other expenses of defending a case.
The defendant also wants to avoid the uncertainty of a trial. If a jury hears all of the plaintiff’s evidence, it might be swayed to the degree that it is bad for the defendant. The jury may feel that the defendant acted particularly badly and may want to send a message of its disapproval by awarding the plaintiff as much money as possible under the law. So, the defendant may figure that acknowledging liability and paying a settlement is the safest option.
Thus, settlement calculations are sometimes different than calculating a straight damages award. Settlement calculations may involve other factors as well, such as:
- Defendant’s Ability to Pay: There may not be much point in pursuing a large award of damages if it is clear that the defendant would not be able to pay it. The settlement amount may be dictated by the amount available to pay it. So, for example, in a case about a car accident, if the defendant’s insurance policy limit is $300,000, there’s no real point in pursuing a judgment for more than that if the insurance company agrees to pay up to the policy limit;
- Time and Money Saved: How much time and money each party may save by settling rather than pursuing litigation is a factor in coming to a settlement agreement;
- Applicable State Law: What is allowed under state law may be a factor. For example, state law may not allow punitive damages in certain cases. Or, state law may cap how much can be awarded. Both sides will consider such laws as they evaluate their respective positions.
Of course, traditional calculations are also included, such as the exact amount of costs the plaintiff incurred for medical bills, property damage, and lost wages. And then, settlements tend to be subject to negotiation. Once a figure is agreed upon, the parties may submit their agreement to a judge, who then approves the amount and finalizes the settlement in a court order.
What If I Have a Dispute over a Settlement Amount?
Violations of settlement rulings are subject to legal consequences such as a contempt order. Settlement agreements basically become legal contracts.
Thus, the defendant becomes legally liable for making the settlement payments, either in a full lump sum or periodic payments. Failure to follow the settlement ruling can result in a lawsuit seeking the enforcement of the settlement agreement.
Do I Need a Lawyer for Help with a Personal Injury Settlement?
Personal injury settlements are at issue in every personal injury case. However, they generally require quite a bit of skill when it comes to calculating and negotiating relevant facts and figures.
You want to consult an experienced personal injury lawyer if you need help with a personal injury case. Your lawyer can help represent you during settlement negotiations and can best advise you on how to proceed.