My job is to try to make insurance companies treat accident victims fairly. “Fair,” of course, is in the eye of the beholder. So what happens when you can’t come to a settlement agreement with the insurance company after an accident? Well, you have to file suit. But is that always a good idea?
One of the biggest mistakes I think people can make in handling their claims is making a business decision based on emotion. A business decision? What do you mean, Jeff? I mean that this is a business transaction, like it or not. And that means you should do your best to put emotion behind you and look at the numbers.
If you have competent representation, they’ll have a pretty reasonable idea as to what seems fair for your case. That will be based on similar cases your attorney has handled or seen, and it’s often based on discussions with other attorneys (we talk a lot about cases together). So while there’s no set-in-stone value for each case, we can generally come up with what we think is a reasonable range of value. That of course takes into consideration the strengths AND the weaknesses of your case. This is the first place where emotion will cause you trouble: If you’re emotional about your case, you’re likely thinking ONLY of the strengths and not giving enough consideration to the weaknesses of your case, and that can doom you.
So maybe you are getting good advice as to what your case should be worth. But the insurance company just isn’t giving that. Maybe you have to file suit. But at what cost?
Here is the second place where emotion will cause you even more trouble: You have to look at the math! Take this example:
You have a case where you think you should walk with about $2000. The current offer will net you $1500.
To file suit, you’ll spend $200, not to mention the ancillary costs of service and lay depositions ($500-$1000?). You’ll need to depose an expert witness to get a causation opinion (depending on the witness, you’re looking at $2000 and up, with higher MD specialties approaching and eclipsing 5 figures sometimes…). There’s a mandatory mediation where you’re responsible for 1/2 of the mediator’s fee ($400?). All told, you’re looking at a minimum of $1100 even WITHOUT your expert witness.
Best case scenario, you spend that money and get what you want, which is that extra $500. Hooray. You just spent $1100 to do that. What if it didn’t work out for you and you didn’t get that extra $500 but were stuck with what they were offering you? All of your take-home was just eaten by costs. Even worse, what if you were awarded less? And what are your odds? 50%? $80%? 10%? Does that sort of gamble make any financial sense?
You get the picture. Of course, the higher the potential value of your case, the more this makes sense. If you have a case you think should net you $100,000, then spending $5000 to go after it seems far less insane. If you have catastrophic injuries, the potential reward for what you spend to get that is far greater, so that sort of gamble makes sense. But with those lower odds, it often doesn’t make any sense.
Does that mean you never file suit on lower value cases? No, not at all. It just means you shouldn’t make that sort of decision based on emotion. If you feel that it’s the right thing to do, and you’re OK with the risk, then that’s fine. Attorneys and clients make that decision together every day. But you just need to make sure you’re taking into consideration the mathematical realities of litigation, and above all listen to your attorney! This is why you hired one in the first place.