QuestionQUESTION: Well I will get right to it. About 9 months ago I was in a car accident where I was rearended.. and then I hit the vehicle in front of me. I had a Chevy Malibu and the bumper in the back was hanging down in the rubbing against my tires... yea it was off pretty much. Now I went to the emergency room on my own because I had pain in my back and shoulder. The insurance company of the gal that hit me tried to settle right away and offer me something like 550 dollars. So needless to say I went to an attorney. I started medical treatment for a soft tissue damage in my back and went for about 6 months. During this time My car was totaled out by the girls insurance company.When I went to look at my car there was damage underneath (when you removed the trunk lining) from where my car crinkled up from the blow. I was kinda in shock that that was even there.
I am getting to the point I promise! Okay so now its time to settle for my injury and I just feel like the insurance company is offering crap and I want to make sure I do the right thing. Go to court or not go to court. I sustained about 5700 dollars in med bills and they were offering 4700 dollars!!!.... and without going into all the prior amounts they came up with we they are now up 6300 dollars for everything and I would receive a third of that. My attorney is saying they are not going to come up more. I would like to get 5000 for my part of the settlement so I can get back to an even place like before the accident( the car I have now is a downgrade from what I had before and my it friggin hurt .. my body was a wreck for a few months)
so with all that being said I am trying to figure out if I should take the settlement amount or go to court for what I want?? I want to make sure my case stands up in court if I decide to go that way. When the accident happened I didn't get any eyewitness accounts nor the police didn't file a report... but my car was totaled and I had an injury that needed medical attention and there are records to prove that. I am curious to know about other cases as well that are similar to mine and what the success is of them in court.... win , loss, etc.
I hope that wasn't too long winded!
Thanks!
Tiffany
ANSWER: Hi Tiffany,
Short answer: I am going to recommend that you tell your attorney IN WRITING ONLY that you wish for him to go forward with your case and take it to trial. He will NOT want to do that, so somewhere along the way, you can get him to cut his fees in half if you agree to settle.
But if you ask him to cut his fees without making him face the dismal prospects of a trial, then he will say no. You have to hold his feet to the fire until he yells.
I am going to present your answer as an economic choice, so we have to get into the basics of how attorney's fees are earned in personal injury insurance claims.
But first, there is a bit of confusion about what is on the table here.
I am not sure what you are talking about for settlement since on the one hand you seem to say that the offer is only $600 more than your medical bills, but on the other hand, you state that you would "receive a third of THAT."
Please write me back if you wish to let me know which it is. One would think that if you owe subrogation for prepayment of your medical bills, then the $5,700 would go off the top to reimburse whoever paid your medical bills, and you would be left with either $600 net to divide between you and the attorney, OR YOU WOULD GET $6,300 NET to divide between you and the attorney.
So, in order to make sense of your question, please clarify just what the offer includes. Also, let me know what the attorney's fee is, and how much work the attorney had to do in order to get the present offer.
Now, on to the offer and the refusal to budge. Well, it seems that you are caught in the middle of a strategy started in the 90s by AllState and now used by many companies: pay unrepresented claims fairly, but punish those who hire attorneys by forcing them to accept small amounts or face an expensive court battle--and make every effort to fight even small amounts in court.
That strategy is winning, because attorneys know that they will face a tough battle, even for what we used to call small claims: under $15,000.
In my state, the trial lawyers finally started putting together a series of Continuing Legal Education seminars titled "How to Hammer AllState".
They made it economically untenable for attorneys to take those $15K cases to trial because they would appeal the award. In most states, there is arbitration for such claims, and AllState (and now some other companies) are appealing even arbitration awards of $15,000.
Thus, the attorneys have lost their incentive to take such claims to court. Figure the time in depositions, the time answering a set of interrogatories, the time to meet with the client and prepare her, the time to prepare a Arbitration hearing package, the time to talk to doctors, the time to prepare for arbitration, and the time to go through the arbitration.
All totaled, the attorney will have to put in around 15 hours to write your demand letter and to settle the claim, and an additional 35 hours to do all the above through arbitration. If the insurance company appeals the arbitration, then there would be more hours.
Thus, if you got $6,300 net, the attorney would get one-third, or $2,100. This would equate to only $140 per hour, less of course than that since the staff time should be accounted for.
If the attorney goes to trial and he gets a lot more, say a $9,000 net award, then he gets $3,000, but the hourly rate will drop to just $85 per hour. And of course the staff time triples with trial preparation, witnesses, etc.
BUT, if you add in the 15 hours he already has put in, the total will be 50 hours, and hence his hourly rate is clearly a loser for the office at only $60 per hour. This is the goal AllState and the others were fighting for since they knew that attorneys would pressure their clients to fold, rather than take a loss in hourly income.
While those hourly rates might seem comfortable to you, they are marginal for the $140, but unsatisfactory for the $85. It takes a lot more than that to support the overhead in the law office. For example, my last billing rate (for probate, for example) was $250 per hour. I would have to shut down if I could only make $85 an hour.
Thus, the pressure now is on the attorney, NOT ON YOU. You will win the case, no doubt, since there is no issue of liability you have disclosed. Plus, since the offer is so light, and since you have a good hard crash to support your claim of soft tissue injuries, one would reasonably conclude that the amount you will win cannot be any less than what they have offered. Sooo, if you were to write to your attorney, and tell him you want him to prosecute your claim to a successful conclusion, what do you think he will do?
He might just dig in and try the case. Or, second choice, he might try to encourage you to settle by reducing his attorney's fee percentage. Or, he might just withdraw, and leave you the settlement to yourself.
What you have to do is to CONVEY YOUR DIRECTIONS IN WRITING, as that will be more likely to convince him that you are "for real" in your desire to try the claim.
Ohhhh, he will whine and balk, because he knows what a hassle your claim will be to try in court. But keep in it. Give no quarter. Once he feels the pain of having to go forward in a proposition that is strictly a loss for him, then he will be amenable to discussing reduction or elimination of hie attorney's fees.
Let me put it to you in terms of the fees for both of the possibilities mentioned at the beginning.
If he only got a $600 net award, he did not do his job, so I would not give him a dime. Maybe $50, but no more. You were hit hard enough to deserve a much higher settlement, and he failed to get it for you.
IF, ON THE OTHER HAND, he got you a net award of $6,300, then that is at least a marginal return on your claim. I would offer him 15% of that in fees, so he would end up with $945 for his efforts in writing a demand letter.
Finally, there is usually some truth of what is referred to the courthouse steps settlement. Insurance companies seem to open their checkbooks when they see that the plaintiff is ready to go to trial. Thus, one could expect a significant increase in the offer about ten days prior to trial.
My choice, I would COMMUNICATE IN WRITING ONLY to my attorney that you wish for him to go ahead and fulfill the terms of the professional services agreement he signed at the beginning. It said nothing about quitting when the hourly fee went down because of tough work. Make him fulfill the terms he agreed to and represent you through to victory.
Best wishes,
Dr. Settlement, J.D. (Juris Doctor)
www.SettlementCentral.Com
---------- FOLLOW-UP ----------
QUESTION: Hi thanks for the quick reply. Now onto the clarification the insurance company if offering me a total(net)of $6300. Now I thought of something else. I am curious as to what to ask for my case if I do in fact decide to go to court? Here are some things I need to consider when trying to decide what to ask for.
I have a car now that is not comparable to the car I had before the accident. The car before the accident had a larger engine and less mileage and a few other add ons. I know my other car was great and this car I am not so sure.
What if my back injury flares up down the road and I have to be hospitalized?
Pain and suffering!
Tiffany
AnswerHello again, Tiffany,
As for your personal injury award, why don't you ask for a second opinion on the value? You can go to another attorney and pay her to look at your case. If you have no cash now (it will cost around $150), make a lien with the insurance company so she can see you.
She will give you straight advice, whereas your own attorney is going to try to downplay the value of the claim because he wants to settle it without having to go thru a trial.
BUT he agreed to represent you, so make him do it. If he wants out, DO NOT SIGN ANYTHING THAT GIVES HIM A LIEN. Write to me and I will show you how to get that file to another attorney, who will be able to get an agreement as to the fees and costs.
As for your car, I thought you were paid for it already. If not, then ask me what you would like to know about possibly keeping it or getting a higher value.
But if you already were paid on the car, that is the end of that topic. It does not again become relevant in the personal injury claim.
Best wishes,
Dr. Settlement, J.D. (Juris Doctor)
www.SettlementCentral.Com
