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Mediation is like watching the TV program American Pickers. The show is a great example of how people negotiate. The program is about two men who travel across the country to buy antiques for their store. When they find someone who is willing to sell something they want, they point out issues they have with the item. For instance, a sign they want to buy may be bent, have holes in it, and be rusted. The seller, on the other hand, points out the good things about the item. They may say it is rare, has graphics on two sides, has good subject matter and is unique. As each side evaluates the item having heard the good, the bad, and the ugly about the item, they go back and forth with offers to buy/sell. If they can agree to a price they shake hands and the deal is done.
Mediation takes on a similar process, except that instead of dealing directly with the buyer/seller, the mediator will be the go between you and your attorney and Defendant’s insurer and their attorney. The mediator will be obtaining information from each side about your particular case and will act as kind of a devil’s advocate in pointing out issues each side will have to deal with at trial. The mediator does this in order to hopefully get the offer from the insurance company up. And, on the other hand, get the demand from the Plaintiff down. The parties are likely to go back and forth with each other making several offers during the negotiation process. In the end, it will be up to you to decide if you are going to settle the case at the final offer or go to trial.
If the parties can reach a settlement, the parties will sign an agreement (known as an 80(a) agreement) that is binding and the negotiations are complete. A more formal agreement will later be entered into and the court will be notified of the settlement.
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T = Time.
If an agreement can be made, the insurance company will write you and your attorney a draft. Your attorney will put it in his trust account and then disperse you a check after paying his fees and costs. If you go to trial, you will have to wait until a judgment is rendered. Sometimes judgments can be appealed and it can take a very long time before the ultimate outcome of the trial is determined and paid.
R = Risk.
Trial is very risky. You don’t know how a jury is going to decide. Your attorney will help you evaluate the risk in going to trial and prognosticate a likely outcome. But, there are no guarantees. With a settlement you know the outcome. There is another risk in proceeding to trial. If the case does not settle the insurance company will likely file what is known as an offer of judgment for the last offer that was made to you. Court rules, in order to encourage litigants to accept an offer of judgment, provide for sanctions – if it is determined that the Defendant’s offer of judgment is more than the jury’s award. If sanctions are applied to your case you will have to pay Defendant’s expert fees (usually pretty substantial in a jury trial) and double the taxable costs. The cost and expert fees start to run 30 days after the offer is made. Your attorney can file an offer of judgment too for the last demand you made and the same scenario for sanctions apply to Defendant. But insurance companies can afford to loose an offer of judgment. You probably cannot.
A = Anxiety.
Trials are high stress situations. It is stressful to know that you can go to trial and possibly not get the judgment you think you should and possibly be sanctioned for loosing an offer of judgment. It is stressful to know that experts who testify for you and you will be cross-examined by the defense attorney. Sitting through a trial and cross examinations is not pleasant to say the least. Settlement relieves the anxiety of litigation.
C = Cost.
Litigation leading up to trial and trials in and of themselves are expensive. Expert fees usually run thousands of dollars. These fees are in addition to attorney fees. Consider the net dollars that you will receive by saving litigation costs if you can settle your case. For example, if you have a chance at receiving a $50,000 judgement at trial you could be spending $16,600 in attorney fees and perhaps $5,500 in expert fees. Going to trial will cost you approximately $22,000 netting you $28,000. If you were able to settle your case at mediation for $40,000 attorney fees are likely to be approximately $13,200. But you would save $5,500 in expert fees. So, your net dollars would be $26,800 under this scenario. Would it be worth the difference of $1,200 to go through a risky stressful trial that may get appealed?
E = Emotions.
In determining if you want to settle, analyze your case logically. Think in terms of what a jury is likely to decide as to who is liable and what is reasonable compensation for your injury. Keep in mind it is the jury, who is not emotionally attached to your case, that will ultimately decide the value of your case if you choose not to settle. The jury will be taking into account both sides of the litigation.
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- What is the jury going to like/dislike about your case?
- What will likely come into evidence at trial? What evidence will likely be excluded from the jury?
- How do your experts match up with opposing counsel’s experts?
- What defenses is the jury likely to consider?
- What is the jury likely to consider as the reasonable and necessary medical expenses?
- What percentage of fault will likely be applied to you by the jury?
- What is the jury likely to consider as the injury caused by the accident?
- Was your condition a pre-existing condition? Was your pre-existing condition made worse by the accident or did it stay the same.
- What is the jury likely to consider as a reasonable length of recovery time?