High-Low Agreements in Personal Injury Cases

I dislike trying personal injury cases with high-low agreements that contain the size of the verdict. If you will force us to take the case to trial, I would prefer the chance of the upside. My gut-level reaction is no deal.

But the problem with this bravado is clients. Our law firm has a decent volume of personal injury cases, which means our lawyers can spread the risk of the possibility of an unacceptable outcome at trial. Clients have just one case, so their risk calculus is very different. An added force of inertia for high-low agreements that makes the numbers more reasonable for injury victims is that insurance companies want to limit the possibility of a verdict exceeding the policy limits.

If you will make a high-low agreement, it is important to make sure everyone is crystal clear on what the agreement is. Not most, but a good number of high-lows are made during trial while the jury is out. Yesterday, in Missouri Lawyers Weekly, there was an article about a case in which the parties reached a high-low settlement in what I think was a car accident case (the article is not clear) just before the jury reached a verdict. According to the plaintiff’s lawyer, the settlement agreement was for whatever the jury handed down up to $1.36 million, plus prejudgment interest. Incredibly, the jury awarded exactly that: $1 million-plus $360,000 in prejudgment interest.

The defense attorneys moved to set aside the judgment and enforce the settlement agreement, arguing that the agreement did not include prejudgment interest. The trial judge agreed and ordered the settlement of $1 million be enforced with no prejudgment interest. The plaintiff is appealing that decision.

How this gets sorted out is anyone’s guess. It sounds like a lot of he said/she said stuff that you really want to avoid litigating. The take-home message here is obvious: all high-low agreements need to be crystal clear on every essential ingredient, including costs, and where applicable, interest and attorneys’ fees.

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