How Attorneys Value Your Claim When Making A Recommendation To Settle Or Proceed To Trial: An Explanation For The Parties

I used to receive correspondence like this once every couple of months.  For reasons not clear to me, I’m now receiving two or three a week:

I am the plaintiff in a malpractice action against a prestigious hospital. After eight years of litigation, the case is finally  set for trial in in May. The Court ordered the case to mediation, which is taking place tomorrow.  Our attorney, who demanded $2 million for my injuries, was confident of our chances of success at trial until two days before the mediation.  Today I received an email from my lawyer telling me that the hospital has offered to settle the case for $10,000.  He advised me to take the offer because my case is “weak,” something he has never said before.  I have made several telephone calls to my attorney in response to this email but he hasn’t returned my calls.  It appears as if we’re just going to “wing” tomorrow’s mediation.  I am  flabbergasted.

In addition to these pre-mediation emails, I also receive post-mediation emails where the complaints/misunderstandings include:

• I was left for seven hours in a conference room while my attorney conferred with opposing counsel and the mediator; I was not offered lunch nor permitted to leave the building.  By the time my attorney returned with the offer he pressured me to accept, my will was weak.  Though I protested, I eventually signed.  Don’t I have 24 hours to withdraw my consent?
• The attorney and the mediator both pressured me to accept the settlement offered, which was tens of thousands of dollars less than my attorney told me my case was worth.  He never changed his opinion until the day of the mediation.  I asked for an explanation and all my attorney and the mediator told me was that my case had only “nuisance” value and I was lucky to be offered the sum of money “on the table.”  If I didn’t accept the settlement, my attorney told me he would withdraw from the case and I’d have to find a new lawyer to represent me at a trial scheduled in two months.  I signed but now want to withdraw my consent.  May I do this?

Here is my standard response:  I am sorry to hear about your troubles.  Unfortunately, I no longer practice law.  Over the course of litigation, laws change as does the testimony of witnesses.  Your attorney should be able to explain to you the many reasons he has valued your case less well after months or years of litigation than he originally did.  If you are not satisfied, you can always seek a second opinion.

If I had the time, I add the following:  Often, facts come to light that significantly decrease the value of your lawsuit.  Attorneys value litigation by predicting, as best they can, what the likely outcome will be at trial.  The factors they take into consideration include the effect each side’s expert witnesses are likely to have on a jury based on how well the experts’ testimony went (or is expected to go) in pre-trial testimony (“depositions”); how their credentials stack up against the opposing experts’ resumes; whether their testimony will likely be impeached at trial (often based on admissions made during deposition); and, what type of “jury appeal” each of those experts has.

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These considerations also apply to “eye” witnesses (people who know the facts first-hand) who will testify at trial; your own credibility and the likely jury response to your claim and your personality (and sometimes, unfortunately, also your race, nationality, obvious sexual orientation or gender). Documents unearthed during the “discovery” period when each side is entitled to demand the production of relevant papers from your opponent and third-parties can also decrease the likelihood that you will prevail at trial.

Attorneys think in ranges of potential outcomes – complete victory; partial victory; and, loss.  They also think in ranges of potential damages, based upon their own personal experience with jury trials and the experience of others, the latter of which is often made public in local, state, and national legal newspapers, magazines and journals.

Your case will generally both get better and worse over time.  People’s memories are notorious flawed and it is relatively easy to “impeach” (diminish their veracity) them with documents that were written at the time the events occurred.  You must also remember that when you first told your story of injustice to the man or woman who might be your attorney, you did, as we all reflexively do, cast your tale in the best light possible, often leaving out “unnecessary” details or facts that would make your claim appear more “complicated” than you believe it to be.  And, here’s a shocker.  Clients also do not always tell the truth.  When they’ve testified to something under oath and are later shown to have “fudged” the facts (or worse) the value of their case plummets, even though their injuries and the events that led to them are not changed in any significant way.

Lawyers call this a “risk analysis,” multiplying the range of potential outcomes by the likely range of damages.  60% chance of winning, for instance, times a probable award of $100,000 in damages, leading to a “value” of approximately $60,000.  Although attorneys engage in this type of risk analysis, it misrepresents the reality of the risk.  If you have a 40% chance of losing, four times out of ten you and your attorney will receive less than nothing for your efforts.  I say “less than nothing” because your attorney will have expended monies on expert witnesses; deposition transcripts; filing fees; and, the like that either you or he will have to pay the other side if you lose.

Here’s the rub for the individual plaintiff.  You do not try ten cases out of ten.  You try only one case.  And because the potential for victory is based upon so many factors and your fate in the hands of twelve people whose background and attitudes you do not know (or know very little) it is almost impossible to predict the result in any single trial with any degree of confidence.  The defendant who is represented by an insurance company is also trying only one case, not many.  But the insurance company tries thousands and cases every year.  And it is the insurance company making the decision whether and how much to offer you to avoid the possibility that it will lose. The “risk analysis” discussed above is more useful to these “repeat players” than to individuals who will have only a single chance to “get it right.”

If statistics appeal to you, take a look at Beyond Right and Wrong:  the Power of Effective Decision-Making for Attorneys. Though I’m giving you a link to Google Books, this tome should be near at hand in the office of every lawyer engaged in predicting litigation outcomes.  Here’s a link where it can be purchased.   Here’s what the most recent research indicates about the way in which plaintiffs and defense attorneys predict jury verdicts.

[P]laintiffs make decision errors more often than defendants but the cost of defendants’ decision errors is dramatically higher than the losses Plaintiffs sustain.  The decision error for Plaintiffs is 60%, compared to defendants’ decision error rate of 25%.  In other words, Plaintiffs would have achieved better financial results if they had flipped a coin whether to settle or try a case, and defendants made a decision error in one out of every four cases.  In only 15% of the cases did both parties obtain a superior economic result by rejecting each other’s settlement proposal and proceeding to trial.  Out of every 100 trials [studied] only 15 trials resulted in a nominal win-win award after the parties walked away from the negotiating table.

For the Plaintiffs, the average cost of decision error – the difference between what they received at trial and the amount they could have received through settlement – is $73,400.  The Defendants average cost of error, in comparison, $1,403,654, about 19 times the loss sustained by Plaintiffs.

Because I didn’t set out to analyze decision error, but only to give litigants an idea of the difficulty and complexity of predicting trial results and affixing a set value to a claimed injustice, I will leave it at that for now.  Anyone with sufficient interest in this subject, particularly attorneys, should buy the book and keep it, if not on their night-stands, at least on their desks.

There is no “solution” to the problem of “decision error.”  Hopefully, you have an attorney who is an experienced trial lawyer with dozens, if not hundreds, of trials on his resume.  The seasoned trial attorney has more of the right kind of experience that will permit him to value your chances of success before a jury.  He or she has won and lost on multiple occasions, learning with each one how to better present a case and knowing, down to the knuckles of his or her spine how unpredictable and often irrational both juries and judges (not to mention the sometimes inevitable appellate justices) can be.

I hope that helps.

                       

Victoria Pynchon

Attorney-mediator Victoria Pynchon is a panelist with ADR Services, Inc. Ms. Pynchon was awarded her LL.M Degree in Dispute Resolution from the Straus Institute in May of 2006, after 25 years of complex commercial litigation practice, with sub-specialties in intellectual property, securities fraud, antitrust, insurance coverage, consumer class actions and all… MORE >