The gambler and the settlement talk

You've got to know when to hold 'em, know when to fold 'em

Hardly a week goes by without me realizing how far I have to go as a lawyer. In the course of a week, I am inevitably faced with some problem or task that I haven’t confronted often enough to handle with ease and self-assurance. Events of the past two weeks have highlighted the fact that I need to get better at discussing settlement offers with clients.

The Gambler

You’ve got to know when to hold’em, know when to… well, you know the rest.

The whole point of my existence as a personal injury plaintiffs’ lawyer is to reach a settlement agreement or obtain a judgment that is acceptable to my client. But most clients have never been through a personal injury claim before and don’t really know what a good settlement looks like. When I present them with the insurance company’s settlement offer, they don’t have much context for that offer.

In the best-case scenario, they lean heavily on my judgment when weighing a settlement offer. In the worst-case scenario, they have friends and family who “know” what their case is worth, have “heard” that in a “case like this” they should get a settlement worth three times their medical expenses (which hasn’t been an accurate heuristic for 25 or 30 years), and generally regard my advice with suspicion.

I can understand why, at least in some respects. As I’ve discussed before, insurance company settlement tactics are often confounding. They don’t behave the way you would think they would if you knew nothing about their business. You would think their goal is to prevent their policyholders from being sued or, if they’ve already been sued, to bring that suit to an end before trial. But that isn’t their goal. Their goal is to spend as little as possible on claims without exposing their policyholder to an excess judgment. That means they really don’t care if making a lowball offer early on causes their policyholder to get sued. They don’t care that the lawsuit process might be unpleasant for their customer. They care about keeping claims payments down.

That is the background against which auto liability insurance settlement offers are made. I try to discuss this with clients at our very first meeting. I try to help set their expectations early on, but it is difficult. Most people don’t view their car accident as a lottery ticket, but a person’s pain and suffering, aggravation, and loss of their car are almost always worth more to them than to an insurance company, judge, or jury.

I try to help the client understand that my job is to try to convince those decision-makers of the value of these somewhat intangible injuries, while trying to ground the client’s expectations in reality. As their case develops, I get a better sense of what their economic damages will be, which allows me to gauge how the insurance company will value the case. As that picture become clearer to me, I will often reach out to the client and have another conversation about where the case seems to be heading in terms of value.

That’s all fine and well, but it doesn’t take much to knock the ship off course. If the claims adjuster reads the medical records dramatically differently than I have, the first offer might come in well below what I think the case is worth and subsequent offers may not get much better before trial. If the case is in a county that consistently produces low jury verdicts, the offer might start at and remain really low just because the insurance company thinks the risk of a big verdict is minimal. Other times, the offers wind up being well below what I expected for no apparent reason. I’ve yet to find a good way to explain that sort of thing to the client. And the only good countermeasure to that sort of insurance company behavior that I’m aware of is going to trial.

But trial isn’t right for every client. For a variety of reasons, it might be in a particular client’s best interest to take a really low offer and avoid trial when you would recommend trying the case to 95 percent of your other clients. It may be because an unforeseen problem developed in the case. It might be that the client’s deposition didn’t go well, an expert’s deposition didn’t go well, the client failed to tell me something early on that has now come back to bite us or we lost a motion we expected to win. (And let’s face it, us younger lawyers are often given cases with problems that no one else wants to deal with. Sometimes the problems are baked-in from the outset, and we’re the last ones to realize it.)

Explaining these sorts of things to a client can be very, very difficult. You don’t want to push your client into taking a settlement that they don’t want but you have an obligation to explain to them that the outcome at trial could be a good deal worse than the offer on the table today, unpleasant as it is.

I’ve had to do this several times recently. It isn’t fun, and I’m not particularly good at it. Am I pushing too hard? Not hard enough? Leaving this settlement on the table and getting zero at trial would devastate me financially if I were the client — am I allowing my own conservative financial philosophy to color the advice I’m giving my client?

I need to get better at delivering this sort of tough advice.

But I’d rather get better and keeping cases from going off the rails in the first place.