There is no such thing as an "average" personal injury settlement in terms of a dollar amount. Aside from there being too many different types of personal injury cases, a potential settlement will depend on the unique facts of each case. This article discusses some of the primary considerations that go into a personal injury settlement and explains why "average" numbers aren't necessarily helpful in trying to guess what a case is worth.
How are Personal Injury Settlements Reached?
A personal injury settlement takes place when the person being sued (the defendant, usually through his or her insurer or attorney) agrees to pay the person suing (the plaintiff) some amount to make the plaintiff drop the case. Most personal injury cases end with a settlement, not a jury verdict, and many settle before a lawsuit is even filed. (Learn more about settlement versus litigation.)
To arrive at a settlement amount, both sides start out by determining on their own what they think the case is worth, i.e. what a jury might give the plaintiff if the case made it all the way to trial. Typically, this is accomplished by researching similar cases and seeing what juries have awarded in the past, and then factoring in any unique circumstances of the current case. If an insurance company is handling the defendant’s case, they might also have predetermined settlement amounts for different types of lawsuits.
Once both sides have established their rough estimate of an acceptable settlement amount, they will begin to send settlement offers back and forth. As both sides gather facts and get a better idea of how likely it is the plaintiff will win or lose at trial, the amount of an acceptable settlement may go higher or lower. Once an acceptable offer is made, both sides will sign a settlement agreement and the plaintiff will drop the case.
The Difference Between Median and Average
With a little bit of research, someone with a potential case can find websites and publications that give themedian jury verdict or settlement for different types of personal injury cases. Some of these publications or websites might even refer to the number given as an “average.” However, a median does not give an average or a ball park figure that anyone with a particular type of case can rely on.
The median is simply the middle range of all the cases combined, and there can be a very wide range. A few huge settlements or verdicts could make the median settlement or verdict number much higher than what a typical plaintiff might actually get. Once again, it is the individual factors of each case that matter most.
Defendant’s Assets. If a defendant simply doesn’t have the means to pay a settlement, either through his or her own funds or through an insurance company, then a high settlement isn’t possible, regardless of the facts of the case.
If a defendant loses at trial, the courts can sell the defendant's assets or garnish their wages, but if there isn’t much to sell or garnish, there is no way to make the defendant come up with the money (here's where the old "you can't get blood from a stone" adage comes into play). A plaintiff needs to consider just how much a defendant is worth and/or the policy limits of any applicable insurance, when accepting or rejecting a settlement offer.
Damages. The damages in a personal injury lawsuit include all medical expenses, lost work and other concrete financial losses caused by the defendant, as well as compensation for the plaintiff’s physical and emotional pain and suffering. If a defendant has acted intentionally or very negligently, punitive damages may also be available.
Depending on the facts of the case, concrete damages like medical expenses might be low, but the plaintiff’s potential recovery for physical and/or emotional pain and suffering might be quite high. Both sides will likely have a similar idea of what the range of concrete damages could be at trial, although items like future medical expenses could be contentious.
Researching the outcome of similar cases is the best way the parties will be able to guess at physical and emotional pain and suffering damages, but there will never be anything better than a broad range of possible verdicts. The jury is permitted to award physical and emotional pain and suffering damages based on the jury’s own assessment of what would “make the plaintiff whole,” therefore prior damage awards in similar cases are only vague indicators.
Punitive damages are designed to punish the defendant, therefore the richer the defendant, the higher the potential punitive damages. If the defendant is a large corporation, or other very wealthy entity, and the plaintiff has evidence of serious wrongdoing, the defendant may offer to pay a bigger settlement than otherwise to avoid the risk of punitive damages.
Liability. The final factor is just how strong the plaintiff’s case is against the defendant, i.e. whether the defendant is liable.
Although potential damages might be high, there may be little or no evidence that the defendant committed the acts or that the acts were what actually caused the plaintiff’s damages. Some cases might involve a defendant that is clearly liable and others might be very questionable. However, it is the nature of the law and litigation that a large number of factors will play into whether a defendant will or can be found liable.
Unless the case is fairly clear-cut one way or the other, neither side will be entirely confident that they can win the case at trial. As pre-trial litigation goes on, for example taking the deposition of key witnesses, a clearer picture may emerge of what the likely outcome will be. At that point, the sides will be more likely agree on acceptable settlement.