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Settlements FAQ

Answers To The Most Frequently Asked Questions Regarding Settlement

1. What is a settlement?

A settlement is an agreement to resolve the differences between one or more parties in a claim or lawsuit. Most settlements in civil cases involve the payment of money to the plaintiff in exchange for the plaintiff dismissing his or her claims against the defendant. However, settlements can have many non-monetary terms.

2. When can a settlement occur?

A settlement can occur at any time from the moment that the defendant first becomes aware of a claim, before trial, during trial, or even while a case is on an appeal.

3. If there are more than one defendants in my case, can I settle with one defendant and proceed in litigation or trial against the other(s)?

Yes. This is known as a partial settlement. A plaintiff is allowed to settle with one defendant and dismiss the case against that defendant while proceeding against the remaining wrongdoers. Sometimes it is in the best interest of the plaintiff to utilize this tactic and sometimes it is not. It must be decided on a case-by-case basis.

4. Do most cases settle?

Yes. Statistics show that approximately 90 to 95% of civil cases settle at some point before trial.

5. Who has the authority to settle my case?

The authority to settle a plaintiff’s case always rests in the hands of the plaintiff himself or herself. An attorney cannot settle a case for a plaintiff without the plaintiff’s authority. In the case of a minor, a guardian is appointed who, along with an attorney, recommends a settlement to the court. However, a judge must approve the settlement.

6. Who determines the amount of the settlement?

Ultimately, the parties themselves, with the advice of attorneys, determine the amount of the settlement. In cases in which the claim is covered by insurance, the insurance company determines the amount that it is willing to pay, sometimes with or sometimes without the advice of an attorney. In cases that are more difficult to settle, the parties often seek the advice of a mediator or a settlement conference judge to help them reach a settlement; however, a mediator or settlement judge does not have the power to force a party to settle the case.

7. How is the amount of settlement determined?

There are literally hundreds of factors that go into determining the amount of a settlement in a given case. Some of the more important factors include:

  1. The value of the case as determined by a projection of what a jury will do if the case goes to trial. This is frequently determined by reviewing jury verdicts from prior similar cases.
  2. The amount of insurance coverage or assets available. If the case has a higher value than the available policy limits and the defendant does not have sufficient assets to add to the settlement, the case will generally settle at the policy limit (unless the case involves an automobile accident and the plaintiff is able to proceed against his or her own insurance company in an uninsured motorist case).
  3. The willingness of the plaintiff to settle his or her claim for less than the value to stop the emotional and economic expense of litigation or the willingness of the defendant and/or insurance carrier to pay more than it views as the value of a case in order to stop the expense of litigation.

8. How do I make sure my settlement is paid? How will my settlement proceeds be divided up?

Generally speaking, in personal injury, harassment, abuse or malpractice cases, the plaintiff’s lawyer accepts the case on a contingency fee basis, getting no fee if the plaintiff loses, but receiving a fee of usually 33.33 or 40% of a settlement when the case is over. In addition, in most cases the plaintiff’s attorney advances the costs of the litigation and is reimbursed out of the settlement proceeds for advanced costs in addition to the fee. Finally, if there are any “liens” — i.e., requests for reimbursement by medical care providers or insurance companies who have paid for the plaintiff’s treatment — the lien claimants will receive all or part of their unpaid fees, or in the case of insurance companies or MediCal or Medicare money paid to healthcare providers out of the plaintiff’s settlement. The plaintiff’s net settlement amount will be the amount of money that is left over after attorney’s fees have been paid, costs have been reimbursed and liens, if any, paid off.

9. How and where do settlements occur?

Settlements can occur in many different ways and in many different places. Sometimes cases are settled with the exchange of letters; sometimes there are letters and phone calls between plaintiff’s attorney and the defense attorney/insurance adjustor; other times cases settle at a more formal settlement proceeding such as mediation or a court ordered settlement conference. However, it is true that some cases literally do settle on the courthouse steps (or at least hallways) just before or during a trial.

10. Are settlements always paid in one lump sum of cash, or can they be paid over time?

Most settlements involve the payment of the entire settlement proceeds in one lump sum within several weeks of the date of the settlement. However, if there is enough money involved and a plaintiff chooses, the parties may be able to agree on a “structured settlement” where money is paid over time. There are infinite varieties of structured settlements. Some structured settlements involve monthly life-long payments to the plaintiff; others involve larger payments over varying amounts of time. In a structured settlement, the insurance company purchases for the plaintiff an annuity policy which guarantees the future payments. Structured settlements are particularly valuable in cases involving minors, as it allows the parents to control the minor’s use of the money when they are past the age of 18, and they are useful in the case of people who are not used to handling large sums of money since it provides a safe investment tool with guaranteed payouts.

Most legal questions require complex answers. The answers provided here may not be complete or fully accurate but attempt to provide consumers with abbreviated answers. For more detailed answers to these questions, a consumer should check out other articles in this section of this website, research other legal articles and texts on the subject matter or consult with an attorney.

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