Initial negotiations

Settlement negotiations are part of the process in car accident lawsuits

In some ways, settlement negotiations are like trial. That is, they require an art of persuasion and are an adversarial process.

Different lawyers have different styles, and any style can be effective. It might be nice if negotiations were direct and straightforward, but they are not.

Considerations in initial settlement negotiations in car accident lawsuits

The plaintiff is almost always required to make the initial demand. Sometimes an insurance adjuster will open discussions with an offer, but this is rare.

The initial demand is normally more than the lawyer really feels the case ultimately is worth. Deciding how much more is where matters become complicated. There are numerous factors to consider and evaluate including how long, extensive, and protracted your personal injury lawyer expects the negotiations to be.

In a car accident lawsuit, there are several basic issues that must be considered. These include:

  • Negligence of the defendant(s).
  • Negligence of the plaintiff(s).
  • Severity of the injuries.
  • Seatbelt defense.
  • Insurance limits.

Sample car accident lawsuit with negotiation scenarios

The following is a sample of possible negotiations. In this case, an elderly woman, who was a seat-belted passenger, sustained a rib fracture that produced discomfort for a few months but required no significant treatment and healed totally (so there was no permanent injury).

A common approach is to initially demand two to four times the settlement value that the lawyer places on the case. With this approach, if a reasonable settlement for the rib fracture would be $7,500, then her attorney might demand anywhere from $15,000 to $30,000. This might mean an initial demanding for $25,000.

The insurance carrier handling the defense then might respond in one of three ways:

(1) There might be a responsive offer of $10,000. If that occurs, there might be an eventual settlement at $15,000, double the evaluation of the case.

(2) The insurance carrier might refuse to negotiate because the demand is “too high.” This indicates that the case is not ripe for resolution, and it is necessary to move on to the next stage of the litigation process.

(3) The insurance carrier might also evaluate the case at $7,500, and make a counter-offer of $3,500. The plaintiff’s attorney now has to respond, and the most likely options and results are:

  • Keep the demand high, reducing it only to $20,000. However, this might shut down negotiations as the distance between the carrier’s value and the demand appear too significant to make a resolution seem likely.
  • Reduce the demand to $7,500 (the bottom figure). This may be too dramatic of a drop and could result in a best case scenario result of a $5000 maximum recovery.
  • Reduce the demand to $17,500. That is a significant reduction. Since the plaintiff does not know the carrier’s top line, that permits an attempt for $10,000. This technique is known as bracketing, with each side working slowly toward the middle ground in small amounts.

Ways to help negotiations

The tradition is that each side is permitted three moves. Since this is an adversarial process, the stronger the plaintiff’s position the better the likely outcome.

The “threat of suit” does not put significant pressure on the carrier. If the carrier can settle a claim pre-suit at a significant discount to actual value, it may be motivated to do so. However, it has not been hurt as a result of the accident. It is not out of work and does not have a mortgage coming due. Therefore, delay puts no additional pressure on the carrier. It has significant resources and reserves, and has lawyers on retainer so that going to trial costs it little extra.

The best way to move a case to a favorable resolution is for your lawyer to provide the carrier with information. Your personal injury lawyer will send the carrier a demand letter that provides sufficient information about the case for the carrier to understand the reasonableness of the claim.

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