How Does a Personal Injury Lawyer Handle Settlement Negotiations?

The first step in this process is for you to meet with your lawyer to talk through what’s happened to you, where you are in the healing process from your injuries, and the details of the accident. Your lawyer will need as much information as possible to negotiate. Once you and your lawyer have talked through your goals and exactly what happened, your lawyer will then help you to calculate the full extent of your damages. If you don’t know the extent of your damages, you don’t know what number to ask for, and you don’t know what room you have in negotiations. When you negotiate, it’s always wise to start with a very high number so that there’s room to move down in compromise.

There are two large types of compensation you can ask for in negotiations. The first type of compensation is economic. This is all the losses that you’ve suffered which can be quantified and tallied up with receipts and bills. This will include your medical bills, but also any wages or salary that you’ve lost because you couldn’t work, property that’s been damaged and had to be repaired or replaced, and other costs that you’ve incurred directly related to the accident and your injuries.

The second type of compensation is known as non-economic, and this is commonly known as “pain and suffering” or mental anguish damages. Non-economic damages are usually calculated in reference to your economic damages by multiplying the latter by a number between one and five. For very minor injuries and losses, you would multiply by just one. For catastrophic long-term injuries, such as paralysis or serious brain damage, you would usually multiply by five. Everything else falls somewhere in between, and a good lawyer will know how to help you make the proper calculations, as well as ensure you haven’t missed anything.

You may have heard of punitive damages, which can be extremely high in some cases. Because they are so high, they get into the news, but the reality is that is very rare for punitive damages to be awarded in a personal injury case. There must be clear and convincing evidence that the other person deliberately harmed you or engaged in such gross negligence that they might as well have done it deliberately.

It’s a high bar to reach, but if there is evidence to suggest this, your lawyer will talk about this in negotiations and use it as leverage to encourage the other side to come up with a fair offer and avoid having to go to court where punitive damages are likely to be awarded.

The negotiating process formally begins when your lawyer sends a demand letter to the insurance company. This letter has to provide all the details about the settlement you’re requesting and the reason for the amount you’re asking for. These reasons must be specific and should be backed up with evidence. This is why it’s important to have a qualified lawyer help: things will go more quickly and smoothly if your demand letter is professionally crafted and meets all the requirements from the outset. Typically, your lawyer will also remind the insurance company that if you do not get fair compensation for your injuries, the next step will be going to court.

In the demand letter, your lawyer will add details which the insurance adjuster and their investigation may not have accounted for. Your attorney will know firsthand how this accident is actually affecting your life and the impact it’s had on your relationships, work, and more. They will also point out anything particularly egregious in the responsible party’s behavior, such as if a driver was drunk when they hit you or if a store had a history of safety violations. Your lawyer will also frame things to put the insurance company on the defensive. In other words, it will be on them to justify why they are denying you.

Once the demand letter has been sent, the insurance company will reply. The insurance company will be looking to pay as little as possible for the claim, and so they will typically counter with a lower offer. Just as your lawyer will often start high to leave room to come down, the insurance adjuster will probably start low to leave room to come up. This will most likely trigger a series of phone calls between your attorney and the insurance company, and some meetings may take place in person.

When you get to a number that’s closer to appropriate, the insurance company will likely offer a settlement. They may offer a settlement at any point along the way, but it’s always important to run a settlement by your lawyer before you accept it. You need to be sure that what they’re offering will actually cover your damages and losses. Sometimes, insurance companies make initial settlements very quickly in the hopes that you don’t yet know what your claim is really worth or are becoming desperate for money and will sign just about anything. It’s your attorney’s job to protect you from this and help you understand how to access money that you might need while you wait.

Obviously, the hope is that you will be able to avoid the courtroom. Even if your case is strong, there are no guarantees in a courtroom. Fortunately, this reality is just as true for the insurance company as it is for you. They stand to lose big if the court rules against them, and they have just as much reason as you do to avoid the uncertainties of a trial. This is usually an incentive to offer a fair settlement, but there are just sometimes cases where an insurance company refuses to do this.