How a Medical Malpractice Lawyer Assigns a Case "Value"

How much is my case worth? It's a question familiar to medical malpractice lawyers. Here are the legal and financial issues they would consider.

If you think you might have a valid medical malpractice case, you might ask your lawyer how much your potential claim might be worth. In this article, we'll touch on some of the key issues an attorney would consider to value a medical malpractice case.

Settlement Value vs. Trial Value

The first thing to know is that there are actually two ways to value a medical malpractice case, or indeed any type of personal injury case: settlement value and trial value.

The case’s settlement value is what your lawyer would reasonably attempt to settle the case for. The settlement value will be much lower than the trial value because you settle a medical malpractice case to avoid the risk of going to trial, losing, and walking away with nothing.

The trial value is what you would reasonably expect to win if your lawyer took your case to the courtroom. So, if you think that, if you went to trial and won, the jury would award you $1,000,000, but that you only have a 25% chance of winning, you might want to settle your case for roughly $250,000 (i.e., 25% of what you reasonably expect to win at trial).

So, in general, a case’s settlement value is roughly the trial value multiplied by the estimated chances of winning the trial.

Now, let’s take a look at how lawyers project how much you might win at trial in a medical malpractice case.

Calculating Medical Malpractice Damages

Lawyers usually break up damages in medical malpractice cases into two categories:

  • damages capable of exact calculation (generally called special damages), and
  • damages not capable of exact calculation -- pain and suffering

Special Damages

Special damages are lost earnings and lost earning capacity, medical bills, and other financial losses. Special damages are capable of exact calculation because they are calculated to the dollar.

Lost earnings and lost earning capacity refer to the earnings that the malpractice victim lost or will lose -- past, present, and future -- as a result of the malpractice. This also includes lost employment benefits such as health insurance, vacation time, pension or 401(k) contributions.

Medical bills include the bills that the malpractice victim is reasonably likely to incur for future medical treatment needed due to the malpractice. Future medical expenses can often be quite large in a malpractice case.

General Damages - Pain And Suffering

Pain and suffering (general damages) cannot be exactly calculated. A jury cannot look at a chart to figure out how much to award a patient for the they’ve endured. Judges generally instruct juries to use their good sense, background, and experience in determining pain and suffering. Because pain and suffering cannot be calculated exactly, settlement negotiations between defense and plaintiff’s attorneys often get hung up on exactly what the plaintiff’s pain and suffering might be worth.

Pain and suffering is divided into physical and mental pain and suffering. Physical pain and suffering is the pain of the victim’s actual physical injuries, as well as the pain and suffering from scarring, disfigurement, and permanency of the injuries.

Mental pain and suffering includes things like mental anguish, emotional distress, loss of enjoyment of life, fear, anger, humiliation, anxiety, and shock. Significant mental pain and suffering can also cause severe anger, appetite loss, lack of energy, sexual dysfunction, loss of interest in sex, mood swings, and/or sleep disturbances. Very severe mental pain and suffering can even constitute post-traumatic stress disorder (PTSD).

Lost Earnings

Calculating past lost earnings is easy. You simply add up the earnings and employment benefits that you lost from being out of work. If you earn $70,000 per year, and were out of work for two years, then you lost $140,000, plus lost employment benefits.

Future Lost Earning Capacity

Calculating future lost earning capacity is usually much harder, and generally requires your lawyer to hire an economic expert to properly present the numbers to the jury in a digestible way. Here is why.

Let’s say that, before the malpractice, you earned $60,000 per year, but that you only recovered partially and could only return to a part time job earning $30,000 per year. So, your lost earning capacity is $30,000 per year for the remainder of your work life expectancy. Work life expectancy is a statistical measure based on federal government statistics of how many more years a person is reasonably expected to work, based on that person’s age, sex, and race. That is easy to figure out, but where it gets difficult is in calculating what $30,000 per year projected into the future is worth. That's where "present value" comes in.

Present Value

Because lost earning capacity involves a calculation of losses that may extend for many years into the future, it has to be calculated in terms of its present value. Present value is a financial concept that involves determining the value of a future stream of income (i.e., your weekly paycheck) as if it were all in a bank account today. In other words, how much money does your employer need in a bank account today in order to pay you your salary for, say, the next twenty years? This is a complex financial calculation that courts require to be performed by an expert economist.

To learn more about damages in a medical malpractice case, see this overview article.

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