Again, recognize that in almost any setting there can be multiple potential defendants in any given personal injury scenario. Attorneys often look to these potential claims and defendants as ways of expanding the pool of available insurance. Often, even if one potential defendant is marginally – or even questionably – negligent, based on a variety of factors insurance companies may decide to settle, or contribute to an overall “global” settlement, even when the case may not seem all that strong.
They may have a variety of reasons for doing so (costs of defense, significant potential verdict, bad press, etc.) and the motives are irrelevant. What matters to you is attaining the result you desire. Adding to the pool of potential contributors (i.e. defendants) only makes that goal more likely to be reached by spreading the risks and costs of settlement among more players. This very often makes settlement more likely to occur, and more economically feasible. In most litigation, defendants are “jointly and severally” liable. This is a good thing for you; it means that each defendant is on the hook for up to the entire amount of the verdict or judgment.
Thus, even if one defendant is found only 1% negligent (when the liability assessment is made), but they have substantial assets; and the main tortfeasor responsible for the other 99% of liability is virtually broke, you may collect from either, or both, [EQUALLY] up to the full amount of the verdict or judgment. Later, the defendants can fight amongst themselves as to who repays and indemnifies whom. (That is not something for the plaintiff to really need worry about) This is a powerful motivation for defendants to cooperate and bring the matter to a resolution before trial. As such, insurance companies can often be sensitive to even slight exposure. Having and using this knowledge can DEFINITELY be to your advantage in dealing with insurance companies. If they fear a potential $1 million exposure, they may very well be willing to part with $50,000.00 right now, to conclude the matter once and for all and be done with it. For them there is safety and certainty in settling; whereas even the costs of litigation alone will likely cost them that much, regardless of the outcome.
Another consideration, is that insurance companies not only pay the verdict amount when they go to trial, but they must also pay their own (not insubstantial) attorney fees – – usually 5+ years worth. Worse still, they often must pay the plaintiff’s attorney fees as well (as the prevailing party). This is in addition to costs, plus pre-judgment interest (8 – 10%, per year); which means a $1 million litigation verdict in 5 years, could potentially add on up to $100,000.00 – per year for the last five years (i.e. $500K) just in interest, let alone fees or costs. This can easily cause the verdict amount to more than double! This is WITHOUT considering any potential punitive damages (if applicable). Thus, trial is a costly and somewhat hazardous business for insurance companies.
Often times, even the attorney costs from insurance companies’ OWN COUNSEL can be quite high and is often a source of heated debate between them. Insurance companies have refused to pay these costs, or submitted their very own insurance defense attorney bills to “billing review” in an effort to “trim the fat” and curb costs, attempting to keep their own attorney fees under control. Universally, the “billing reviews” find the defense attorney fees “too high” and they argue/negotiate with their OWN COUNSEL about these fees and demand reductions. This obviously creates animosity between the insurance companies and their own counsel; sometimes even precipitating into litigation amongst themselves.
The bottom line is, the settlement is often in EVERYONE’S best interest prior to litigation, if at all possible. This is a given, without even factoring in the potential for runaway verdicts (where juries at times award astronomical amounts to plaintiffs), bad faith verdicts, or being hit with the other parties attorney fees. These elements can cost insurance companies heavily, let alone forcing the defendant’s insurance company to incur yet more (significant) expenses in pursuing [usually new, specialized] appellate counsel to have the “runaway verdicts” reviewed on appeal. Further, large verdicts are “news,” and people hear of this and ultimately more lawsuits result. Thus, for a variety of reasons, settlement prior to trial should be the ultimate goal of both plaintiff and the defendant. It is usually a win/win situation for both parties.
One perspective that should be realized and recognized early on in dealing with an insurance claim, is this: There is often a great deal of difference between dealing with an insurance company or a self-insured company directly; and a defense litigation law firm. They in many ways have divergent and competing agendas and should be approached somewhat differently. There are fundamental and distinct differences, and you should learn to recognize these and to try to find a way to use or exploit these differences to your advantage.
The previous paragraphs have been discussing dealing with an insurance company; and for all intents and purposes, when you are dealing with a large company by itself [often self-insured] it is much the same. Sometimes very large companies, casinos, etc., with billions in assets; may nevertheless wish for SOME type of insurance indemnifying them from huge lawsuits and catastrophic claims. Therefore, they take out large policies, but to keep premiums reasonable, they have significant deductibles [or Self-Insured Retentions, S.I.R.’s] that they themselves handle. These companies “manage” these deductibles and their own claims up to pre-determined dollar values.
However, in dealing with insurance companies and large companies with S.I.R.’s, you will notice a distinct difference in the way they handle claims as opposed to insurance defense law firms. Essentially, law firms – specifically, insurance defense firms – work on an hourly basis. This is how they get paid and how the firms do business. They DO NOT want to settle claims, at least in the early stages, as this works directly against their own monetary interests.