JURY TRIALS V. ADR
Are we trying too few cases?

     Over the 30 plus years that I have defend insurers and their insureds in personal injury litigation, there has been an unmistakable shift from trying cases to resolving cases through ADR. I have gone from handling maybe 1 or 2 jury trials a month in the early years, to perhaps 1 or 2 jury trials a year, with the slack being taken up with arbitration and mediation. For the most part, this is a good trend. Insurers and attorneys have gotten better at recognizing the fair value of cases and settling cases without the expense of a jury trial. Cases which can be resolved for their fair value should be.

     I contend, however, that at times we are getting carried away, rushing to settle cases and “close claims”, even when doing so ends up costing far more than simply asking a jury to decide the case. We are also at times treating mediation as a substitute for our own a critical analysis of cases and our own effort to either settle cases or try them. ADR is not always necessary to reach either end, and it often increases the cost of defending cases unnecessarily.

     Let me cite to a recent example of a case that did not need ADR. I just completed a jury trial, in which the plaintiff had been offered approximately $25,000 (including PIP reimbursement) for a case involving two arthroscopic knee surgeries and roughly $30,000 in total medical expenses and wage loss. This offer had been made pre-litigation, in a good faith effort to resolve a disputed claim. The rationale for the amount of this pre-litigation offer was that causation for the knee condition was disputed (this was a tap rear-ender). This offer reflected a fair compromise between possible jury verdicts of a zero dollar recovery and something close to the $50,000 policy limit.

     Once the case was filed, and I was retained to defend the insured, the facts improved considerably. Through discovery, we discovered a mechanism of injury that pointed to something other than the minor rear-end impact as the cause of the knee condition which led to surgery. We also confirmed that the forces of this impact were more in the range of what a person might experience while parallel parking, than anything with serious injury potential. We also discovered a criminal history for the plaintiff, which we thought the jury would properly consider when judging his credibility.

     The court scheduled a Judicial Settlement Conference, a few weeks before trial. By the time of the conference, the insurer had already spent considerable defense dollars in discovery and medical consultation, but told the settlement judge it would still pay the $25,000 if the plaintiff wanted to settle on that basis. Up until that point, the plaintiff’s settlement demand had been the $50,000 policy limit. Although the settlement judge worked hard and did persuade the plaintiff and his attorney to reduce their demand from $50,000, the judge was unable to convince them to take the $25,000. They insisted on $27,500, because of an outstanding medical bill. The insurer did not want to increase the offer.

     With this, the contest was set up. The parties chose to convene a jury, over a $2,500 difference. This is pretty rare these days. There are considerable pressures that come to bear to close a claim, from insurers concerned about extra-contractual liability, to strong-armed judges, to concerns about the expense of trial, but I agreed with the insurer in this case. The previous $25,000 offer seemed to over-state the risk of this case, as it had developed in discovery.

     At the start of trial, the trial judge did his best to get the parties to close the gap. He started with the plaintiff and told the plaintiff’s attorney that he felt the $25,000 offer seemed like a “bird in the hand” that should be accepted. He asked me if the insurer would still pay it, if the plaintiff wanted it. I had to admit that I was somewhat doubtful, because of the expenses incurred since the Settlement Conference, but I said I would inquire. After a brief consultation with the plaintiff, however, we were told he would only consider settlement if the offer were increased. The trial began.

     Two days later, and after less than 30 minutes of deliberation, the jury decided the plaintiff had not met his burden of proving that the defendant was negligent or that he was injured in the accident. The jury returned a full defense verdict. The insurer saved $25,000. Of course, they had incurred the cost of defending the case, but that was less costly than paying $25,000. And, this result was far less expensive than it would have been to settle the case after already spending the money to defend it.

     This type of story does not occur frequently enough these days. Far too often, once a claim gets into litigation, the focus becomes “closing the file”, at basically any cost. Settlement judges and mediators talk frequently of what they think the “settlement value” of the case should be, or what similar cases have “settled for”, instead of how similar cases have been decided by juries.

     If we try fewer cases, we do not know as well as we once did what juries are awarding. This is one reason why we need to try more cases. We also need to ask juries to decide cases to keep our focus on what we are doing. The goal is to pay what a jury would award. Some plaintiff attorneys have not taken a case to trial in years. And, some plaintiff attorneys have essentially turned the job of evaluating and resolving their clients’ cases over to settlement judges or mediators. We do not need to do the same.

     In my opinion, the true “settlement value” of a case should be what a jury would award for it, not whatever we can pay to get rid of it. Often, the true settlement value of a case is a fairly known quantity, at least for standard cases without many wrinkles. To the extent there are unusual features, such as skinny liability but very serious injuries, there may be a need to increase the settlement range. Or, the risk may run both ways, as in the case I just tried, suggesting a settlement value somewhere in the middle.

     We do not need to be afraid to try cases. Defense attorneys who have tried enough cases, or who are otherwise in tune with what juries are awarding, are usually able to fairly well forecast a likely jury value range. On occasion, that forecast can be wrong. The jury might award less. Or, it could award more. The important thing, however, is that once the jury is done with the case, we will know exactly what it is worth, and we will have that much more experience with which to evaluate the next case.

     In summary, I believe we should strive to resolve cases for their fair value, as early in the process as possible, to keep defense costs to a minimum. If a fair settlement is not possible, we should not be reluctant to ask a jury to decide the case for us. We need to restore balance in the system and put us all back in touch with the true value of injury cases. Please contact Jay Enloe at 503-768-9600 or jay@lerlaw.com with any questions.

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