How to Value a Personal Injury Case

The vast majority of personal injury cases settle out of court. Litigation -- the process of taking a personal injury lawsuit through the civil court system -- is a costly proposition with no guarantee of a good result. Both plaintiffs and defendants generally recognize that reaching a reasonable injury settlement is vastly preferable to the court-based process. But how do you put a monetary value on a personal injury case? What constitutes a fair (or even acceptable) settlement amount? Read on to learn how to value a personal injury case.

The Concept of "Damages"

You cannot appropriately value a personal injury case unless you understand what damages are available in your case.

There are three basic types of damages: economic, non-economic and punitive. In nearly every personal injury case, economic and non-economic damages are at issue. Punitive damages -- those being damages designed purely to punish an egregiously negligent party -- are generally available only in specific instances, and generally aren’t part of settlement calculations in most cases.

Economic damages are quantifiable expenditures or financial losses that can be directly attributed to the injury suffered, and to the underlying accident. Economic damages can be relatively easy to calculate, particularly if you are diligent about keeping thorough personal records of all you spend or lose (including wages) due to your injury.

Non-economic damages are the proverbial pain and suffering damages, and are designed to compensate you for any emotional or psychological toll your injuries have taken on your life. While economic damages may be subject to some negotiation, placing a value on them is relatively easy. No so with pain and suffering.

Determining what to demand in non-economic damages requires a combination of research, experience and honest assessment. While every injured party would like a seven-figure sum regardless of the injury, the simple truth is that insurance companies (who are likely paying any settlement) only have so much money to pay under their policies.

An experienced attorney will know how certain insurance companies work, and will generally have some idea of how much money, in total, is available. A little research can go a long way toward determining what juries have awarded in similar cases, which can also inform a demand. Finally, an honest assessment of the value of the case -- and the dollar amount you consider to be fair compensation -- will help frame any settlement demand. As such, a slip and fall with minor bumps and bruises will likely settle for far less than a slip and fall that results in permanent disability.

Framing a Demand

Once you understand the damages available, as well as the amount of potential settlement money available, it is time to frame a demand and formalize it in a demand letter.

A demand should always leave room for negotiation, so it is a smart idea to ask for a sum greater than your “bottom line” number. When framing your demand, you simply add up your economic damages and any monetary compensation for pain and suffering you feel you deserve. The defendant or insurance company will then begin to negotiate that number down.

Depending on the strengths and weaknesses of your case, or the time frame in which the demand is made, a counteroffer may be significantly lower than your initial demand. This is normal. Insurance companies are always looking for discounts for early resolution of cases, and will magnify any perceived weaknesses in your case in an attempt to obtain the cheapest settlement possible.

The negotiation process can be a matter of a few phone calls between attorneys, or can involve mediators, facilitators and even judges. Courts prefer that cases settle prior to trial, and will often bring any and all resources at their disposal to bear to ensure that a case settles. The value you place upon your case can directly impact how settlement negotiations are handled. In fact, injured parties sometimes make extremely high demands to force unwilling defendants into mediation or facilitation.

The Real Value of Your Case

Only you, as an injured person, can know the true value of a case. But when placing a settlement value on a personal injury claim, it is important to keep in mind that the ultimate goal is recovery and that recovery requires compromise.

If you have a particularly strong case, where the facts are not in dispute and liability is relatively clear, you are likely in a position to place a high value on your case and still settle. However, for every crack and weakness in the facts of your case, your demand will likely be reduced accordingly. If you enter negotiations with these facts in mind, and are mentally and financially prepared to receive fair compensation as opposed to a windfall, you and your attorney should be able to place a value on your case that will lead to a satisfactory settlement.

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