Most personal injury lawsuits settle before the case ever reaches trial -- and for good reason. Settling an injury lawsuit out of court can provide a number of advantages over litigating a case through to the (often bitter) end. This article discusses those advantages in detail.
Typically, the injured person (the plaintiff) in a personal injury lawsuit will have a contingency fee arrangement with his or her attorney. The most common arrangement is that the attorney will receive 33% of any pre-trial settlement and 40% of any amount received after trial begins.
A defendant will typically hire an attorney and pay an hourly rate, so the very time-intensive trial process represents a significant out-of-pocket expense for the defendant, compared to settling. Paying more to attorneys is not the only expense of trial. Expert witnesses, court costs, travel and lost time from work can all add up considerably.
Keep in mind that the earlier a case settles, the less expensive the litigation process is for both parties, particularly a defendant paying at an hourly rate. The pre-trial discovery process can involve lengthy depositions, including depositions of experts. Some plaintiffs’ attorneys will agree to pay pre-litigation expenses like expert witness fees up front, but some do not -- and if the fees are paid up front, they then come out of any award or settlement. If the defendant’s liability and the extent of the plaintiff’s damages are fairly clear early on, both parties benefit from settling earlier.
If the defendant’s attorney is being paid for by an insurance company, these considerations change in theory. An insurance company is under an obligation to settle cases in “good faith” and is technically not permitted to settle a case early simply to save on litigation costs. However, if the plaintiff accepts or proposes a reasonable settlement offer, the defendant cannot refuse the offer simply because he or she is not paying the bill.
Although a typical personal injury trial will not last more than a few days, the process can be extremely stressful for everyone involved. Both parties can be subjected to examination and cross-examination on the witness stand, and have their character publicly called into question. In addition, the weeks leading up to a trial can be very labor- intensive for both parties, not just their attorneys. With a settlement, an agreement is negotiated, the defendant (typically) pays some damages to the plaintiff, and the matter is concluded.
While a jury may award the plaintiff much higher damages (more money) than what the defendant offers to settle the case, there is no guarantee. Trials are notoriously unpredictable. Key evidence might be excluded by the judge, eyewitnesses might come across as unreliable, inconsistencies in the plaintiff’s testimony might come out, etc. The modern legal system is designed to take surprises out of the trial process, but the system is not fool proof.
Even more unpredictable than proving liability, however, is just what the jury will award a plaintiff who wins at trial. What a plaintiff receives is up to the jury’s discretion, and predicting what that number will be ahead of time can never be more than an educated guess. With an out-of-court settlement, both parties have negotiated control over how much a defendant must pay out. In fact, many states encourage settlement by requiring the plaintiff to pay the defendant’s attorney fees if the plaintiff wins less at trial than what the defendant offered to settle.
A trial will often not commence until more than a year after the initial claim is filed. Even after one of the parties wins at trial, the other party can prolong the uncertainty by appealing the case. Even with a relatively simple personal injury case, it is not uncommon for the entire process, i.e. from filing a claim to receiving damages awarded at trial after several appeals, to take three or four years -- sometimes significantly longer. With a settlement, on the other hand, the parties know exactly when and how much money will exchange hands, and both can put the matter behind them.
Unless the judge orders the records sealed, which will rarely ever happen in a personal injury case, all the details of a trial are public record. This means all of the witness testimony, all of the evidence, everything the two sides used to make each other look as bad as possible, will be available for anyone to read. By settling the personal injury case out of court, the parties are in complete control of what remains private and what remains public, including the settlement amount.
If a defendant loses at trial (or loses any subsequent appeals), he or she has been officially proven liable for the plaintiff’s injuries. If the parties settle, however, the defendant is not required to admit to liability. This may not be ideal for a plaintiff who feels morally invested in proving a defendant’s guilt, but it is a significant benefit to a defendant concerned about having a public record of negligence or intentional wrongdoing.