How to Evaluate a Settlement Agreement as a Plaintiff

Most civil litigation is resolved by an agreement to settle the dispute. In most civil litigation, the remedy is a payment of money representing the value of the claim. For example, a personal injury car accident lawsuit that only causes soft tissue injuries, such as whiplash, might have a settlement range of $10,000 to $25,000.

As a lawsuit proceeds, both sides learn the strengths and weaknesses of each other’s case. This will develop an idea about how much the case is really worth.

Predicting High Settlements For Plaintiffs

The concepts and initial calculations in this worksheet will result in a money value on the high side. Don’t form any firm expectations about how much you might recover in a settlement from this article.

Your lawyer will have a more accurate idea based on other information and opinions. They will provide advice about your case for you to consider as you and your lawyer develop a settlement demand.

Questions To Consider When Determining a Settlement

Keep in mind that in settling the case, you are relieved of the time, expense, uncertainty, and stress of trial. That is worth something and can often be worth more than financial gain. You have the option to find a resolution before trial.

There are trade-offs, and it can be challenging to determine what’s fair given complex circumstances. While settling can avoid the risk of losing your claim in trial and give you some extra control over a guaranteed amount, you want to ensure the value of the settlement is still fair for the damages you’ve faced.

You may want to ask yourself:

1. Why did you sue the defendant?

2. What result did you want from this lawsuit?

Calculate the Value of Your Losses

The questions below guide you through placing a value on general items. You’ll need to ask yourself what kinds of monetary losses the defendant’s conduct caused you:

• Wages for time lost from work

• Travel or lodging expenses

• Value of item covered in contract

• Cost of repairing damage to land you own or buildings on the land

• Damage to personal property, such as equipment, vehicles, furniture, etc.

• Lost profits

• Future profits (some states don’t allow this option)

• Paying someone else to complete work described in a contract with the defendant

• The replacement cost of equipment or a product

• The amount of the loan the defendant did not repay

• Costs to repossess or foreclose on property pledged for a loan

• Damages or settlement in another lawsuit

• Lawyer’s fees and costs in another lawsuit

Calculating Settlements That Involve Contracts

If your case involves a contract, does the contract have a clause requiring payment of interest? (A promissory note is a contract.)

What rate of interest is set forth in the contract? If no rate is specified, or if your case involves something other than a breach of contract, then this does not apply.

Also consider how much time has elapsed since the defendant breached the contract or committed the act causing you monetary injury.

You’ll want to consider the amount of damages and the amount of interest per year.

Estimate Your Legal Fees So They Are Included In The Settlement

Attorneys’ fees will come out of the settlement you get. It is essential that the settlement offer still benefits you and covers damages after the legal team has received its payment. Consider the following questions:

• If your case arises from a breach of contract, did the contract have a clause requiring payment of lawyer’s fees?

• If you are being billed by the hour or on a flat-fee basis, what are your lawyer’s fees to date? Do not include costs and expenses listed on your bill(s).

• If you have a contingency agreement with your lawyer (you pay the lawyer’s fees only if you recover some money), what is the amount of the contingency?

• In some cases, you might have agreed to pay your lawyer a percentage of your recovery.

Unless you have a contract requiring the defendant to pay your lawyer’s fees, you probably would not be allowed to recover them at trial. You may certainly ask for them as part of your settlement demand; however, this may be the first item you will compromise in the interest of reaching a settlement. You may need to adjust your settlement value accordingly.

Legal Fees and Bills During Lawsuit Settlements

Along the way, you should keep track of any expenses your lawyer billed to you. This might include the following:

• Filing fee to start a civil lawsuit or class action lawsuit in court

• Fees to serve the defendant with court papers

• Deposition expenses

• Other expenses arising from discovery

• Expert witness fee(s)

• Photocopying charges

• Travel, meals, and lodging expenses

Consider Going to Trial vs. Settling

Any calculations from this article so far will be a high-end value of your claim. Don’t get hung up on it.

Try to place a value on the risk of going to trial and losing. Consider:

• Trial expenses (ask your lawyer what range they’d be in)

• The value of time you would lose if you had to attend trial (e.g., lost wages, child-care expense if you are a stay-at-home parent)

• The emotional cost of being center-stage at trial and the uncertainty of the result (this can be difficult to express as a monetary value)

• The cost of stress during the trial (also difficult to value)

Payout Estimates after Settlement Negotiations

The amount of money you’ve estimated in this article will be high and not accurate for your particular case. The plaintiff’s attorney will provide legal advice to get a strong but reasonable settlement or proceed with a negotiated settlement.

The attorney-client relationship can last for months during product liability or personal injury cases, so look for an attorney you can partner well with. FindLaw’s attorney directory can help you find a local personal injury lawyer or a lawyer focused on other types of lawsuits. You can also learn how to sue someone or join a class action settlement.