Trial or Settlement? What are the chances?
Many new clients are very curious about the likelihood that their claim will end up in trial. In this Post we will attempt to address this issue as thoroughly as we can, in the absence of a specific case context. In this analysis, keep in mind that there are two stages of litigation: the "active" stage that occurs after a suit is filed, but before a trial is actually held (this will typically last 8 months to a year); and the actual "trial" stage, when the parties, witnesses and jurors actually attend court and evidence is presented (usually a Michigan civil action tried by an experienced attorney will last only 3-20 trial days, depending on the complications, the number of parties and witnesses, and the work ethic of the judge).
First, just as the Courts have created Plea Agreements to encourage criminal cases to reach a conclusion without the time and expense of trial, they have also created devices and rules to encourage the negotiated settlement of civil actions. When Mr. Thompson first entered practice in 1978, most cases were either settled early by an experienced adjuster, or they did not settle until the eleventh hour. It was highly likely that an injured person would not be offered a reasonable settlement until after the jury selection process had begun. Experienced adjusters would wait to see if the injured person had the stamina to wait out 2 or 3 years of litigation and might also wait to get a look at the potential jury. Those days are long gone.
Today, hard-working judges will have simple injury cases ready for trial within 8-10 months of filing. Even complicated medical malpractice or product liability cases are likely to be assigned a trial date within 15 to 18 months of filing. Injured people are also more likely to have financial support during this period, in the form of No Fault PIP benefits, for example, that enable them to "outlast" the insurer.
During this active stage of litigation prior to Trial, the Michigan courts will routinely schedule a "Facilitated Mediation", forcing the parties to come together and discuss settlement. This one-day event is usually supervised by an experienced attorney who is trained to help open and maintain channels of communication between hostile parties. There are some excellent Mediators available in this region, including John Racine, John Blakeslee, Chuck Judson and Jon Muth, just to name a few. Mediation is often a hollow gesture, and may be a waste of time in the case of particular attorneys and adjusters. It may have the effect of bypassing an attorney or adjuster who is more interested in pushing the process than in achieving a fair outcome, though, when the parties are gathered in one room. It can also force a party to actually analyze the adversary's claim or defense for the first time.
If Mediation is unsuccessful, the Court will order parties who have prepared for trial to present their proofs to a neutral, experienced panel, in an abbreviated fashion. This panel is then charged with recommending a fair settlement which the parties have 28 days to accept or reject. Each party makes this decision privately, and if both accept, the case is concluded at that time. If either party rejects, the case continues forward, however, if the rejecting party does not ultimately improve upon the recommended settlement by at least ten percent, he or she will be charged with the other party's actual attorneys fees and costs. Thus, while the Evaluation is not "binding" it definitely carries teeth and may cause the parties to deliberate hard with regard to the soundness of their position.
Throughout this period, the parties are also free to carry on negotiations, either formally or informally, and many do. Some parties will utilize "Offers of Judgment" to enhance the impact of a settlement position with potential sanctions. Others--especially more experienced and confident attorneys, will strive to keep a door open to negotiations throughout litigation, since most clients would prefer to achieve closure at the earliest date reasonably possible, with the fewest litigation expenses.
Depending on the nature of the case, it has been our experience that many adjusters today tend to be less experienced and less professional than they were thirty years ago. Some companies employ very inexperienced persons in this role who want to wait and see what a Case Evaluation panel thinks about the likely verdict and to use the third-party evaluation to justify any settlement offered. As the Michigan Supreme Court has trended toward favoring insurers, adjusters have also become more likely to demand that every avenue of potential summary disposition be explored.
As a result, it has been our experience that fewer cases actually go to trial, today, but cases are more likely to reach the Case Evaluation stage, particularly if they involve substantial damages. We sense that insurers are intentionally waiting to see that the injured person has the stamina to withstand litigation and that his or her attorney is capable of proving a significant case, without stumbling over any proof problems, before a reasonable settlement will be offered.
Looking at our own caseload, and comparing it with the cases we help to Mediate or Evaluate, it appears that fewer than one case in ten civil actions actually results in a trial. This is not to say that your attorney does not need to be experienced in trial practice, however, as insurers are good poker players: they will bluff an attorney or client who appears unwilling or unable to prove a case. Not surprisingly, the surest way to end up in trial is to fail to prepare for it or to telegraph a desire to settle. If both sides are well prepared and experienced, most cases settle simply because both sides can make an independent assessment of their likely outcome, and they negotiate to achieve a certain result that avoids substantial expenses and risks.
The circumstances of the injured person also have a significant impact on the likelihood of settlement. A person who is comfortable gambling is more likely to "roll the dice" on an outcome defined by a jury of strangers. A person who prefers predictability or who prefers greater privacy will be more likely to compromise. Settlement can also be influenced by factors that are highly individual to the specific case: is there a Defendant doctor who refuses to authorize settlement? To the contrary, has the Defendant employed his own attorney who is insisting that the insurance carrier "step to the window" and protect the victim and the Defendant's assets? In employment cases, we have found that settlement is often obstructed by the nasty personal feelings engendered by an alleged wrongful discharge or sexual harassment. Oddly, even a routine employment claim may generate more hard feelings than are generated from a motor vehicle accident that has caused a death.
The exact nature of the civil claim can influence settlement in other ways.
Medical malpractice insurers are notorious for eschewing potential settlements prior to the eleventh hour, but then feverishly pursuing a confidential settlement to avoid publicity. Product and professional malpractice cases may involve a manufacturer with a significant self-insured deductible. Podiatrists usually have a policy that provides only a single limit of protection for defense AND indemnification, meaning that the defense attorney often bills the insurance coverage down substantially before any payment is offered to the victim.
If a person has purchased only a small liability policy, that factor will also influence the timing of settlement negotiations. Needless to say, the typical auto insurer is less willing to incur $30,000.00 of expense costs to protect its $20,000.00 of coverage than it would be to protect a policy that placed $200,000.00 of its own money at risk. Unfortunately, in a series of decisions handed down by the Michigan Supreme Court, the potential exposure of an insurer's policy holder to an "excess judgment" not covered by insurance is far less likely to influence the insurer's decision-making. Insurers in other states are more readily held to a standard of "good faith and fair-dealing" in protecting their insured's assets from an excess judgment.
REGARDLESS OF WHO THE ATTORNEY IS, CERTAIN RULES RELATING TO SETTLEMENT ARE SET BY THE COURT:
1. SETTLEMENT IS ALWAYS THE CLIENT'S CHOICE AND NO CLIENT CAN BE FORCED TO SETTLE.
2. IF AN ATTORNEY THINKS THAT A CLIENT'S SETTLEMENT DECISION IS A CLEAR ERROR, THE ATTORNEY'S REMEDY IS TO WITHDRAW FROM THE CASE: NO CLIENT SHOULD EVER BE COMPELLED TO SETTLE TO SATISFY HIS OR HER ATTORNEY.
3. ANY SETTLEMENT PROPOSAL MUST BE RELAYED BY THE ATTORNEY TO HIS CLIENT: IT IS NEVER APPROPRIATE FOR THE ATTORNEY TO MAKE A SETTLEMENT DECISION WITHOUT THE CLIENT'S INPUT.
4. A CLIENT'S ULTIMATE SETTLEMENT DECISION SHOULD BE BASED UPON HIS OR HER OWN WELL-INFORMED SENSE OF JUSTICE AND RISK, TAKING INTO ACCOUNT A THOUGHTFUL, PROFESSIONALLY-INFORMED ANALYSIS OF THE RANGE OF LIKELY OUTCOMES AT TRIAL.