A lot of people ask us, "What is the formula for settlement in a personal injury case?" We often get calls from people who are trying to settle their case on their own or they want to know what our methodology for recommending a settlement range. We hear things like, "I heard that you take the medical bills, you add them up and then you multiply by three or by two or by four - what is the formula?"  Well this may come as a surprise to you, but there is no formula for settling personal injury claims.

What Really Determines How Much an Injury Case is Worth

Personal injury claims - when they go to trial - are determined by juries. The jury decides how much money the plaintiff will be awarded. They're not given a specific formula to follow; instead, they're given evidence and a list of items of damage that they may consider when deciding what the case is actually worth.

While there isn't a formula, there is definitely a methodology. A way of looking at cases that are engaged in both by the insurance company - who is making the offer - and by the personal injury attorney, who is making the recommendation for settlement.

Ultimately, the question that both the insurance company and your lawyer are answering is, "What would a jury do with your case?"

In order to answer that, at least from the insurance company's perspective, what they're doing is keeping track of thousands of cases a year across the country and how much those cases settle for or how much money is awarded by a jury.

They have all sorts of data including what are the injuries being claimed, what are the medical bills, is there any scarring, what did the person do for a living, how much time did they miss off of work, do they have any permanent disability, etc. They take all of those numbers and put them into their database. They can extract from that database knowledge and information about what juries in the same or similar circumstances in your region have done, and they also know how successful they have been in settling cases with same or similar type injuries.

It's important to know that only your region matters. What that means is that you may have a case in Virginia, but you hear about somebody in California or in New York who received a certain amount of money for a broken ankle and you wonder why your case isn't valued as highly as those others. The issue is that what we're looking at is what Virginia juries have done in the past cases involving your particular injury. That is the market place, so the jury is the marketplace.

We also know that the insurance companies have the most information about this; why?  Because they are the one settling more cases than any lawyers possibly could.  It doesn't mean they're right all the time, but it means it has a statistical matter.  They're going to have the most information about what has gone on in the past.

What Non-economic Factors Go Into the Value of Your Case?

There really are two big ones from the insurance company's standpoint.

  1. Who is your doctor?
  2. Who is your lawyer?

You now know that the insurance companies keep track of everything so they have these big databases. Well, one of the thing they can figure is which doctors are the "over-treaters" and generates medical bills that are easier to challenge at trial in front of a jury.

They also know which doctors make bad witnesses (and which doctors make good witnesses as well).

It may surprise you to also learn that there are a lot of lawyers that make referrals of clients to doctors which can be hazardous to your case. This is something that you'll never know unless you go to trial, but it can be the "Kiss of Death" for your case. If your lawyer is one who refers lots and lots of claimants to the same doctor that is going to look bad during cross examination at trial. The argument is going to be made that that doctor is shading his testimony to favor your lawyer. So you need to ask that question of your lawyer if you are getting a referral to a doctor, but you need to know how many times has that lawyer referred to that doctor, how many patients a year, a month because it can be vital to your case.

The second thing they want to know is who is your lawyer. The insurance companies know which auto accident attorneys settle everything. That's important because they know that some lawyers will never go to trial, so they can be convinced to take a lower amount of money for your case. They keep track of this stuff. The other thing they know is whether or not your lawyer focuses on certain areas of law or is just a general practitioner. That's important because the insurance company is making an evaluation of how likely it is that your lawyer will do a great job if you have to go to trial. Remember that while most of these cases settle, a certain percentage will go to trial every year and you're going to want to go to trial with someone who is an experienced auto accident lawyer.

What goes into your lawyer's evaluation? Typically a good auto accident lawyer will not tell you what your case is worth until you have finished your treatment (and if they tell you what it's worth without all the treatment being done, they're just guessing).  They should create their evaluation from all the doctor reports, the medical bills, and information from your employer.  They should have spoken to your doctor about the nature and extent of your injury, and then your lawyer will make you a settlement evaluation in writing before any demand is made on the insurance company.

An experienced Virginia personal injury lawyer should able to tell you, "Look, in my city or town or in other cities or towns where I've tried a lot of cases, I think your case is worth between X and Y."

Ben Glass
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Ben Glass is a nationally recognized car accident and ERISA disability attorney in Fairfax, VA.