Friday, July 18, 2008

Show Me the Money!

Personal injury mediations have a number of characteristics in common which set them apart from mediation of other types of disputes: (a) insurance companies are usually the primary stakeholders on the defense side; (b) typically, the disputants’ only relevant relationship is that of parties to the same lawsuit; (c) the parties are not interested in repairing the relationship, but in ending it; and (d) ending the relationship will, in virtually all such cases, happen when the insurance company writes a check, and the plaintiff deposits it.

Philosophers have decried efforts to reduce human misery to haggling over dollars, but the concept of wergild is firmly embedded in our society. In one form or another, it has been the basis of our Anglo-American tort system since well before the battle of Hastings. Like it or not, this is the planet we live on.

The focus on money, however, does not mean that there is no room for creative value-enhancing ideas in settlement negotiations. Money, after all, has no inherent value; its worth depends on what it will buy. And the value of such "things" is very much in the eye of the beholder. Different people place different values on the same goods and services. These differences, if explored thoughtfully, can often lead to settlement when the parties are close, but not close enough.

For example: years ago, I represented a husband and wife as plaintiffs in an auto accident case. The defendant’s liability was clear, but the injuries were not too serious and resolved within a year or so. The insurance company was not willing to offer enough cash to interest my clients. Rather than give up, the defense attorney and I tried to look beyond the obvious and to find a solution which would benefit the plaintiffs more than it cost the insurance company.

My clients had a young child. Both were employed and, by the time of trial, were earning more money than they ever had before. They did not need more money; what they needed was tax planning. Once my clients’ needs were analyzed, we were able to reach a settlement in which enough money was paid up front to pay my fee, with a little left over for a modest family vacation. The amount remaining (less than $10,000) was used to purchase an annuity that would pay a lump sum in the neighborhood of $200,000 when the couple was ready to retire, or a lesser amount when their child reached college age.

This story should serve as an example of how it is possible to "think outside of the box," even when the case is "only about money."

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