High-low settlement agreements may reduce risk in civil lawsuits

High low agreements are one option that may minimize risk for clients in personal injury lawsuits.

Civil lawsuits are won through skill, hard work and determination, not luck or serendipity. Still, the number of factors and variables involved in all lawsuits means that there will always be inherent uncertainty in the outcome of a lawsuit. Perhaps that is why high-low agreements have begun to gain in popularity in recent years. This is especially true in the Northeast, where over half of all high-low agreements in the context of an insurance company claims take place.

High-low agreements allow plaintiffs and defendants to agree to a maximum and minimum award amount while still proceeding to a verdict and allowing for an anticipated favorable outcome at trial. The high-low agreement is binding no matter what a jury decides. In essence, rather than a "settle or risk it all" mentality, high-low agreements occupy a middle ground that allows for each side to aim for what they want while still protecting their interests and minimizing the downside.

As an example, a high-low agreement could agree that the defendant will not be liable for more than $1 million, while the plaintiff will not receive less than $333,000.

Negotiations can be extremely late in the process

Unlike settlement talks, however, high-low agreements typically take place at the last minute. Often, high-low agreements will occur right before trial, or even after all of the evidence is presented at trial or while the jury is in deliberation. At this point, each side can assess how the trial went - perhaps even factor in how long the jury is deliberating.

In a way, a high-low agreement functions as insurance against an unfavorable outcome. Each side is giving up the potential for a huge award or a defense verdict in their favor in order to eliminate the possibility of an extreme outcome.

Insurance often plays a role

One of the biggest reasons to enter into a high-low agreement involves insurance. In a medical malpractice case, for example, a physician may only have malpractice insurance up to a certain dollar amount. A verdict in excess of that policy limit could therefore put personal interests at stake. However, that same doctor may fully believe that he or she did nothing negligent and not want to settle.

Conversely, the plaintiff may believe that he or she suffered significant injury through negligence but may not be willing to pursue the defendant's personal assets or may be concerned about his or her ability to convince a jury of the extent of the alleged injuries. In such a situation, it may make sense for a high-low agreement in which the high is the policy limit and the low enough to cover certain necessary expenses for the plaintiff, such as outstanding medical bills.

In this way the physician can ensure that he or she will not lose a business interest or personal assets, while the plaintiff can be assured of some recovery albeit not all of the claimed damages in the lawsuit. Nevertheless, the high-low agreement still leaves room for both sides to proceed to a verdict while minimizing the risks.

Skillful negotiation needed

While high-low agreements can be in the mutual interests of both plaintiff and defendant in a civil trial case, the wide-ranging possible scenarios in the framework of high-low agreements means much is up for negotiation. For example, what do the sides agree to if there is a hung jury? Will interest be awarded, and at what percent? Will both sides agree to waive appeal rights?

High-low agreements are useful tools in civil lawsuits; of course there are limitations and potential pitfalls regarding these agreements. In addition, high-low agreements are just one option among many in civil litigation.

Litigants in Massachusetts who have been damaged or injured can benefit from the utilization of high-low agreements with the assistance of skilled trial attorneys. If you or a loved one has been damaged or injured through the negligence or misconduct of another, speak with a skilled trial attorney or an experienced personal injury attorney to discuss all of your legal options and what steps to take to best protect your interests.

Keywords: Personal injury, high low agreements, settlement negotiations.