Negotiating a Fair Settlement

—By John Merrick —

How do you reach a fair settlement sooner rather than later?

Answer: Allow sufficient time, provide adequate information and be reasonable.

As a former insurance defense lawyer, I am often asked “What can I do to get so-and-so to settle this case 6 months before trial?”

My normal response is, “Have you made a reasonable demand?” To which the usual response is “Not really” (for a variety of reasons).

When the plaintiff makes an unreasonable demand, most defense attorneys have little incentive to try to resolve the case well in advance of a trial date. They have plenty of other cases that require their attention and will happily remain on cruise control until trial approaches without a reasonable demand.

The best way to reach a settlement sooner rather than later is to make sure the other side has all the information they need, sufficient time to analyze the information and report to the insurance carrier, and a reasonable demand to consider.

A reasonable demand is key. The insurance company does not want to continue to pay defense and expert bills if it has confidence that the case can be settled before incurring significant expenses.

Assuming both sides have the sufficient information and time, a reasonable demand requires:

(1) Knowledge of the case inside and out,

(2) Verdict and settlement research in the same or similar venue(s),

(3) A fair and impartial anticipated verdict range,

(4) A fair and impartial assessment of the risk of a defense verdict (as a %), and

(5) A conversation with your client about their expectations along with your assessment.

A reasonable settlement demand is within 40% of the high end of the reasonable verdict range, taking into account the percentage of risk for a defense verdict.

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