The great majority of personal injury lawsuits are settled before going to trial. Settlement may occur shortly after a lawsuit is filed or on the courthouse steps just before trial. Because of the inherent uncertainty of trial results, there can be major benefits in settling a case before it goes to trial.
This article covers the risks of going to trial and why settlement through mediation can make great sense. The article includes topics such as the minor’s compromise and structured settlements, including the advantages and disadvantages of structured annuities.
Jury Verdicts Are Unpredictable
No one can predict what a jury will do under any set of circumstances. This is an excellent reason to consider mediating your injury case once the discovery phase of your case has concluded.
Every category of accident cases has its strong and weak points. For example, car accidents are treated differently by jurors than bus accidents. Accidents involving falls can be more complicated to prove than medical malpractice cases.
Even the most compelling cases can result in a defense verdict or an award far less than you expected. The conventional wisdom, especially during difficult economic times, is that jurors may also be struggling financially as they consider how much to award in general damages.
Juries Can Be Resentful
Getting caught up in our financial struggles is easy, especially at trial. As a plaintiff, however, you don’t want to give the jury the impression that you are overreaching on the value of your case, nor do you want to appear over-deserving in the amount you are asking the jury to consider awarding you.
Although experienced personal injury lawyers can advise you about the overall strength of your claim and your chances of recovery at trial, juries are generally unpredictable and may not decide in your favor.
Further, some trial attorneys charge a higher fee once the case goes to trial, so the bottom line amount you receive may not necessarily exceed the settlement offer made to you by the other side.
Settling Your Case Through Mediation
As the actual trial date soon approaches and after a plaintiff has, in most cases, waited for years to finally have their day in court, it is only natural for them to imagine what going to trial might actually mean and how the process will unfold.
The plaintiff might envision a trial filled with high drama and moments of glory, culminating in a very public victory and vindication of the plaintiff’s rights. So, you can imagine the disappointment felt when the plaintiff learns his very public case has been ordered to confidential mediation rather than trial.
The Mediation Process
Depending on the jurisdiction and the amount of money claimed in damages by the plaintiff, almost all personal injury cases are sent to mediation before trial.
The mediation process begins with the mediator having been previously supplied with the lawyer’s written briefs, which is a description of the contested facts of the case, a statement of the applicable law, and a legal argument about why their side would prevail if the matter were tried.
Mediation is very much like a settlement conference in which the lawyers present their case to a mediator called a neutral who tries to have the parties settle, usually through a long and tedious process in which the neutral instills fear in both parties as to the real and inherent risks of going to trial.
The Mediation Process Depends On the Mediator
The Mediation Shuffle
Negotiations are often a time-consuming and grinding experience for the parties. In a personal injury mediation, the plaintiff can expect to receive multiple low offers, then long periods of waiting in separate rooms as the lawyers and the mediator shuffle in and out of the meeting rooms.
Separate Rooms
The opposing parties are kept in separate rooms to prevent the parties from arguing with each other. Over the course of sometimes many hours, the party’s expectations of reaching an acceptable settlement rise and fall, usually resulting in emotional exhaustion, making both sides more inclined to settle their case rather than having to endure watching their lawyers repeat their endless shuffling in and out of the conference rooms.
Breaking Down the Party’s Resistance To Settle
The process is intended to emotionally exhaust the parties, as the mediator visits each side to explain why they should settle the case rather than proceed to trial.
Usually, the mediator, in private, will emphasize the weaknesses of each of the parties’ cases and the financial loss they might incur should they lose. The mediator will also remind each side that juries are notoriously unpredictable and that both sides might spend substantial sums of money on court costs, expert fees, and additional attorney fees should they take their case to trial.
Mediation Is Non-Binding Unless The Parties Agree
Mediation is a form of dispute resolution which is flexible, voluntary, and confidential. Mediations do not require the parties to testify.
The mediation process is not legally binding. However, should the matter resolve in principle, which usually means an agreed settlement amount, the attorneys will draft a formal settlement agreement that their clients will review with their lawyer and execute. The final executed agreement is considered an enforceable contract.
Benefits Of Mediation Include:
- Personal Injury Mediations are Informal: The process is informal, flexible, and less stressful than going to trial. There are no laws of evidence to follow, no set rules or witnesses to call, and the process is far less adversarial than trial.
- Personal Injury Mediations are Confidential: Unlike a public trial. The mediators are not allowed to disclose any information that is revealed to them during the mediation. The mediation is not recorded or transcribed.
- Personal Injury Mediations are Fast and Inexpensive: Mediation takes a fraction of the time to complete when compared to a personal injury trial. The cost of a jury trial can easily be ten times or more than the amount costs to mediate your case. Say nothing of the exorbitant costs of expert witness fees.
- Personal Injury Mediations Offer Parties Control: Mediation is not binding unless settled. Parties in mediation retain control in shaping and controlling the outcome of their own settlement. There is no determination of fault, as is the case in public trials. Instead, the parties come to a mutually agreed resolution of their case.
Alternative Dispute Resolution Is Highly Favored
Mediation is a valuable component of Alternative Dispute Resolution, also called ADR. The ADR field has been rapidly growing over the past twenty years. These private, for-profit organizations are staffed mainly by former judges and offer services such as binding and non-binding arbitration, mediation, and settlement conferences.
It is highly favored by judicial administrators, lawyers, and judges mainly because courts neither have the time nor resources to handle the ever-increasing level of civil and criminal cases waiting to be tried.
Structured Settlements
Structured Annuities
In personal injury cases in which the plaintiff settles for large sums of money, the plaintiff’s counsel will likely discuss and advise with the plaintiff, in consultation with a financial planner, the option of receiving their settlement proceeds over time, as opposed to receiving it in a lump sum payment now. This is known as a structured settlement.
Cases Involving Minors
The Minors Compromise
In cases involving minors, especially when a court-ordered minor compromise must be approved before the final settlement, the plaintiff’s attorney must prepare and present a structured payout schedule for the court’s approval. Furthermore, most courts must be convinced that the structured settlement is in the minor’s best interests compared to other options.
The Structured Settlement Industry
The Periodic Payment Settlement Act of 1982 amended the Federal tax code to recognize and encourage structured settlements in personal injury cases.
The structured settlement and annuity business has grown even more in recent years. One reason for its popularity is that structured settlement transactions involve large sums of money, making it one of the most profitable financial products a broker or agent could sell.
Given the legal and financial complexity surrounding structured settlements, the states and the federal government have enacted important consumer legislation and industry regulations to better protect this particular class of people.
Advantages of Structured Settlements
- Receiving periodic payments can reduce taxes. People choose to go with a structured settlement to avoid the potential tax consequences of receiving a lump sum settlement.
- Receiving periodic payments can also reduce the chance of overspending and running out of money before the next payment arrives.
- A significant advantage to structured settlements is that they can be devised in various ways based on the claimant’s individual medical needs and specific financial preferences.
- These preferences can include periodic payments to the claimant when funds are required for:
- Continued medical expenses
- Continued education
- Vocational education
- Housing expenses
- Continued financial support
- Both defense counsel and the insurance company prefer working with annuities because it is far easier for the parties to settle big-dollar cases. One reason is that the settlement amounts can look much larger when paid out over time.
Disadvantages Of Structured Settlements
- Some claimants under a periodic payment schedule often consider their arrangement unnecessarily restrictive.
- It is tough to change the structure of the agreement once the annuity is locked into place.
- Finally, beware of excessive commissions in structured settlements. They can always be negotiated. There is a great deal of money made selling annuities. Make sure you ensure the commissions don’t consume too much of the principal. Check with at least two other brokers and your financial advisor before you agree to accept the annuity settlement.
Personal Injury Lawyers
If you have questions or require additional information about your legal rights and obligations, consult a verified Personal Injury Lawyer as soon as possible.
