Negotiating the settlement of a personal injury case is an art. The most important part in crafting your negotiation strategy is knowing your enemy. You have to be aware of the negotiation strategy of both the insurance company and the particular insurance adjuster.
There are many different ways to negotiate the settlement of a personal injury case. But one thing is for sure: there is no formula for determining the value of an injury case. Case value depends on many factors. Of course the medical costs, the lost wages, and the injury are critically important. But other important factors include the county where you'd file the lawsuit, the costs of going forward with a suit, and whether or not either of the parties is extremely likeable or unlikeable. All of these things and more influence settlement value.
One thing that we have found time and time again does not influence settlement value is our opening demand. Many lawyers will say that you have to start with a very high number or the insurance company won't take you seriously. In fact, we've seen settlement demands in cases where our client had fired a previous lawyer for as much as ten times the medical costs. In some cases, this may be reasonable - but it isn't in a "soft tissue" case. Demands like that are unproductive and sometimes counterproductive.
That is, if the insurance company actually considers the demand.
The other thing that we are finding over and over is that the insurance company does not even bother reading our demand letter in many cases. Our attorneys have had cases where we've sent very detailed demand letters to Allstate with explanations about liability and treatment and Allstate calls with very basic questions which are actually answered in the letter.
Why is this? Because the adjuster often will skip the letter written by the lawyer and go straight to what they think is important - the police report, photos of the injuries, and the medical bills and records.
As a result, our attorneys will rarely be the first ones to make a demand. We'll evaluate the case for the client and submit all of the documentation to the insurance company and then solicit a demand.
Lessons from an Allstate Negotiation
Of course, there are cases where making a demand is a good idea. In a recent case pending in Fairfax County, we knew that liability was an issue. In fact, based on what we learned during the course of discovery, we thought we would probably lose at trial. So we advised the client that if he wer able to settle the case for the amount of his medical bills, that would be a better result than getting zero'd at trial. The client agreed with us.
So we made a "compromised demand" of the medical bills. About $25,000. We told the insurance lawyer that we'd settle the case for $25,000. We also told the adjuster directly that we'd take $25,000.
We were surprised when the offer came back: $30,000
Proof positive that Allstate does not care what your demand is. They must not have even recorded our demand! Allstate is an insurance company that performs its own evaluation based on a computer software program and just makes an offer. In this case, that dogmatic approach to cases worked in our client's favor!