Maximizing damages and settlements – Lesson 6

Excerpted from Maximizing Damages in Small Personal Injury Cases
by Derry Rundlett

When a client will not accept a reasonable offer, and responses to client questions about settlement

Several years ago a friend of mine tried a case in which $40,000 had been offered to two plaintiffs in an automobile collision case. The attorney advised the plaintiffs to accept the offer before trial but they refused. The case was well tried but the jury awarded $4,000 to each plaintiff.

This is an experience many of us have had. In some cases, plaintiffs take on a belief that their case is worth far more than the insurance company is willing to pay, and indeed, far more than the case is actually worth. Plaintiffs hear or read stories about large settlements and verdicts, get caught up in the litigation process, or simply have an inflated value of their own injury.

In small cases, there are usually several ways to avoid such problems and there are also methods to deal with those clients who refuse reasonable settlements. The following steps can be used to either prevent such a problem from happening or can be used to convince a client to accept a reasonable offer:

  1. In the first place, you should establish your own expertise in the area of personal injury law at the outset of the case. Make it clear to your clients that, because of your experience in this area of law, you hope, and expect, that they will take seriously your recommendations with respect to settlement when, and if, that occurs. Let the client know that although ultimate settlement authority is his or her decision, you hope that the client will trust your judgment and that of other lawyers in your office in evaluating his or her case. Obtain the confidence of the client in the beginning of the case so that the settlement process will move smoothly later on.

  2. Be aware of your client’s attitudes during the case. It is important to meet with clients from time to time and be sensitive to their concerns. You can often detect when they are “getting out of hand.” If you ascertain that they are starting to be unrealistic about the value of their claim, attempt to get them back on the ground before you begin the settlement process.

  3. Before the actual letter of demand, establish a reasonable settlement range with the client. Meet with the client before you formulate your first letter of demand and discuss a settlement range.
    I suggest being on the low side for both the minimum and maximum values of the case. For example, if you believe you can settle the case for $20,000 with the insurance company, indicate to the client that the carrier may be willing to pay something in the $10,000 to 18,000 range. It is my experience that clients with low expectations are pleasantly surprised and satisfied when the case settles for more than the outside value discussed in your office. It also gives you significant leeway if there are factors in the case that make the value lower than you expected.

  1. Explain to the client that the value they place on the case is not necessarily the insurance company’s value or the amount that a jury would award on a given date. If your client appears to be difficult, either before or after the offer from the insurance company, I recommend that you explain about the three values in a case:

a.    The value placed by the client.
This value may be high or low depending on how reasonable your client is. If the value is low, you will probably have no trouble settling the case and you will end up with a satisfied client. If the client’s value is high, inform them that they are entitled to such an opinion but that, in reality, they will probably never see it, even if the case goes to trial.

b.    The value placed by the insurance company.
This value is one that a particular insurance company may be willing to pay at a certain time for this particular case on a settlement basis. If the carrier is a conservative one, as most are in small cases, I inform the client of this fact at the outset. I also inform the client that the insurance company will try to place a value on the claim that will encourage settlement and that once the carrier has placed such a value, they are usually quite firm in their position.

c.    The value a jury would award on a given day in court.
This third value is the possible verdict a jury would award given the set of facts put to the client’s case. I explain this value by use of a bell-shaped curve. I inform the client that the low value could be zero in some cases if liability is an issue or could be less than or equal to the medical bills. The mid-range value is often consistent with the insurance company’s settlement range. At the right end of the bell-shaped curve is the unlikely high verdict that a jury would award on the very best day if all factors went in perfectly for the plaintiff. The example below is an illustration of the bell-shaped curve for a small case.
Use the bell-shaped curve approach to explain the three possible values of a case and indicate to the client that if the insurance company’s offer is in or near the mid range  the bell-shaped curve, settlement should be seriously considered. (See chart 5-1 at the bottom of the page.)

  1. If the client still refuses to accept a reasonable offer, request that a second opinion be obtained. If you are confident that the carrier has offered a reasonable settlement in a small case and the client is still reluctant, ask the client to obtain a second opinion. Make sure that the client goes to a reputable attorney for that opinion and if you believe it will assist the process, offer to pay for the second option from your fee.
    Many attorneys will evaluate a file for a nominal fee and it is better to pay that cost then to end up losing the client or having to commence litigation in a small case. In many cases the client will allow you to select the attorney for the second opinion as long as you make it clear to them that the attorney will make an independent evaluation of the case.
  2. Take the time to explain the costs and problems of litigation. If the client continues to resist a reasonable offer, explain in detail the many problems of litigation including depositions, interrogatories, lapse of time getting to trial, costs, etc. Inform the client that in some cases, the insurance company will lower the value after litigation has been commenced especially if weaknesses are disclosed in the case. I have found that many clients become more willing to settle when they are told that it will take several years and several thousand dollars to take their case to suit.
  3. Explain how juries are reluctant to award significant verdicts in small cases such as soft tissue injuries. If your state has a reporting system of verdicts, inform your client of some of the recent low verdicts that have occurred in small cases. Inform the client that many juries are influenced by insurance advertising about so-called “whiplash” injuries. Let the client know that the potential jury verdict could be a fraction of the carrier’s final offer.
  4. Consider reducing your fees in order to promote settlement. In many cases, the client can be convinced to settle if the amount he or she finally receives is at least a little more than would have been received if you took your full percentage for the fee. If the insurance company and the client are not that far apart, consider reducing your fee somewhat to promote settlement.
    I have found that many clients are pressed by such a tactic and will give in if they see their lawyer is willing to reduce his or her fee. This may only cost you a few hundred dollars (considering taxes) but you will actually be way ahead of the game. Your client will be happy, you will receive a reasonable fee, and the case will be closed without the necessity of litigation
  5. If your client still insists that the settlement is not enough, bite the bullet and commence litigation. If you have a clear liability case that will result in some verdict or the possibility of an increased offer, you may have to simply accept the fact that litigation is required. Unfortunately, this is not a good situation if you are going to resent the client. Since the law requires that the ultimate settlement authority rests with the plaintiff, it is best to begin litigation in the hopes that the case will either settle or you will obtain a verdict that is at least somewhat satisfactory to the client.
  6. Try to release the client. If the client is extremely unreasonable with respect to value of his case, you can indicate that, because of the difference of opinion, you do not believe it is in the client’s best interest to commence litigation.
    In such a case, you can release the file to the client with the expectation that you will be paid either when the case settles or at the time you release the file for the time you have spent on the case thus far. This is a last resort tactic but, if your client is way out of line with respect to the value of his or her case, you may have no choice but to release the client and let him or her pursue the claim with another attorney.

§432.2     Responses to Client Questions About Settlement

It has become increasingly difficult to convince clients that acceptance of settlement offers from conservative insurers is in their best interest. Clients read about huge damage awards and often assume they are entitled to the same. I find that I am now spending as much time working with the client as I do trying to convince the insurance carrier to make a reasonable offer.

In this section I have tried to list every question that clients pose to me near the time of settlement. I have also included appropriate responses that I have found to be most effective in answering these questions. Since the most frequent client complaint is that the attorney did not effectively communicate or explain the case, I recommend that you take the time to discuss settlement in detail and to clarify any questions that might arise. When the client leaves your office well-informed about the settlement offer that has been placed on the table, there is a greater likelihood of acceptance and satisfaction.

Question One: Why do I have to pay back my medical bills that were paid by the health carrier?

Response: Virtually every health insurance company in the country, including health maintenance organizations and self insured businesses, insist on being reimbursed for medical bills that were paid on behalf of the injured party after the injury occurred. Almost all health insurance policies, person­nel agreements, and even state laws require that the health insurance carrier be reimbursed when the injured party collects benefits from the responsible tortfeasor. These insurance companies and employers base their health insurance premiums and ultimate costs of insurance on retrieving medical costs that are essentially the responsibility of another insurance carrier; that is, in your case, the automobile carrier for the person who caused the incident. If the health insurance company does not collect from you after you settle your case, they consider it a double recovery for you. Your medical bills were paid for by them, the offer of settlement included those medical bills, and therefore, it is only fair that you reimburse your own health carrier for the medical bills they paid.

Question Two: I still don’t think it’s fair-I paid a premium for that policy and it was deducted from my weekly paycheck. Why should they collect the premiums and then require me to repay my medical bills?

Response: Imagine a meeting held at your place of business a year before your accident. Everyone at the meeting is asked to vote on whether people who collect medical bills in settlements from insurance companies for accidents should have to pay back the health insurance carrier. You are told at the meeting that by reimbursing the health carrier, your premiums will be reduced, and the cost of health insurance for all employees will be lower. Do you agree with me that you would have voted at that time for a policy that requires reimbursement of medical payments when such medical payments are included in settlements to injured policyholders? I think you will agree that almost everyone at the meeting would vote to have lower premiums rather than a double recovery for people who are injured.

Question Three: What if I just refuse to pay the health carrier?

Response: In many cases you do not have that choice. In your own policy, there is a “subrogation” clause that is part of the contract. That clause requires that you must reimburse your own health insurance carrier for medical bills paid by them and ultimately recovered by you. If you do not pay them back, they have the right to sue you in court, they will most likely win the case, and they have the option to cancel your health insurance policy because you have breached the contract.

More importantly, in this case the medical provider has put me and the negligent party’s insurance carrier on notice, and such notice operates as a lien on the proceeds. As your attorney, I have no choice but to pay them or, in the alternative, put the money in escrow while you dispute the necessity of paying them back. It would not be legal for me to release the money to you since I have been notified of the subrogation lien.

Lastly, if this health policy is with a self-insured employer, your employer will take a very dim view that you are trying to deny them reimbursement of proceeds that they consider to be a binding part of your employment contract with them. I have had clients who have made their employer angry by refusing to pay back medical bills that actually came out of the employer’s self-insured health insur­ance fund.

Question Four: Will the health insurance carrier give me any credit whatsoever for the attorneys’ fees I am paying you to collect their money?

Response: Carriers do allow some credit for attorneys’ fees, but not always the one-third I have charged you in this case. (NOTE: Some states have a statute similar to the one set forth below that allows the attorney to negotiate credit for attorneys’ fees and litigation costs. Check your own state statutes to see whether this policy is governed by statute.)

Title 24A, Maine Revised Statutes Annotated, §2729-A

No policy for health insurance shall provide for priority over the insured of payment for any medical or surgical services or of any expenses paid or reimbursed under the policy, in the event the insured is entitled to receive payment reimbursement from another person as a result of legal action or claim, except as provided herein.

A policy may contain a provision that allows such payments, if that provision is approved by the superintendent, and if that provision requires the prior written approval of the insured and allows such payments only on a just and equitable basis and not on the basis of a priority lien. A just and equitable basis shall mean that any factors that diminish the potential value of the insured’s claim shall likewise reduce the share in the claim for those claiming payment for services or reimbursement. Such factors shall include, but are not limited to:

1. Legal defenses. Questions of liability and comparative negligence or other legal defenses;

2. Exigencies of trial. Exigencies of trial that reduce a settlement or award in order to resolve the claim; and

3. Limits of coverage. Limits on the amount of applicable insurance coverage that reduce the claim to an amount recoverable by the insured.
In the event of a dispute as to the application of any such provision or the amount available for payment to those claiming payment for services or reimbursement, the dispute shall be determined if the action is pending, before the court in which it is pending, or if no action is pending, by filing an action in any court for determination of the dispute.

In this particular case 1 will attempt to negotiate some sort of credit. If I succeed, that credit for attorneys’ fees will go into your pocket, not mine, as my one-third has already been taken from the total settlement.

Question Five: If you are not successful in getting credit for my attorneys’ fees, it doesn’t seem fair that my medical bills have to be deducted from the settlement. That doesn’t leave me with much money. Therefore, why should I accept the settlement at this time?

Response: The law in this state says that when you are injured because of the negligence of a third party, you are entitled to recover the following: reasonable medical costs for your recovery, reasonable loss of income or lost earning capacity actually resulting from the incident, a reasonable sum for pain, suffering, and loss of enjoyment of life, and possible loss of consortium. The insurance carrier considers medical bills to be the most important item because it is money that was actually paid to help you with your recovery. In this case, like most cases, there will be enough money in the settlement for your medical bills, your lost wages, your attorneys’ fees, and some tax free money to reasonably compensate you for your pain and suffering. The settlement in this case is fair because the amount you are receiving for your pain and suffering is fairly consistent, if not better than, amounts awarded by juries for similar incidents. More importantly, the money is available to you now rather than having to wait two or even three years for this matter to go to trial.

Question Six: Why does your one-third fee come from the whole amount? I thought that you take one-third after my medical bills and lost wages are deducted from the total settlement?

Response: Our contingent fee agreement is quite clear that my attorneys’ fees are based upon the total settlement. That figure is the gross amount of the settlement, not the net amount. Otherwise, it would be virtually impossible for attorneys to take these cases if the fee were to be one-third after all deductions. It is my job to make sure that your settlement includes recovery of medical bills, reasonable loss of income, pain and suffering, with consideration that attorneys’ fees must be deducted from the total amount of the settlement. I have lived up to that responsibility in that your medical bills will be completely paid, you will recover your lost wages, and even after attorneys’ fees, there will be money left over for your pain and suffering. If I were to deduct all of your medical bills and lost wages before my own fee, I would have had no interest in taking this case because insurance carriers are extremely conservative when it comes to pain and suffering. Furthermore, most insurance carriers, if not all, give some consideration to the fact that you have retained an attorney and usually they are aware that attorneys’ fees will be deducted from your settlement. In this case you will be made whole by the settlement offer that is on the table even after attorneys’ fees have been deducted.

Question Seven: Will you reduce your attorneys’ fees so that I can personally recover the amount I need for expenses, bills, and other necessities that have arisen?

Response: First of all, it is not fair to my firm or to myself to reduce fees in this case simply because you have a certain figure in mind. Secondly, it is not fair to other clients to reduce fees in some cases and not theirs. My fee is based upon several factors, the most important of which is that we took this case on a contingent basis. You would not have been required to pay one dime for my services if this case had not resolved in a monetary settlement or verdict. Also, my fee is based upon the time, effort, administrative costs, and expertise in handling this type of case. It is my policy not to negotiate fees with clients unless it is absolutely necessary. Instead, I save my negotiation tactics for insurance carriers and adjusters. We are on the same side of this case. I do not want to make you my adversary by having to negotiate my fee. Lastly, settlements are based upon the fair and reasonable value of the case, not necessarily the needs and expectations of the client.

Question Eight: I do not believe that I am getting enough money in this case. Why don’t we simply go to trial?

Response: It is not always possible to settle a case for the amount of money the client requires. It is my job to make sure that your settlement is fair and consistent with other settlements paid to other parties for similar injuries. You certainly have a right to place a value on your injuries, but the insurance company has an equal right to place its own value, even if that value is much lower than your own expectations. When the client and the insurance company cannot reach agreement on the value of a case, it is up to a judge or jury to decide. My goal is to achieve a settlement that, in my opinion, and based upon my expertise, is close to the potential award from a jury, court, or neutral third party such as an arbitrator.

In my opinion, the offer that we now have on the table from the insurance carrier is well within the potential verdict range in this case. In fact, I believe it is closer to the top range of the verdict scale than the bottom range. (NOTE: An alternative to the above is: I concede that the offer is closer to the low range of the potential verdict in this case, but it is still well within the ballpark of a potential jury verdict and is being paid now rather than two or three years from now.) If you decide to bring suit, it will be a long and expensive process before this case goes to trial. When that trial takes place, the chances of you obtaining more than a few thousand dollars more than the present settlement otter are very slim and, in fact, the chances are equal that you may get less than the present offer. For these reasons, I do not recommend gambling on a trial, when the chance of obtaining significantly more money is against the odds.

Question Nine: Why are the chances that I will receive less money equal to the chances I will receive more money?

Response: You must understand that when a case goes to trial the insurance company will hire com­petent defense counsel to do anything possible to either reduce the potential verdict or even to win the case outright. In some cases, errors are made during the course of trial that result in an appeal. If the insurance company loses this case and has to pay significantly more than the offer on the table, they may decide to appeal the case, which will drag it even further into the future. Also, you must remember that any amount of recovery is reduced by attorneys’ fees and additional court costs. So, if you go to trial and win $5,000 more than the offer on the table, you will receive only two-thirds of that amount and possibly less. In conclusion, I don’t recommend rolling the dice for another $2,000 to $3,000. If you settle your case now, you will receive a check. If you decide that you want to litigate, all you have left is a contested lawsuit with at least a two or three year wait before you even walk into the courtroom.

Question Ten: By starting at a fairly low figure I believe that you reduced the potential value of my settlement. Why didn’t you ask for more in your demand letter?

Response: Many clients believe that the more you ask for in a settlement demand letter, the more the insurance company will offer you at the time of settlement. This is not true. Insurance adjusters and claims supervisors are not impressed with lawyers who make high demands in small to medium personal injury cases. High demand figures are reserved only for catastrophic injuries where the party has been injured severely and the liability is clear. The figure in our request for settlement is based upon logic, reason, and experience as to the potential verdict this case may have in a court of law. If an attorney asks for $100,000 in a case that is really worth $10,000, the insurance adjuster will not take the case seriously. In fact, most insurance adjusters will not even respond to ridiculously high demands. Our request was high enough to give us room to move, but the settlement demand has to at least be in the ballpark.

Question Eleven: Can you issue me a check that includes my medical bills so that I can make arrangements to pay them myself rather than have you deduct them from my settlement?

Response: I prefer not to do this for several reasons. First, we have written to almost all of the med­ical facilities and doctors who treated you and have asked them for important information about your case. Those doctors and medical facilities count on us to make sure that they are paid from the set­tlement proceeds. If we release the money to you and you do not honor your agreement to pay the medical facilities, they will contact us at a future date and will be very upset that we did not protect them. Secondly, we want to close this case, for you, for us, and for the doctors. Your settlement check includes all of the medical bills which, by law, are your responsibility. We want to make sure that you satisfy your legal obligation now to avoid any future problems, including litigation, and to protect you from a bad credit record. Thirdly, it has been my experience that many people either forget, or intentionally refuse, to pay their medical bills after they have received payment for such bills. It is impos­sible for us to make sure that you pay these bills once you leave our office. Fourth, the release that the insurance company asked you to sign requires that you hold them harmless from any potential suit for medical bills. You have agreed in your release to satisfy any liens for medical bills. By paying such medical bills now, we will be sure that you have complied with your obligation and your agree­ment with the insurance company made in the release.


The above advice came from…

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Maximizing Damages in Small Personal Injury Cases will teach you dozens of proven techniques for obtaining top dollar in small cases.  For example:


  • 14 negotiating techniques that really work.  §445

  • Insurance carrier negotiating tactics and how to deal with them.  §450

  • How to minimize the impact of independent medical examinations.  §445

  • 18 steps to evaluation of a small personal injury case.  §458.4

  • 16 mediation preparation tips guaranteed to lead to settlement.  §474.1

  • How to deal with unreasonable insurance adjusters and carriers.  §490.2

Commencing suit

  • 9 major case weaknesses to consider before filing suit.  §512

  • 14 defense tactics you need to know about before filing.  §513

  • How to deal with nominal property damage impacts.  §512.7

  • 23 tips on how to deal with large chain store cases.  §131.3

  • Strategies for maximum discovery at minimal cost.  §522


  • The 30 most common objections in small-case trials.  §664.1

  • Techniques to avoid in openings and closings.  §643, 684

  • Topics that are prohibited in closing argument and how to get around them.  §682

  • 37 trial tips from jurors.  §685

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