Personal injury cases end one of three ways: You settle, you win with a jury, you lose with a jury. These are the only options you have at your disposal. At some point in every case the plaintiff has to ask the question, should I mediate and, then, should I settle at mediation?
These are hard questions to answer because every case rises and falls on its on merits and every case is different. However, there are some things that you should consider before, during, and after mediation to make sure that you are making a wise decision when it comes to resolving your case.
1. Should you settle at mediation or go to the jury trial
The best and only factor for you to consider when it comes to your case value and settlement offers is what a jury would do in your particular case. I often say that the jury trial is the original tort reform. In Virginia, seven people in a box will determine if you win or lose and, if you win, how much money you will receive as compensation for your injuries. If you weren’t hurt, the jury will not award you any money. If you were hurt, the jury will award you full and fair compensation.
With that said, an empirical study published in the Journal Empirical Legal Studies concluded that “in just 15% of cases, both sides were right to go to trial—meaning that the defendant paid less than the plaintiff had wanted but the plaintiff got more than the defendant had offered.” Jonathan Glater, Study Finds Settling Is Better Than Going to Trial, The New York Times (Aug. 7, 2008).
To answer the case value question—that is what would a jury award you in your particular case—you should retain an experienced personal injury lawyer who knows what juries are doing given varying facts in your jurisdiction. It is not a good idea to hire lawyer joe or your cousins sister-in-law if that attorney doesn’t practice personal injury law. You need a lawyer who knows what to ask the jury for and how to ask it.
Take a sneak peak at my case valuation thoughts here. Once you have an experienced personal injury lawyer to value your case, the next question whether you should settle at mediation or go to trial? If you do go to trial, what are the likely outcomes.
2. Plaintiffs lawyers get it wrong, but to a small degree
Studies over the last few decades have shown that plaintiff’s who submit to mediation and decide to go to trial are wrong 61% of the time. Randall Kiser calls this a decision error. That means in 6 out of 10 mediations, the plaintiff’s lawyer was wrong and the jury did not agree with the lawyers case valuation. These lawyers thought the case was worth more than the jury though the case was worth.
“The vast majority of cases do settle—from 80 to 92 percent by some estimates, Mr. Kiser said—and there is no way to know whether either side in those cases could have done better at trial. But the findings, based on a study of 2,054 cases that went to trial from 2002 to 2005, raise provocative questions about how lawyers and clients make decisions, the quality of legal advice and lawyers’ motives.”
This decision error rate is alarming. This percentage hasn’t changed which makes this study even more alarming.
As part of the study, which is the biggest of its kind to date, the authors surveyed trial outcomes over 40 years until 2004. They found that over time, poor decisions to go to trial have actually become more frequent.
What other profession has failed to increase its accuracy over four decades? If this were the medical profession, we, as a society, would not stand for such poor performance and predictability.
When plaintiff’s lawyers get the case value wrong and opt to go to trial instead of settlement, it costs plaintiffs on average $43,100. Kiser calls this the cost of decision error. The cost of decision error for plaintiffs is significantly less than for insurance companies, as we will see below.
3. Insurance companies get it wrong too, but to a large degree
Insurance companies are wrong in 24% of cases. That means in those cases the insurance company has valued the case below what the jury awarded the plaintiff. However, the average cost of its decision error is $1,100,000. That is significantly higher than $43,100.
A couple factors account for this discrepancy according to the report. First, psychologist say that a party is more likely to take a risk when she has something to lose and less likely to take a risk when she has something to gain. Second, whether there is available insurance plays a role in high error rates from the defense perspective.
“Most of the time, one of the parties has made some kind of miscalculation or mistake,” said Jeffrey J. Rachlinski, a law professor at Cornell who has studied how lawyers and clients decide to go to trial and who is co-editor of the journal. “The interesting thing about it is the errors the defendants make are much more costly.”
Id. This is interesting indeed. While insurance companies are right 76% of the time, those cases where they get it wrong they get it really wrong. There is a lesson to be learned in this fact just like there is a lesson to be learned above. Here, the plaintiff and the plaintiff lawyers must fairly evaluate the case. When the insurance company refuses to come anywhere close, go to trial. If the insurance company makes an offer inside what I call the “range of possibility,” then the safe bet is to make the deal. If the insurance company never makes an offer inside the “range of possibility,” then go to trial.
4. The tale of two cases
Not too long ago I had a husband and wife client pair who were injured in the same car wreck in Lynchburg. I though that the husband’s case would be more difficult to resolve in mediation. I also thought that the wife’s case would easily resolve in mediation.
The difference was that the husband injured his knee which he had just had totally replaced. And the wife injured her neck that had never been injured before. The husband’s injury resulted in a revision surgery that solved the problem and the wife’s injury was an ongoing permanent injury.
Trial dates were set in both cases and we attempted a mediation in both cases prior to trial. By lunch it became clear that the wife’s case would not settle at mediation. We were making good progress in the husband’s case. We ended the day settling the husband’s case for a value that almost reached 3 times his medical expenses (less the saved cost of trial).
In the wife’s case, which I wrote about here, she had $22,792.22 in medical expenses. The insurance company offered $9,985 in mediation. It never increased it’s final offer and we went to trial. After a one day jury trial, the jury decided the case value in favor or my client and awarded damages in the amount of $65,000.00.
The moral of the story is that some cases can settle at mediation and some won’t. You need an attorney who knows what the local juries are doing. Then, you can get advice that is reliable. My experience tells me that most plaintiffs are risk averse when real money is on the table. However, my experience also tells me when to advise a client that the insurance company is yanking her chain. If that is the case, we just need to go to trial.