To Settle or Not To Settle

One of the issues that arise in a personal injury claim is whether the injured person, the plaintiff, should settle.  A 2008 study published in the Journal of Empirical Legal Studies, suggests that plaintiffs who reject settlement offers and go onto trial get less money than if they had taken the offer and settled.  The basis for this conclusion is that in 61% of the cases studied, plaintiffs made the wrong decision, that is, they passed on an offer and went to trial but the jury awarded them less money than the settlement offer.  Defendants in the study were wrong 24% of the cases, that is, a jury awarded the plaintiff more money than was offered to settle the case.  On average, making the wrong decision cost plaintiffs about $43,000 the study found.

It is important to note that these numbers are only statistics and your case as a plaintiff will have its own set of circumstances and facts which should be considered and discussed with your attorney.  One of those issues which you, as the injured party, should understand before settling is how much of the actual settlement would you receive.  Typically in personal injury matters, attorneys and clients agree to handle the matter on a contingency fee basis.  This means there is no charge for the attorney’s time if there is no recovery and that the attorney receives an agreed upon percentage of the settlement if there is a recovery.   This fee is usually calculated on the entire settlement received; that is before other expenses arising from the accident are paid.  In addition to the attorney’s fee, insurance companies including Medicare and Medicaid who have paid for medical care arising from the accident are entitled to be reimbursed for their costs from any settlement funds.  Once the insurance company has been reimbursed, there are typically other costs your attorney has incurred in preparing the case.  These usually include the fees charged by hospitals and doctors for copying and providing medical records and bills.  These actual costs are normally passed onto the client under the fee agreement with the attorney.  Many cases also require a doctor to offer an opinion that the injuries were caused by the accident and the medical care provided to you were reasonable.   The expense to get this opinion from the doctor is another cost which is paid out of a settlement.  These actual costs are typically passed onto the client based upon the fee agreement.  The reminder of the settlement, once these fees and expenses have been paid, is your actual settlement.

The bottom line settlement amount and other considerations need to be discussed with your attorney before deciding whether or not to settle your personal injury claim.