High-Low Agreements in Personal Injury Cases

Generally, I dislike trying personal injury cases with high-low agreements that contain the size of the verdict. If you are going to force us to take the case to trial, I would prefer to have 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 are able to spread the risk of the possibility of a bad 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 tends to make the numbers more reasonable for injury victims is that insurance companies do want to limit the possibility of a verdict in excess of policy limits.

If you are going to 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 filed a motion 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 in cases where applicable, interest and attorneys’ fees.

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