You’ve met your injured client, executed your fee agreement, gathered your facts and put your file together. Your client is asking whether it is time to settle her personal injury case. Is it time to consider a settlement? If you settle a case too soon, you are leaving money on the table. If you wait too long, you are wasting time…. or worse.
Be Clear on Notice and Filing Deadlines
When deciding whether it is time to settle your case, first and foremost, check the statute of limitations. If you have a statute problem, all bets are off. If you have less than six months, file suit. You can worry about settlement later. You do not want to lose your right to bring a claim. There are exceedingly few exceptions to a statute of limitations.
You can always serve the defendant, send a copy to the claims representative with whom you’ve been dealing, and agree to take no further action during a fixed time period, during which it is understood that settlement negotiations will be addressed. Also, be sure early on, when opening your file, whether there are any statutory notice provisions with which you must comply pre-suit. Sometimes they are obvious — clearly county-owned vehicle — and sometimes you will never be able to know unless you file suit and get the defendant’s discovery responses.
You can always serve the defendant, send a copy to the claims representative, and agree to take no further action during a fixed time period, during which it is understood that settlement negotiations will be addressed. Also, be sure early on, when opening your file, whether there are any statutory notice provisions with which you must comply pre-suit. Claims against state and local governments typically have provisions such as these, which require specific notice to be given to designated officials. If you are an inexperienced lawyer or a pro se plaintiff, read that last sentence carefully. Because “Oh, come on, I’m sure it got to the right person” will not fly.
The time limits for providing notice are usually much shorter than the statutory limitations period for the cause of action and providing notice is generally a prerequisite to being able to file a lawsuit. Claims against state and local governments typically have provisions such as these, which require specific notice to be given to designated officials. In Maryland, the period can be as little as 180 days. Miss one of these and the next thing you will get is a motion to dismiss, followed shortly by a bar complaint, a very viable claim for legal malpractice, or both. I get calls to serve as an expert in legal malpractice cases, and most involve the statute of limitations or failure to give notice. These cases almost always require counsel who had plenty of time to bring a claim and just kept putting it off.
- How much should I ask for in settlement negotiations?
- How much is my case worth?
- Is there a settlement formula in personal injury cases?
When Settlement Is Possible
If you do not have an impending limitations problem, you may wish to approach settlement as shortly after the date of the accident as possible, usually within the first year and well before filing your complaint, if:
- The facts situation is clear;
- You have identified the defendant;
- Damages are modest and clear and all insurance has clearly been exhausted; and
- Liability is clear, whether or not it is in your favor.
We have settled serious injury cases worth multi-millions of dollars before filing suit. But that is the exception rather than the rule. To maximize the value of a serious injury case, you are most likely going to put that case into suit. We go through the settlement process because it does not cost the client anything and sometimes our client for whatever reason wants to settle for less than the most that they could get by waiting longer. But it is the exception rather than the rule to have more insurance money available and be able to achieve what I would call a quality settlement without filing a lawsuit. Why? Because the insurance companies want to know if the client will file suit. If we have the case, the insurance company knows full well Miller & Zois is more than happy to file a lawsuit and get into the weeds and battle. But they don’t know if the client will do it. So, more often than not, they hold back money as a gut check.
It is also worth pointing out that we are talking about personal injury claims involving motor vehicle accidents. If you have a medical malpractice case, you are filing a lawsuit 98% of the time.
Maximum Medical Improvement Before Settlement
In every case where limitations are not an issue, settlement discussions should not begin until your injured client has reached maximum medical improvement. What is the maximum medical improvement? It is the point when your client’s injuries are completely healed, or when he has reached the maximum benefit medical treatment will provide and his injuries have become permanent. Generally, I advise not to approach settlement discussions until the client has been at maximum medical improvement for at least ninety days if you have a severe injury claim. This allays fears that follow-up treatment will be needed for any remaining residual complaints, or that the client has merely plateaued and will heal further with the passage of time.
Also, in the event of a permanent injury, you will need some time after the completion of medical treatment to secure documentation of the permanent nature of the client’s injuries. Moreover, if those injuries will affect the client’s ability to work or to earn an amount comparable to his pre-injury wages, you will need time to secure additional documentation of those damages, such as a vocational assessment, or a report from an economist. Make sure you don’t fail to seek recoverable damages in a premature rush to the settlement table.