Have you ever wondered what decides the amount of money involved in a lawsuit settlement? Lawsuits happen every day and understanding how they work can benefit everyone.
Fact is…
Most people have no idea what goes into lawsuit settlements. They hear the big headlines in the news about multi-million dollar payouts and think every case will give them millions. The truth is very different.
In this article you will learn…
- How are Settlement Amounts Determined?
- The Top 3 Factors That Will Impact Your Potential Payout
- Why Most Lawsuits End Up in Settlement Instead of Trial
- What the Average Settlements Are in Some of the Recent Lawsuits
The Fundamentals of Lawsuit Settlements
A lawsuit settlement is when the two parties in a legal dispute agree to resolve their case without a trial.
Essentially it is a negotiation where the plaintiff and the defendant agree to a certain amount that makes the plaintiff agree to drop the lawsuit. The amount is paid to the plaintiff in compensation for the trouble he or she had and the defendant is saved the expense of defending the case before a jury.
This is the reason…
Recent statistics show that approximately 95% of personal injury cases settle before ever reaching trial.
The majority of cases get settled because it saves both sides a lot of time, money and stress. Settlements also give both parties more control over the outcome, whereas a trial means leaving it to a judge or jury. Plus, both sides can negotiate settlements at any time, even after a lawsuit has been initiated.
As far as average settlement numbers in personal injury cases are concerned, there is no definite answer. Each case is different and the numbers can vary from one case to another. In certain cases, plaintiffs receive a few thousand dollars as a settlement, while in other cases, some of them receive millions of dollars.
The real key to understanding these numbers lies in knowing what actually impacts settlement amounts.
What Determines Lawsuit Settlement Amounts?
If you want to know the secret formula to calculating settlement values, I hate to disappoint you…
There is no magic formula that can tell you the value of your case. There are several factors involved that all need to be considered together to determine the final value of the settlement.
Let’s check them one by one…
Injury Severity
The first and most obvious factor is the severity of the injuries.
The more serious the injuries, the larger the potential payout. Minor soft tissue injuries, for example, tend to have an average settlement value of between $2,000 and $8,000. Fracture cases have an average settlement value of between $15,000 and $50,000.
But now, the interesting part begins…
Serious injuries, such as brain damage or paralysis, can result in settlements ranging from $300,000 to even millions of dollars. This is because the settlement amount needs to cover all medical expenses as well as:
- All future medical costs
- Lost income
- Pain and suffering
- Reduced quality of life
Medical Documentation
Your medical records provide evidence of your injuries.
When your medical documentation from doctors, hospitals and specialists is in order, your case is stronger and easier to win. The insurance company has a much harder time trying to dispute your claim if you have objective medical evidence that details the extent of your injuries and the treatment you received.
The more thorough your medical records, the less room there is for the other side to lowball you when it comes to negotiating your settlement amount.
Fault and Liability
How certain is it that the defendant’s actions caused your injuries?
When fault is clear cut, such as in the case of a rear-end collision, settlements are typically higher and the case is resolved faster. But when fault is in question or shared between the parties, the settlement amount is likely to be lower.
Comparative negligence rules in some states may reduce your settlement by your share of the fault. This can significantly lower the final settlement value you will receive.
Insurance Policy Limits
Something else that many people are not aware of is…
The defendant’s insurance policy puts an upper limit on the total settlement value. For example, if the defendant only has $100,000 in coverage, that will probably be the most you will receive even if the case is valued at $500,000. Insurance companies rarely make any payments over the defendant’s policy limits.
Insurance policy limits should be discovered early in the legal process, so it is important to be aware of them.
Current Lawsuit Settlement Trends
The lawsuit settlement landscape is constantly changing and evolving.
Class action settlements, for example, have been on a sharp rise over the past few years. In 2024, they amounted to $42 billion, marking the third year in a row in which the figure has exceeded $40 billion. These numbers tell you how corporations have started to prefer settling cases to a trial before a jury.
As far as average settlement values in personal injury cases are concerned, recent studies have shown they range between $24,000 and $55,100 depending on the law firm and case types they cover.
But wait, there is more…
These are only averages and they can go much higher or much lower in individual cases depending on the specific factors mentioned earlier in this article.
Why Lawsuits Settle Before Trial
Why is it that most lawsuits end up in settlements?
Going to trial is very expensive and time consuming, not to mention unpredictable and risky for both parties.
Trials can take months, if not years, to reach a conclusion. Legal fees and expenses from both sides add up. Expert witnesses have to be paid. No one knows what the final jury verdict will be at the end of the day.
Settlements, on the other hand, offer certainty and both sides know for sure what they will get instead of taking a gamble. Plus, trials are a matter of public record, while most defendants prefer to keep settlements confidential.
Conclusion
The best way to determine lawsuit settlements is to balance your losses against what the other side is willing to pay you to make the case go away.
Learning how settlements work gives you a better idea of what a settlement amount is and how to evaluate and negotiate a fair offer. No matter if you have a minor injury or a catastrophic injury, you need to know how the process works in order to make an informed decision.
The amount that you are entitled to depends on a number of different factors specific to your case. The severity of your injuries, your medical bills, the evidence you have and the insurance coverage available all play a role.
Take your time, build a strong case and don’t be afraid to ask for what you deserve. Settlement amounts are not randomly created by either party, they are actually based on some real factors that you can gather and prove.
