Everything You Need to Know About Settlement Negotiations

Kirk Willis, Partner

September 13, 2005

Start With The End in Mind

Settlement

Goes hand in hand with trial

Must set the case up for trial

Be aggressive about the set-up

Keys to Successful SettlementThorough trial preparation

Client/Insured Interview

Impression to the other side that the case is ready for defense

Attention to detail is key to this impression

Minimize surprises

Settlement

Know the social value of your case

Don’t underestimate the human factor

Be honest but stern

Settlement v. Expenses

Key Expenses

Uncertainty

–Records– Deposition (Attorney, Court Reporter

& Videographer)

–Experts

–Mediation

–Trial [Attorney, Court, Expert, Exhibits Guy]

Settlement

Evaluation of settlement possibilities

Background of parties

Witnesses

Circumstances of accident

Damages (Do they get worse?)

Settlement

Don’t be afraid to “Throw in your Policy”

1) Bad Facts +

2) Big Damages

=

Policy Settlement

Who goes first?

Settlement

Head injuries [Brain damage]

When is the right time to settle?

Children unresolved problems [Stuff happens]

Elderly [Non-symptomatic arthritis]

(No Clear Rule)

Settlement

Tort Reform 2003

Shifting:

Purpose–Penalizes those who reject reasonable offers

–Rewards those making reasonable offers

1) Litigation Cost

3) Attorney fees

2) Court cost

4) Two expert fees

House Bill 4

All lawsuits filed on or after January 1, 2004

[Declaratory, Injunctive other Equities]

Monetary relief only

Claims Excluded

Class Action

Shareholder derivative

Action against Government

Action under Family Code

Workers CompJustice of the Peace

Reasonable Settlement TriggeredStatute says anyone can claim reasonable settlement

Counter ClaimOr

Cross Action

Not triggered until Defendant’s DeclarationUnder this statute, Plaintiff can be

Defendant if:

Reasonable Settlement Triggered

Multiple Defendants?

[Good cause can change]

–Each Defendant must file separate Declarations

–The Declaration must be made no later than 45 days before the case is set for trial

Reasonable Settlement Triggered

Rule does not apply to:1. “Any offers made during mediation /

arbitration”

2. “Any offers not following Rules don’t trigger fee-shift”

Reasonable Settlement Triggered Requirements

Tex. Civ. Prac. & Rem. Code § 42.003; Tex. R. Civ. P. 167.2(b)

1) Writing;

2) Made under Rule 167 and Chapter 42 Texas Practice Code;

3) Identify parties making offer and parties offer made;

4) State terms all monetary claims, attorney fees, cost and interest – may settle;

5) State a deadline – must give at least 14 days

6) Be served on all parties to which offer is made

Reasonable Settlement Triggered

Conditions

No Shifting!

1) They may have reasonable conditions

2) Condition Rejected??

Time LimitsTo qualify, an offer may not be made

1) Before a defendant’s declaration is filed;

Rationale

2) Within 60 days of the appearance in case;

3) Within 14 days of trial; [offer can within 7 days in response to other] Within 14 days of trial; [offer can within 7 days in response to other]

A. Can’t join and make immediate offer

B. Not on courthouse steps

Time Limits

Successive offers Yes, as long as favorable

Withdrawal Yes, in writing

Acceptance Yes, in writing

[must be filed with request to

enforce same to the Court]

Rejection Be careful…

Time Limits

Rejection – Offer made. If offeree does nothing,that triggers the shifting of fees.

Time Limits

“Litigation Cost”

Triggered when the Judgment is significantly less favorable to Rejecting Party.

Plaintiff – His award is less than 80% of the rejected offer

Defendant – The Plaintiff’s award is more than 120% of the rejected offer.

Accident + Injury = Negligence

Plaintiff damages $10,000

Fee Shift

Plaintiff Offers $20,000Defendant rejects offerJury Award $25,000

1) Attorney Fees

2) Cost of Court

3) 2 Experts

Accident + Injury = Negligence

Plaintiff damages $10,000

Fee Shift

Plaintiff Offers $20,000Defendant rejects offerJury Award $15,000

1) Attorney Fees

2) Cost of Court

3) 2 Experts

Accident + Injury = NegligenceQuestions

What constitutes judgment?

–Interest

–Modification

–Take Nothing Judgment

Litigation Cost

Court Cost

Fee for two experts

–Testifying experts

Reasonable attorney fees

All fees are limited to the time the offer was rejected to judgment

Limited Amount

1) Cost cannot exceeda) Non-economic

b) Additional damages

c) ½ of economic damages

Limited Recovery

Defendant can only receive litigation cost as a set off against Plaintiff’s judgment.

Discovery on Reasonable Fees

1) Yes one may, but one will pay

2) If the court determines Reasonable, then Plaintiff will pay that cost of discovery

Settlement Consider every element of your case

–Pre-impact terror

–Instant of crash

–Injured without assistance

–Period of peril

–Mental anguish

Settlement

Other factors–Emergency care

–Actual relief

–Transport to hospital

–Major v. minor injuries

–Therapy and treatment

Everything You Need to Know About Settlement Negotiations

Kirk Willis, Partner469-893-3577

September 13, 2005