Negotiating from strength: sure steps toward a settlement.
In most personal injury cases, your initial dealings will be with a claims adjuster for the defendant's liability carrier. At some point you may also deal with the carrier's in-house counsel or a retained defense attorney. Almost always it is best to begin making your case during your first contact with the adjuster.
Sometimes it is tempting to ignore the adjuster until you have honed the case to a razor-sharp demand package. However, I find that in most cases keeping the adjuster abreast of the case as it develops creates a vastly better atmosphere for settlement.
There are two fairly. simple reasons for this. First, the adjuster cannot set an accurate case reserve figure without knowing the type and cost of medical treatment, the extent of any wage loss, the permanency of the injuries, and an indication of your client's credibility and personal background. Absent information on damages - unless an accident is self-evidently catastrophic - the adjuster will probably assign a minimal reserve. If you later hit the adjuster with a demand far exceeding the reserve, you will likely encounter rigid resistance. In fact, the adjuster may be forced to obtain authority from management to increase the reserve, often a time-consuming process and one that will not endear you and your client to the adjuster.
Second, an adjuster surprised by the nature or extent of the claim will tend to be far more skeptical of its worth. If you give notice right away of an anticipated substantial wage-loss claim, for example, you may be able to convince the adjuster through employment records and tax returns of the legitimacy of the claim by the time you make your settlement demand. On the other hand, if you wait until the time of demand (perhaps a year or two after the accident) to reveal the wage-loss claim, you will usually find yourself scrambling to document it satisfactorily. This almost always delays settlement, sometimes to the point that you are forced to litigate to toll the statute of limitations.
Getting in Sync with Your Client
An often overlooked aspect of preparing a case for settlement is the need for you and your client to approximate the value of the case and agree on a settlement strategy. It is impossible to put a realistic dollar figure on a case until your client's injuries are stable and other elements of damages, such as wage loss, have been calculated.
However, by the time you make the demand for settlement, you should at least be able to discuss with your client a reasonable range within which you expect a jury verdict to be and get a commitment as to what settlement amount would be agreeable to the client. Generally, it is better to resolve major disputes over valuation with your client before you begin negotiating with the other side. Otherwise more time and energy. will be spent settling differences with your client than are spent settling the case.
Discussing valuation with the client can be one of the most devilish aspects of a case. Your client, unlike the insurance adjuster and defense attorney, likely has no idea of the case's value in the jury verdict "marketplace." To a client, his or her case is the only one that matters. The client, not you or the defense, has experienced the actual pain, emotional stress, and financial loss.
It is difficult to sympathize with and advocate for your client and at the same time explain that the case has a practical maximum value that may be considerably less than what the client feels is deserved. Sometimes, I find that showing clients summaries of jury verdicts in similar cases makes them more comfortable about my evaluation. I also share news articles discussing the public's skepticism of injury claims with clients who have unrealistic or naive assumptions.
It is critical to assure clients that you are on their side. But you also need to explain that your job includes avoiding the disaster of declining a reasonable settlement offer only to end up with a verdict that is smaller and requires much greater time and expense to obtain.
Factors Affecting Value
Before beginning negotiation, it is essential to analyze and document factors that will affect the value of the case in the eyes of the defense.
Although some of the factors are obvious - for example, the extent and cost of medical treatment and the amount of wage loss - how you present them will maximize their contribution to the ultimate settlement. This can often be done with minimal time and expense.
Don't tell me. Show me. Where treatment involves a particularly invasive or painful procedure, an objective, detailed presentation, accompanied by photographs or diagrams, will make your demand pack age stand out among the scores of other proposals on the adjuster's desk.
I recently settled an automobile case involving what insurance companies like to call "just a soft-tissue injury." The injury and treatment were excruciatingly painful and debilitating.
My client's treatment included more than a half-dozen injections into "trigger points" of the neck. Described matter-of-factly in the doctor's chart notes, the procedure involved inserting a terrifyingly long needle into the sorest parts of the neck muscles. Repeatedly, the doctor withdrew and reinserted the needle in a fan-like pattern, all while the patient was conscious.
I photocopied diagrams of the procedure from a medical textbook. Just looking at the diagrams made my staff and me cringe. I advised the defense that I would have the doctor testify md display the needle as he described the procedure. Although we had to negotiate literally to the eve of trial, we settled the case for considerably more than the typical "just soft-tissue" case in our jurisdiction.
Of course, X-rays, magnetic resonance imaging, and photographs of scarred, bruised, and swollen tissue similarly bring home the painfulness of an injury in ways that words alone cannot. Including visuals in the demand package, rather than withholding them until trial, will enormously enhance valuation.
Photographs detailing the reduction in a client's daily activities following the injury can likewise add value to a case. A partner and I tried a case a while back and obtained a jury verdict four times the amount of the insurance company's last offer. Although the client's permanent symptoms resulted from "just soft-tissue" injuries, and the client was able to return to his former work, we were able to demonstrate the dramatic effect the injuries had on his daily life.
We introduced an aerial photograph of the client's rural homestead, which included a tidy flower garden, a neatly trimmed lawn, and acres of forest from which the client used to cut his own firewood. Although the client was a stoic, laconic pulp-mill laborer, this photo showed him in a different fight and brought his humanity into focus. Immediately before trial, the defense attorney half-jokingly offered to stipulate to introduction of all our other exhibits if we would withhold the homestead photo. He, too, recognized its value.
A client's character is perennially cited as one of the most critical factors at trial. Communicating character to an insurance adjuster in a demand package is difficult. However, photographs and accounts of a client's praiseworthy personal and social activities are of great help, giving the opposition a better first impression than simply identifying the client as "a 24-year-old male carpenter."
On the other hand, in assessing the value of a claim, don't overlook a client's downside. The defense will surely bring up any negatives if the case goes to trial.
You should also assess the defendant's presentability. If he or she was intoxicated, driving recklessly, or is simply a poor witness, the insurance company will be less enthusiastic about challenging your claims regarding liability and the mechanics of the accident.
Know the limits. It is worthwhile to determine the defendant's policy limits as early as possible. Insurance companies generally are less enthusiastic in defending a $20,000 claim if the policy limit is $25,000, rather than $100,000.
This is partly because failing to settle within the policy limit exposes the insured to personal liability for any verdict above that amount. In most jurisdictions that can constitute bad faith on the part of the insurance company. Also, it is a waste of time and money to prepare an exhaustive, expensive demand package requesting a $500,000 settlement when the defendant's policy limit is $25,000.
Bring subrogated interest into the deal Other factors it is wise to consider early in negotiations are the amount and nature of any subrogated interests claimed by the client's own auto or health insurance company. Subrogated interests are often negotiable. It is common to wait until a case is settled or nearly settled to address these issues. However, I have found that a client's own auto insurer (if it has paid for medical bills under a personal injury protection coverage), and even health insurers, will frequently agree before settlement to reduce their subrogation claims.
This generally involves convincing them that if the case goes to trial they will risk the verdict's being too small to cover their subrogation amounts. This can be persuasive in cases where liability is hotly disputed or the client is accused of overtreating. Going into negotiation knowing that some of the client's bills need not be paid back can lead to settlement of an otherwise thorny case.
In most cases where settlement is attempted before litigation, the negotiating process begins with the plaintiff's presentation of a demand package. The package should essentially be a well-organized, well-written case summary that illustrates and documents the negotiating principles discussed in this article.
Don't simply tell the insurance adjuster you have a good case. Show the adjuster the crumpled car, X-rays of the broken femur, or photos from the marathons your client used to run.
At the same time, don't overplay your hand. An overly aggressive, overstated demand package will usually trigger an adjuster to reply in kind. By contrast, an objectively worded demand supported by graphic proof and other factual documentation will force the adjuster to take the case seriously and perhaps review it with management to obtain authority to make a substantial offer.
I have found that addressing in the demand package any serious weaknesses in the client's case can defuse the defense. Trying to hide a client's preexisting injury or ignoring evidence that he or she may have been partly at fault for the accident rarely leads to a better settlement than stating the facts up front. Since adjusters nowadays almost always insist on a complete set of prior medical records before making even an initial offer, why play games?
Although most plaintiffs' attorneys have horror stories to tell about insurance adjusters, the fact is they are people like you or me, doing their best to settle cases. Except for the occasional burnedout cynic or zealot, most adjusters have nothing to gain from purposely impeding settlement of your clients' cases.
It doesn't take a psychologist to recognize that we each have our unique personalities and that we generally feel most comfortable "just being ourselves." In dealing with insurance adjusters, I get the best results when I am cordial, neither defensive nor overly solicitous. As in all areas of life, people tend to treat you the way you treat them. A self-effacing remark, a running joke, or just "How's the weather out there?" will take the edge off what might otherwise be a tense or hostile conversation.
Several good books are available that discuss the psychology of negotiation. Perhaps best known is Getting to Yes: Negotiating Agreement Without Giving In by Roger Fisher and William Ury. Even if you've been negotiating settlements for 20 years, I recommend you read or reread this book. It is an excellent refresher course you can use to refine basic techniques.
Strategies I have adapted from Getting to Yes, other books, observation of other negotiators, and trial-and-error include:
Get points of agreement out of the way. More than once I have had a telephone call with an adjuster in which we spent the entire time squabbling over one disputed aspect of a case when the majority of other issues turned out to be undisputed. Agreeing up front on points that are not in dispute - liability, amount of medical bills, amount of wage loss - sets the stage for a more civil discussion of the disputed points. Agreement on the undisputed points may bring offers close enough to settle the case without ever having to resolve the long-disputed point.
Use informal discovery. In cases where I believe settlement is likely, I sometimes agree to a limited discovery-like exchange of information without filing suit. For example, I might agree to allow the defense to order medical records directly from the client's doctors, or we might agree to exchange short sets of interrogatories.
Maintain credibility. As in the settlement demand, when negotiating, I try to avoid overstatement, acknowledge true weaknesses of the case, and emphasize my best-documented points. Exaggerating or making claim that can't be backed up objectively will immediately undermine credibility.
Ask adjusters to prove their claims, too. While I try to put forward the best possible documentation of my claims when I begin negotiation, I expect the other side to do the same. For example, if an adjuster claims that the plaintiff was partly at fault because of speeding, I say, "I'll take that into consideration if you send me something I can show my client to prove that's true." I usually find out immediately whether the adjuster is bluffing or stating a legitimate defense.
Be flexible. It is easy to fall into a habit of negotiating via bare back-and-forth exchanges of dollar amounts. However, in many cases you can obtain a better result - or at least make the negotiation more meaningful for the client - by adding other elements to the process.
If the client has a good presence but the defense is skeptical of the case, invite the adjuster to meet the client in person and take a taped statement. Of course, you should prepare your client for the interview and be present. Adjusters generally assign more credibility to someone they have met.
As discussed above, reduction of subrogated interests of the personal injury protection coverage or health insurance carrier also can sometimes aid in settling a case. You can try to add a future or noncash benefit for your client.
Explore the possibility of a structured settlement. The benefits of a structured settlement can sometimes settle a difficult case. I have found that insurance companies are increasingly willing to consider these settlements, even in cases of modest value, because they realize that the arrangement appeals to many claimants and will thus bring a quicker settlement of the dispute.
Consider mediation. When negotiation brings the parties to the dance floor but not quite close enough to dance, consider asking a mediator to call the tune. Even for small cases, mediation is simple and inexpensive enough to appeal to most insurance companies.
By keeping the defense apprised of your case, thoroughly documenting damages, being in sync with your client, and producing an effective demand package, you set the stage for prompt, fair settlement. By understanding the reasonable value of the case and dealing forthrightly with the insurance adjuster or defense attorney, you make settlement even more likely.
Open-mindedness during negotiation often allows you to put the finishing touches on settlements. In the vast majority of cases, this is in the best interests of your client and your practice.
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|Author:||Heatherly, Michael J.|
|Date:||Aug 1, 1995|
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