You were injured in a car accident, and you filed a car insurance claim with the other driver’s insurance company, but settlement negotiations have bogged down. You (or your lawyer) can't seem to settle the claim for what you think is a fair amount. Should you accept what is offered or file a car accident lawsuit?
There is really only one reason to file a car accident lawsuit (or any type of personal injury lawsuit for that matter), and that's money. Plaintiffs file lawsuits to get fair compensation for their injuries. If you don't see the other side coming to the negotiating table with a fair offer, a lawsuit might be your best option. Read on to learn more.
Personal injury litigation boils down to money. If your lawyer believes that your case is worth significantly more than what the insurer is offering, and it is unlikely that the insurer will increase its offer in pre-suit injury settlement negotiations, then it is time to file a lawsuit.
But how far apart do the two sides need to be before filing a lawsuit makes sense? This is where you must remember that car accident injury claims do not have a specific value; instead, they have a range of values.
This is because part of the value of a car accident claim is the injured person's pain and suffering, which is not typically subject to exact calculation. So, in reality, a claim is not worth, for example, $50,000. Instead, it is more accurate to say that the case is worth $40,000 to $60,000. When you think about the value of a car accident claim in this way, then you get a better picture on what your settlement goals should be. In a case that is worth $40,000 to $60,000, your goal should be to settle the case for somewhere in that range (hopefully towards the higher end).
So, if you and your lawyer value your car accident case at $40,000 to $60,000, and the insurer’s final pre-suit offer is $52,000, you take the offer and settle the case. That’s an easy decision. If the insurer’s final pre-suit offer is $38,500, it probably makes sense to take it. It's close enough to your valuation of the case. If the final offer is $20,000, that’s also an easy decision. Put the case in suit.
Now for a harder example. Let’s say that the insurer’s final offer is $30,000. In that situation, you are certainly justified in filing a lawsuit. The offer wasn’t close enough to your valuation of the case. But, keep in mind that, if you put a case in suit, you most likely won’t be able to talk settlement again for at least a few months. This is because, once the case is in suit, the defense attorney will want to do pre-trial investigation and discovery, and the insurer will not be interested in talking settlement until its attorney has completed investigation and is ready to make a settlement recommendation to the insurer.
Also, keep in mind that, if you file suit, your lawyer’s out of pocket expenses will start to increase significantly, and that it is possible that a later settlement will not put a lot more money in your pocket.
Let’s look at another example. Let’s say that, pre-suit, your lawyer’s costs are $1,000. With a $39,000 offer and a 1/3 contingent fee agreement, your lawyer’s fee is $13,000. So, you would net $25,000 from the settlement. Let’s say that you reject that offer and put the case in suit. After a year of pre-trial investigation, the insurer increases its offer to $54,000, but your lawyer’s costs have increased to $6,000. After the 1/3 attorney’s fee and the costs, you would net $30,000 from the settlement, a year later. Was it worth a year’s wait to get $5,000 more? Only you can decide that. Learn more about costs in a personal injury case.
The time delay and the increased expenses show that it is only worth putting a case in suit if you and your lawyer feel that the case is worth substantially more than the insurer’s final pre-suit offer.
Note that, for better or worse, it is your lawyer’s opinion that is probably most significant when it comes to deciding whether a lawsuit is the right move. Valuing a case may not seem like rocket science, but it isn’t as straightforward as you might think. The average person generally doesn’t have the inside information -- such as prior settlement and jury verdict amounts in similar cases -- that one needs in order to value a case accurately.
With respect to valuing your case, you have to trust your lawyer. The attorney-client relationship is based on trust, after all. Learn more about getting help from a personal injury lawyer.