Depending on the study, statistics show that about 95% of personal injury lawsuits will reach a settlement before trial, and since a significant number of personal injury cases arise from car accidents, those numbers hold true for car accident lawsuits as well. So, why do most car accident cases settle? There are several reasons.
Even though the plaintiff is suing another driver in most car accident cases, it’s very rare for the defendant him/herself to pay out any judgment if the plaintiff wins. Rather, it’s the defendant’s car insurance company that pays, and it's in the interest of the insurance company to resolve a car accident claim as quickly as possible (for a lot of the reasons we'll discuss in the sections that follow, including avoiding the unpredictability of a trial, and achieving closure). Learn more about the role of insurance in a car accident case.
Now, just because it's in the insurance company's best interest to resolve a car accident claim quickly via settlement, that doesn't mean it's going to be in your best interest to do so too. Insurance companies aren't in the business of overpaying claimants after a car accident. Their goal is to pay a claimant as little as possible, get the release signed, and close the claim. So, it's important to make sure you don't agree to any settlement until you understand the full scope and extent of your losses, and until the insurance company comes to the negotiating table with an offer that amounts to fair compensation for those losses. Get more car accident settlement tips.
Trials are unpredictable. Anything can happen, regardless of how strong a case a plaintiff or defendant has. To avoid an unexpected result and control their risks, plaintiffs and defendants (and their respective insurers and attorneys) will look to settle a lawsuit. Perhaps neither party will get exactly what it wants, but settlement brings a measure of certainty. The plaintiff can avoid getting nothing and the defendant can avoid a potential massive verdict for the plaintiff.
The plaintiff will want to obtain a payment from the defendant as soon as possible. Besides the fact that money now is worth more than money later, the plaintiff will likely have expenses and costs that are building up. From medical bills to lost wages, the longer it takes to receive a payment, the deeper in debt the plaintiff may become. Even if your car accident case goes to trial and you win a judgment, there's no guarantee you'll be able to collect it, especially if it's for an amount that exceeds the defendant's insurance coverage. Negotiating a fair car accident settlement gets you a check relatively quickly, so you can move on with your life.
Because most plaintiff’s attorneys get paid through a contingency fee agreement, the sooner a case settles, the sooner the plaintiff’s attorney gets paid. All else being equal, a quicker settlement payment is more profitable for the plaintiff’s attorney. This is because the longer a case goes on, the more time and work the plaintiff’s attorney must put into the case, with no guarantee of an increased settlement offer.
While settlement offers often rise as the lawsuit goes on, that’s not always the case. Even if a settlement offer goes up over the course of the lawsuit, there’s no guarantee the increase will rise in proportion to the additional work the plaintiff’s attorney must put in. Then there’s always the risk that if the plaintiff refuses a settlement and the case goes to trial, the plaintiff loses and the plaintiff’s attorney gets nothing.
Litigation is expensive. Cases can go on for years, and the costs can really add up. The time and effort to attend and take depositions, produce documents, and hire expert witnesses can easily reach five figures before trial, with this cost almost doubling just for the trial itself. Both sides will incur these costs and would like to avoid or reduce them whenever possible. Settlement provides this opportunity.
Practically speaking, the manner in which most law offices function does not allow for every case to go to trial. Each attorney is typically juggling multiple cases at once. If every single case went to trial, the attorneys would simply be unable to fully prepare for and try every case. This is similar to the criminal justice system, where plea bargaining is common. Without plea bargaining, there wouldn’t be enough prosecutors to take each case to trial.
Plaintiffs and defendants desire finality and want to move on with their lives after a car accident. Insurance companies want cases completed so they can close claim files. Settling a case achieves this closure much more quickly. Not only is a trial avoided, but a potential appeal is off the table as well. It might take several years to get a case to trial, but an appeal can add another few years to the case’s lifespan.
The bottom line is that settlement is often the most efficient way to dispose of a car accident lawsuit, for everyone involved. It saves time, money and unpleasant surprises.