Personal injury insurance settlement negotiations in CA can be tricky without the right advice and assistance of legal counsel. Having negotiated hundreds of claims throughout the Golden State ranging from traffic collisions to injuries on commercial and residential property to all manner of claims involving bodily harm, I thought I would share some of my tips on effective negotiation tactics. Being able to resolve a claim without having to file a lawsuit can save a client both attorney’s fees and costs. Most personal injury lawyers have a “graduated” scale on their contingency fee agreements. Oftentimes, the percentage of the gross recovery charged as lawyer fees increases the longer the case drags on and the more work the attorney has to do in filing a formal lawsuit in court, conducting discovery (including sending out and responding to requests for information and documents, taking and defending depositions) and preparing for mediation, arbitration or trial of the case. In addition, litigation of claims costs money! There are court filing fees, fees to have the lawsuit served on the defendant(s) by a certified process server or constable, costs of court reporters to record deposition proceedings, costs of expert witnesses and many other expenses. Therefore, it is most often in the economic interest of a personal injury client to try to have their claim resolved sooner rather than later from a net proceeds standpoint unless the offer to settle is so low that the risks and costs of proceeding forward are outweighed by the potential for greater recovery.
Top Five Strategies Used by Attorneys to Maximize the Settlement Offer From An Insurance Claims Adjuster Prior to Filing a Lawsuit
There are many tactics and approaches used by lawyers who represent injury claimants to maximize value and increase the chances of settling a claim “pre-litigation.” I thought I would share my top five methods as follows:
- Know Your Case Inside and Out: In the words of the great John Wooden, “failing to prepare is preparing to fail.” A quality personal injury lawyer will have reviewed all the medical reports and bills and verified his client’s version of how the accident happened by review of the police incident report, eyewitness statements and evidence such as placement of vehicles, property damage location and extent and other indications of what occurred. Even in what should be “clear liability” claims, insurance adjusters will always try to view the facts and the evidence in the light most favorable to their insured. Knowing the facts of the claim and the details of medical treatment prior to having any, meaningful dialogue regarding settlement will give the lawyer an advantage in refuting any claims of comparative fault or improper valuation of past, present and/or future medical treatment.
- Make an Initial Demand that Is High but, Not TOO High or, Alternatively, Let The Insurance Company Make the “First Move”: The initial demands for settlement from plaintiff’s counsel and offers to settle from the defense will always be a “high vs. low” scenario. Opening “positions” should never be at the real “bottom line” on what it will take to make the case go away. Knowing this, legal counsel for the injured party will usually employ one of two strategies as follows: (a) Make an initial settlement demand that is high enough to provide “wiggle room” but, not so high that it seems impossible for the other side to ever reach a “realistic” figure, in their mind. (b) Don’t set an opening number at all but, simply request an offer to be made. This puts the “ball in their court” to set an opening bid for settlement. Either way, the initial number should be thought of as an jumping off point for further negotiations.
- Emphasize the Defendant’s Potential Legal Exposure Fully but, Don’t Exaggerate the Claim: Every quality legal advocate must see the holes in the game of the other side and be able to explain the weaknesses of the defense case fully but, in a way that doesn’t seem too one-sided. Being a good lawyer who is adept at the art of negotiation is kind of like being a good poker player. You never want to “overplay” your hand. Exaggeration of the claim will only lend to a decline in credibility. Nevertheless, fully explaining the value of the claim and the potential for a large award is important as well. The attorney must strike a balance between the two.
- Treat the Claims Adjuster With Courtesy and Respect: At the initial stages of settlement before litigation commences, an insurance claim for personal injury and property damage must be settled with an insurance adjuster. Sometimes these adjusters are younger and less experienced and other times you may have a “seasoned” adjuster who has been at the game awhile but, they all come with some level of knowledge and experience. While these persons are not lawyers, they are educated and trained professionals who, for the most part, are able to analyze the value of claims, assess the risks in moving forward and resolve claims accordingly. As the old saying goes, “you will always attract more with honey than vinegar,” treating the insurance claims person with respect will go a long way to having your best chance to resolve the claim.
- Always Appear Ready to Litigate but, Be The “Voice of Reason”: In the end, reaching a compromise and obtaining a money value that is reasonable prior to filing a lawsuit takes walking a fine line. On the one hand, the attorney must clearly communicate that they are ready, willing and able to file suit and take the case to trial, if necessary. On the other hand, they must show that arriving at a figure that is slightly more than what the insurance company wants to pay and slightly less than what the plaintiff could get on their best day in court without both sides spending time, money and resources, is in the best interest of all involved.
Why is it important to retain the services of a lawyer prior to attempt to negotiate a settlement on any personal injury claim well prior to having to file suit:
Based upon these strategies, one can see the importance of having an intermediary who is skilled in the art of settlement in this “pre-litigation” phase. Obtaining the proper evidence and analyzing the case from a lawyer’s perspective is key to preparing to speak with an adjuster and not be intimidated by any arguments they make to downplay the value of the claim. Knowing what to place as an “opening number” or deciding to let the other side set the bar is also something that only comes from years of experience. Emphasizing legal exposure must come from a knowledge of the value of cases in a particular jurisdiction based upon average jury verdicts and other indicators of what may happen if the matter is litigated up to or through trial.
Finally, trying to negotiate a settlement on your own is like stepping into the street of the wild west with no gun in your holster. Without a credible threat of being able to “take things to the next level”, if necessary, one will never obtain a true max offer. Couple all of this with the reputation of the attorney and the repoire that a seasoned litigator with years of experience can establish with an insurance representative, and you have maximized your chances for a successful resolution. Not all claims are able to be settled prior to litigation but, many can and should in the best interest of the client’s “bottom line” net before fees and costs. Retaining the right representative is key to success!