How Much Should You Settle For?

If you're involved in an injury claim, the first thing that you have to do, before you can start negotiating a settlement, is to put your own value on the case. You can't negotiate until you know how much money you are looking for. In deciding how much to settle for, your goal is to settle the case for what a jury in your jurisdiction might award if you won at trial, while taking into consideration your chances of actually winning the case. Read on to learn more.

First Issue: Your Chances of Winning a Trial

What are the chances of winning your case in a lawsuit at trial? You have to assess your chances of winning the trial realistically and objectively. In order to do this, you have to understand the evidence for and against you, take into account the credibility of all of the witnesses, including yourself, and have a good sense of what juries in your jurisdiction have been doing over the past few years.

Let's take a couple of examples. At one end of the spectrum is a car accident case involving rear end collision, where the chances of winning the case at trial are pretty close to 100% no matter what court you're in. You don't need to worry about what juries have been doing on those cases; you're most likely going to win.

But at the other end of the spectrum might be a very difficult products liability (defective product) or medical malpractice case, or even a car accident case in which the evidence is against you. In those types of cases, your chances of winning might be as low as 10%. Once you have a real sense of what your chances of winning at trial are, then you can think about damages.

Second Issue: What a Jury Might Award as Damages

There are two types of damages in a personal injury case:

• damages capable of exact calculation (called "special damages"), and
• damages not capable of exact calculation (or "general damages")

Damages capable of exact calculation, or special damages, are lost earnings and lost earning capacity, medical bills, and other financial losses. Damages not capable of exact calculation include pain and suffering, emotional distress and related claims.

You have to know not only what damages you are claiming, but also what types of awards juries in your jurisdiction have been making. If, for example, you are in a very conservative jurisdiction where juries simply don't make large damage awards, no matter how bad the injury, then you will need to temper your expectations on damages. If, on the other hand, your trial is or will be taking place in a county where juries award monumental damages for even a hint of injury, then you certainly will want to raise your settlement figures. Trying to calculate what a jury might award is difficult at best, but a ballpark is what you and your opposition might negotiate from.

Use Alllaw's personal injury calculator to get an idea of what the value of your injuries, property damage, and general damages may be.

Putting It Together

How do these two concepts go together -- your chances of winning and what you might receive as damage? It comes down to math.

Very roughly, if you think that you have a 50% chance of winning at trial, and that a jury is likely to award you something in the vicinity of $100,000, you might want to try to settle the case for about $50,000. But keep in mind that every case is different, and that this is only an extremely rough outline of settlement valuation.

Negotiation Tactics

Once you have a good idea of what you are hoping to settle the case for, then you are ready to begin settlement negotiations. The first move will always be up to you. Insurance companies like the plaintiff to put the first number on the table, i.e., the demand letter. They don't want to offer one cent more than they have to. If, hypothetically, you miscalculate the value of the case and demand less than they would have offered, then they will take that into account and lower their offers accordingly.

In making the initial demand, the big question is how much to ask for. The initial demand has to be big enough so that you have room to negotiate. If, for example, you want to settle the case for $80,000, and you demand $90,000, you have very little room to maneuver. As a general rule, your initial demand should be at least twice what you are looking to settle the case for, if not more. You have to give yourself room to negotiate.

The next big issue is how much to reduce your demand in response to the insurer's offers. That is tricky, and depends on the issues in the case, how far away the case is from trial, and even the relationship between your lawyer and the defense attorney, if the case is in suit.

There simply are no hard and fast rules on how to conduct injury settlement negotiations. Every case is different. If you are trying to settle your own personal injury case directly with the adjuster, you have to do what feels right to you. It is a delicate process. If you reduce your demand too quickly, you might leave some money on the table, but, if you don't reduce it quickly enough, the adjuster might lose interest and not increase his/her offer.

For tips on the back and forth of insurance negotiations, see our article, "Overview of the Insurance Settlement Process".

If you are trying to negotiate your own settlement and feel that negotiations are bogging down, you should contact a qualified personal injury lawyer to learn your legal rights.