Personal Injury

Why Do Most Personal Injury Cases Settle?

By David Berg, Attorney
It's common knowledge that the vast majority of personal injury claims will reach an out-of-court settlement. Let's explore the reasons behind this longstanding trend.

Most personal injury claims settle before they make it to trial. In fact, most cases of all types -- civil, criminal, divorce, or probate -- end up reaching an out-of-court resolution rather than being decided by a judge or jury. Personal injury cases in particular tend to settle before trial -- and often even before a personal injury lawsuit is even filed -- for two main reasons, so let's take a closer look at both.

A Trial is a Risky Proposition

The first and most important reason why most kinds of personal injury claims settle is that neither side wants to take the risk of going to trial and losing.

Many personal injury claimants have already lost a lot of money due to their injuries -- between medical bills and time missed at work -- and simply can’t afford to come away from the case with nothing. For this reason, many plaintiffs will grit their teeth and accept a settlement just to get the bills paid and to get out of debt, even if the settlement isn't a particularly favorable one. Something is better than nothing, so many claimants will take the sure thing (the settlement) over the risky bet (a court trial).

And on the other side of the case, the insurance companies want to settle personal injury claims in order to avoid the risk of going to trial and getting hit by a verdict that is way out of proportion to the injured person's actual losses ("damages"). A verdict like this -- sometimes referred to as a “runaway” verdict -- usually only happens in cases with serious damages, but the potential is there for it to happen in any type of case, and insurers are all too aware of that. Insurers hate unpredictability, and although they can often convince the judge or an appellate court to overturn a runaway verdict, that doesn’t always happen, and the insurer is stuck paying out a million dollars on a broken leg or less. (Learn more about The Role of Insurance in Settling a Personal injury Claim.)

Home on the "Range"

The second reason why most personal injury cases settle is because no one -- not even the most experienced of personal injury lawyers -- really knows what any particular case should settle for or what verdict a jury will enter on the case.

All a good lawyer can do is come up with a range of possible settlements. In other words, a plaintiff’s lawyer is not going to say to his/her client, “Your case is worth $125,000.” Rather, a good lawyer will say, “You have a very good chance of winning, and a reasonable verdict in your case is between $100,000 and $150,000. So you should settle for somewhere in that range.”

And on the other side, the insurance defense attorney might be saying to the insurer, “You’re probably going to lose this case, and you’re looking at a verdict in the range of $75,000 to $125,000.”

So, if both sides are thinking of the settlement as falling within a range, then, once the ranges overlap (assuming that they do overlap), the case will almost definitely settle. So, using our example, the case should settle for $100,000 to $125,000, assuming that both lawyers (and their clients) are rational and negotiate reasonably and in good faith. (More Personal injury Claim Do's and Don'ts.)

Every personal injury case is at least slightly unique, but the general pattern in personal injury claim negotiations is that, once the demand and offer are within the other side’s range of reasonable outcomes, then the case should settle well before trial, and maybe even before a lawsuit is filed. (Learn more about Personal Injury Claims Versus Personal Injury Lawsuits.)

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