How a Personal Injury Case Is Settled

When you're injured in an accident that was caused by someone else's negligence, there are usually two ways to get compensation from the at-fault party: Be offered and accept a personal injury settlement outside of court, or go through (or at least start) the civil lawsuit process.

While a lawsuit might ultimately net you more money than a settlement, the vast majority of personal injury cases settle well before trial, and often before a lawsuit is filed. Let's take a closer look.

Understanding Personal Injury Settlements

Settlement occurs when an insurer adjuster or a defendant (the person or company you're suing) makes an offer of payment to you, the injured person.

When might this happen? Almost anytime.

• Before filing suit. Most cases settle before a personal injury lawsuit is filed.
• After filing or during trial. Lots of cases settle after a lawsuit is filed, and even after the trial gets underway.
• After trial. Occasionally, settlements are agreed to after trial, when the parties get cold feet and decide they prefer the "sure thing" of a settlement.

Once the parties come to a settlement, the plaintiff must give up all potential claims against the defendant arising out of the underlying accident. The plaintiff does this by signing a full liability release. For example, say that in a car accident case, the defendant's auto insurer offers the plaintiff $50,000 to settle. The plaintiff, to receive that $50,000, must agree not to file a lawsuit or pursue any other legal remedy in connection with the crash.

Note, importantly, that the settlement will cover both past (known) injuries and losses, as well as all future (unknown) injuries and losses. For this reason, most lawyers prefer to hold off on finalizing a settlement until the injured plaintiff has reached "maximum medical improvement."

Personal Injury Settlement and Insurance Companies

Settlements are almost always offered when insurance companies are involved, which happens in the vast majority of personal injury cases. Insurers have the assets to pay out claims, and they expect to pay out a certain number of claims as part of their business model. Insurers are also risk-averse and don't want to put their financial fate in the hands of an unpredictable jury, while paying the not-insignificant costs of litigating a personal injury case all the way through trial.

Why Do Most Personal Injury Cases Settle?

The fact that so many cases settle, especially when insurance companies are involved, naturally leads to the question: Why? Here are just a few of the many reasons.

Settlement allows a defendant to control risks and avoid legal costs. If the defendant knows they're at fault for the accident that led to the injury claim, or if fault is a cloudy issue but the plaintiff's injuries are significant, the defendant might not want the case to get in front of a sympathetic jury that could give the plaintiff a large damages award.

Settlement allows a defendant to keep the case out of the public eye or out of the paper. This is especially important for larger companies with a public profile. For example, if a company produces a defective product and only a few people are injured by it, the company may want to try to arrange a quiet out-of-court settlement and avoid the sort of major publicity that might accompany a trial.

When negotiating and drafting a settlement, the parties come to terms that are mutually acceptable. Nobody gets everything they want, but the nature of a settlement means everybody gets something. Defendants often insist on a confidentiality agreement to keep the settlement terms and conditions (including the settlement amount) a secret.

Settlement allows a plaintiff to avoid a protracted trial. Trials can extend for months, and the ultimate outcome of the case can remain up in the air if there are appeals. A plaintiff may not want to wait that long to get financial relief, or may not feel up to going through a long trial, putting on a case, presenting evidence and doing everything else necessary to win a legal battle.

Settlement allows a plaintiff a guaranteed (if not always gainful) win. When a case goes to trial, there's always a chance that the plaintiff will lose the case and get nothing. Getting a settlement, even if it's not as much as the plaintiff might have hoped for, beats walking away empty handed.

Learn more about how long personal injury cases take to settle, and how to negotiate a fair personal injury settlement.

Get Help With Your Personal Injury Settlement

If you're having difficulty settling your personal injury case, think about talking to an experienced personal injury lawyer. This is someone who negotiates and settles cases like yours every day, and who knows how the settlement dance works. When you're ready to get professional help, here's how to find an attorney who's right for you.