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How to Negotiate the Best Settlement of Your Career

After a long day at a mediation, the defense lawyers and their claim adjuster leave without warning. A bit perplexed after spending 6 hours in the mediation, you ask the mediator why the defense lawyers and their adjuster suddenly walked out.  Turns out, the claims adjuster’s authority was limited to $1M and they could not reach the senior claims adjuster to get more money.

This, my friend, is a common problem faced at mediation or settlement conferences.  The defense lawyer will arrive alone to the mediation or bring a junior claims adjuster with limited authority. When this happens, you might as well go home.

Negotiating the best settlement for your case is an art form. Will you succeed every time with these practices?  No, but you won’t have much more than a wing and a prayer without them.

4 Steps to Prepare for Mediation

Step #1: 3 Numbers You Must Know before Mediation

Before the mediation/settlement conference, you will need three numbers:

  • Settlement Demand,
  • Settlement Goal,
  • Settlement Value

Settlement Demand: The highest realistic value of the damages, a/k/a the verdict value. 

Determine the settlement value by estimating the economic and non-economic damages. Once you estimate the economic damages (e.g., loss of earnings, future medical expenses, etc.), then estimate the non-economic damages based upon the permanency, severity and limiting nature of the injuries. BE REALISTIC. If you use pie in the sky numbers, your settlement demand is worthless.

Settlement Goal:  The highest realistic goal for a settlement. The settlement value might be 25%-30% higher than the lowest acceptable number (a/k/a, settlement value).

Settlement Value: This is your client’s bottom line. Your client will not settle for a penny less than the settlement value and you ask for their word that they will not authorize a settlement lower than the settlement value.

If your settlement demand is $3.5M, the settlement goal might be $2.1M with a settlement value of $1.6M.  Just make sure your client agrees with your values, gives your authority based upon your numbers and won’t accept anything less than the settlement value.

Document the settlement demand, settlement goal and settlement value in your case management system. Revisit the numbers once a year to make sure they are still correct, e.g., if your client dies or goes back to work, the numbers will need to be adjusted.

Step #2: Insist Upon the Physical Presence of the Senior Most
Claims Adjuster at the Mediation

Defendants’ counsel is not serious about negotiating a settlement if they will not bring the senior claims adjuster.  If defendants’ counsel is unwilling to bring the senior most claims adjuster to the mediation, then the mediation will be a waste of time and you should refuse to proceed with mediation.  

You should insist that defendants’ counsel sign a stipulation containing the above condition prior to agreeing to mediation.

All insurance carriers involved must have a representative physically present at the mediation, who not only has authority to settle, but also the ability to negotiate without a superior.  This representative shall be the senior most representative who has participated in evaluating this case and who has the “final call” in negotiations.

The personal appearance of this representative may not be waived except by the written consent of all counsel, and on the affirmance that the representative will be readily available by phone at all times during the mediation.

If you doubt whether the defense will negotiate in good faith, insist upon a good faith initial settlement offer before the mediation. If the defense lawyer balks, they are sending a clear signal that they are not serious about settling at mediation.

Step #3: Confirm Updated Lien Amounts Before the Mediation

Do not go to mediation without the updated lien amount from Medicare and/or Medicaid.  The lien amount will affect your client’s net recovery, and that is the only thing that should matter. If the Medicare lien is $600k, you should increase the settlement demand by $600k.

Don’t have time to negotiate liens?  Precision Resolution, LLC (PrecisionLienResolution.com) has a team of attorneys who are experts in lien reduction (Paul R. Loudenslager, Esq. and Yeganeh Gibson, Esq. get tremendous results!). I would not handle a case without contacting the team of legal experts at Precision Resolution, LLC.

Step #4: Make Sure You Know Your Clients’ Dreams

Who knows what your clients dreams are, but shouldn’t you at least ask? You might be surprised.  Ask your clients to dream big. Your clients’ dream might be as simple as buying a home, funding their kids’ college plans, or supplementing their retirement account.  

Next, document your client’s dream in a Value Creation Letter (the Value Creation Letter is a registered trademark, protected by copyright and an integral concept of The Strategic Coach, Inc. Used with permission. www.strategiccoach.com).  The Value Creation Letter documents your clients’ dreams and shows them that you’re listening. And when it comes time for mediation, you will know exactly what your clients need to accomplish.

Our Value Creation Letter

Dear Susan,

It was a pleasure learning about your visions, challenges, opportunities  and dreams.  In our discussion, we identified three of the main challenges that need to be resolved toward these goals:

  • You’re afraid that you won’t have money to pay for your daughters’ college education;
  • You’re afraid you won’t have money for retirement; and
  • You don’t want to have any debts when your case is over.

You have identified these challenges during our meeting.  By the end of your case, we will do our best to help fund your dreams and respond to your biggest challenges.  

We hope we can help you grow a bigger future.

Sincerely,

John Fisher

Why should every lawyer do this? First, because no one else is doing this.  Second, you will know exactly the amount of money that your client needs to fulfill their biggest dreams. And fulfilling our clients’ dreams is why you practice law.

3 Rules for a Successful Mediation

Rule #1:  Never Reveal Your Bottom Line

Only reduce your settlement demand in response to monetary offers.  Do not give your bottom line (a/k/a settlement value) to anyone, including the Judge/mediator.  When you reveal your bottom line with the defense or mediator, you have compromised your position in exchange for nothing.

Do not respond to hypothetical settlement offers.  If the mediator asks whether you will settle for $1M, tell them that you will only respond to monetary offers. If the defense wants to find out whether you will settle for $1M, they can make the offer and they will quickly find out.

Rule #2: Confirm that What You Tell the Mediator is “In Strict Confidence”

Always confirm with the mediator that information that you reveal is “in strict confidence” and should not be revealed to the defense counsel. If you do not emphasize this repeatedly with the mediator, there is a decent chance what the mediator will share the information with defense counsel.

Rule #3: Don’t be Afraid to Leave

If the defense presents a low ball offer, sometimes the best solution is leaving the mediation.  That’s right, just tell the mediator that you’re leaving, slam your books on the table and walk out. This sends a message—the defense did not come to the mediation in good faith and you won’t let them waste your time.  And the defense will know that you’re serious about going to trial.

How to Confirm a Settlement Agreement

Verbal settlement agreements are not enforceable under New York law.  For this reason, every settlement agreement should be either: (a) confirmed in a writing signed by defendants’ counsel; or (b) confirmed on the record in open court with defendant’s counsel in the presence of the Judge.

If there are any special conditions of settlement required by the defendant’s counsel, that should be specified either in writing or stated on the record in open court.  Whenever a case settles, you should: 

  • Confirm the settlement in writing, or in open court in the presence of a Judge; 
  • Confirm with defendant’s counsel ALL conditions of the settlement; and 
  • Confirm with defendant’s counsel the exact language that will be contained on the release agreement(s).

The written settlement agreement (e.g., Stipulation of Settlement), signed by counsel for all of the settling parties, should specify ALL of the terms of the settlement.  The stipulation should incorporate a paragraph stating that the written settlement agreement includes all of the terms and conditions of the settlement and there are no other conditions of settlement, either written or verbal.

Do NOT Leave the Mediation Without Doing this First

The real negotiation with defendant’s counsel happens after you settle the case. If you do not confirm ALL of the details of a settlement in writing, the defendant’s counsel will delay payment of the settlement check.  It is better to confirm EVERY SINGLE DETAIL of the settlement with defendant’s counsel AS SOON AS THE CASE IS SETTLED.

It is not enough to simply sign a stipulation of settlement that is signed by counsel for the settling parties.  You must confirm the exact language of the Release Agreement and annex the Release Agreement to the written Stipulation of Settlement.  By precisely agreeing in writing upon all terms of the settlement, you will avoid any attempt by defendant’s counsel to re-negotiate the conditions of the settlement after the day of the settlement.  

This will take extra time to agree in writing upon all of the terms of settlement, but it will prevent a delay in the payment of the settlement check.  For this reason, it is very important to confirm every single condition of settlement.


Image by Capri23auto from Pixabay 


Leave a comment below telling me what surprised, inspired or taught you the most (I personally respond to every comment). And if you disagree with my take on running a personal injury law firm, or have a specific, actionable tip, I’d love to hear from you.
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