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7 lessons from a $34 million truck accident settlement

Michigan Auto Law attorney Steven Gursten and Ohio co-counsel Michael Leizerman and Jan Stamm settle truck accident case for $34 million

Last Thursday, my Ohio co-counsel and I settled a truck accident case in Ohio for $34 million. Michael Leizerman and Jan Stamm were my very excellent co-counsel (more on my co-counsel below). I’m limited by the terms of a confidentiality agreement and cannot share the names of the parties or insurance companies, or discuss the injuries involved in the case, but some broad lessons can still be learned and applied to many other cases.

1. Stop low-balling at mediation.

At mediation, many defendants only offer a small fraction of what the eventual settlement will be. That usually proves to be a big mistake. Offering a more reasonable and realistic number, even a number that is at the low end of reasonable, is usually smarter. Clients would have had to take a hard look at it, and then think about it over time as the months pass by. I think a lot of cases would settle, and settle at lower numbers, than what they eventually do if more insurance companies did this.

I understand the theory behind why some defendants and insurance companies low-ball at mediation, but it’s risky and it often backfires. The defense thinking is that offering a very low settlement number creates a low anchor and makes future offers that are still unreasonable look better.  Also, many mediations are essentially conducted in bad faith, where defendants go through the process hoping to learn what number the plaintiff will take and what is the bottom line, so they can work them down from there.

Maybe, depending on the attorney and his or her relationship with the client, this creates frustration and even suspicion between the injured plaintiff and plaintiff counsel. In many cases, however, it backfires, especially when plaintiff counsel is expecting this and warns the plaintiff ahead of time. Instead, it often hardens the resolve of the plaintiff to go to trial and makes the risks of going to trial more reasonable. It can also antagonize a plaintiff and provoke an emotional response toward defendants.

2. Test what scares you most.

I can’t discuss the injuries or the parties because of our confidentiality agreement, but there were some potential defenses that were, to be honest, potentially scary. So we tested them (I played the defense lawyer in both mock trials and focus groups, and my Ohio co-counsel Michael Leizerman played the plaintiff attorney. I got to make the arguments that scared us the most. And we got to see how potential jurors would react. This again removed a lot of potential uncertainty. In voir dire, sure enough, one woman was called and one of the situations that had worried us quite a bit before the focus groups came up. But we had tested it. We left her on and didn’t use a pre-emptory on her, and the defense didn’t strike her. We had a good idea how this would play out, and that she would be very favorable if the case had gone to verdict.

The lesson here: Test. Test your assumptions, stereotypes and fears. Many of them will turn out to be urban legends, or things that get repeated so often by adjusters and defense lawyers that we just start assuming they’re true. Many are not. Pick the type of jurors who scare you the most, and test all of the defense arguments and landmines.

3. Be careful what you wish for.

The defense likely spent millions defending this truck case. I haven’t seen any legal bills (although I do have an over/under wager with the general counsel attorney for the trucking company as to the eventual cost of defense) so this is my educated guess of the cost. The defense attorneys filed every conceivable motion. The attorneys took every conceivable deposition of every treating doctor, medical expert and liability expert. My guess is during the last month before trial, the law firm defending this case had two or three lawyers locked in a room doing nothing but writing motions on this case.

But it backfired. What this did was remove any remaining uncertainty that existed from the mediation. And after the smoke cleared, the case was stronger for us than it had been before all of the motions. The case was worth much more after all of the motions and discovery depositions. Issues that made us a bit nervous were decided in our favor.  So the defense spent a few million dollars on the cost of defense – making our case worth more.

As with mediation, I understand the thinking behind this strategy. In general, not many plaintiff law firms can stand up to this kind of papering of the file and workload. Many plaintiff personal injury law firms are smaller law firms with limited financial resources. The biggest limitation is time. Many lawyers cannot respond to two dozen motions in limine, as we suddenly faced a few weeks ago. And as many lawyers go paycheck to paycheck, and smart defense attorneys know this, many plaintiff attorneys will settle a case “short” because things are tight or they just get worn down.

But this strategy has risks if defendants pick the wrong lawyers and law firms. The defense had to have known that we could withstand this type of litigation defense. All it did was make the case worth a lot more than it was at mediation.

Yes, between the three of us, we put several hundred hours into this case. But the result was that we knew our case inside and out. Our case was made stronger as issues and possible defenses that did concern us were rebutted or removed entirely thanks to all of the defense motions. It also made our case worth more money than before, as risk and uncertainty were removed.

Yes, some plaintiff lawyers will buckle when defendants employ this type of defense and panic and settle cases short.  Other plaintiff lawyers will refer cases out to specialists. My own law firm receives a fair number of attorney referrals from other lawyers around Michigan when defendants and insurance companies low-ball or schedule a bunch of discovery depositions. The defendants should understand there’s a significant risk to this type of defense.

There’s a big reason so many defense lawyers I know do this. In many large injury cases, the defense law firms make more money than the plaintiff attorneys do.  As I said, defense billable hours of over $3 million in this case would not surprise me. For defense attorneys, this is a great way to defend cases. They make a ton of money defending the case. And on a very serious injury case – one they definitely do not want to go to trial on and later be known as the defense attorneys responsible for a $100 million plaintiff trucking injury verdict, which can cost them a number of clients – they paper the file.  This gives them cover so they can then get more authority to settle the case so they can avoid trial. Defense attorneys think they can defend the case and bill for a lot of money, and if the depositions and motions go well for them, the case is worth less. If the depositions and motions go badly for them, they can report on what will happen and get more authority to settle the case and avoid trial. But it’s a risky strategy, and if the plaintiff and plaintiff attorneys are planning on going to trial, this type of strategy can be very expensive for the defense.

4. What is a very serious truck accident case worth?

Thirty four million dollars is a lot of money. I’ve been told this settlement will likely be the largest truck accident settlement in the U.S. for 2014.  No other Michigan lawyer has ever come close to settling a truck accident case for this amount of money.

But what is value, really? What is the value of a case when you get in the tens of millions of dollars?  What is the difference between $10 million and $30 million? Or $100 million? How does a lawyer ever truly know what a case is worth?

The best answer I’ve found is to focus group your cases. The reality is, the more I practice law, the more I come to understand our notions of what juries may do are completely different from what many lawyers and adjusters think.

I slept like a baby with tremendous dollars on the table, because I knew odds were we could do better if the case went to verdict. Don’t take an amount because an adjuster or mediator or a case evaluation panel tells you this is what case is worth. Test it. Trial is never certain, and anything can happen – and usually does. But you can play the odds. And as long as are communicating the risks appropriately to your client, you and your client are both better served.

This point probably applies more to practicing law in Michigan than in other states that do not have mandatory case evaluation. But I’ve found the only way to truly have an idea of value is to test. In Michigan, case evaluation has become almost meaningless. I appear in Oakland County and there are mostly retired former divorce and general practice lawyers sitting as plaintiff case evaluators. They have no idea what these cases are worth.

In Wayne County, the process is completely broken as well. The mediation clerks are not calling the lawyers who truly understand this area of law and practice in this area. They call the ones they know will be available, because it’s less work. And the results are the case value ranges are all over the place.

So in terms of value, why isn’t a case worth $100 million or more? I’ve found juries are not offended by asking for high numbers, as I was always told they would be when I was a much younger lawyer. Frankly, the more conservative the juror, the more likely they are to punish for bad behavior. So many of the traditional stereotypes we have as lawyers are just wrong. They’re based upon urban legends and are accepted as universal truths, because too many lawyers are too lazy to test their cases and make the investments necessary to truly understand value.

5. Costs: If you can’t stand the heat, get out of the kitchen.

Our costs in this case will be well over $400,000.  This includes several focus groups and a mock trial. It also includes meetings with experts, and a total re-enactment of the truck accident. Attorneys have to be in it all the way, and be willing to make huge investments to explode the full trial or settlement value of these cases.

6. Choose co-counsel wisely, my friends.

Michael Leizerman practices law in Toledo, Ohio. For many years, he has been one of my closest friends. We’re both past-presidents of the American Association for Justice Truck Accident Litigation Group, and our friendship began almost two decades ago at a trucking seminar. Michael literally wrote the book on trucking, called “Litigating Truck Accident Cases.”

We became such good friends that a couple years ago, we decided to start our own law firm together along with our friend attorney Joe Fried from Atlanta, and focus on high-level catastrophic national trucking cases. It was this second law firm that indirectly led to our being associated as co-counsel on this case with Jan Stamm. My friend Michael did an absolutely tremendous job on this case. I cannot stress this enough. This is the best way to put it: I knew Michael was a great lawyer before all of this. Now, after watching him work on this case for over a year and from all of the focus groups and countless hours working with him, I know he’s even better than I thought.  It doesn’t hurt that his wife, Rena, is also a terrific lawyer and writer.

7. Structures

Why do defense attorneys and insurance companies insist on making such a big deal of having their structure person hand out structures? How many plaintiff attorneys haven’t already advised their client well ahead of time not to be fooled – and that the only number that really matters is the present day value of the structure, not the inflated values over time? I guess not enough, because sure enough in almost every serious case I have, the defense has their structure people there and they make this big production.

In most of my cases, I refuse to even play this game and allow a defense structure broker to send over spreadsheets until we’ve already agreed upon a settlement number. Plus, most defense lawyers miss that structures have a downside in settlement negotiations. They can tip the hand of the defense. For example, a $1 million structure probably means the defense has at least $1.5 million in authority, because the $1 million for the structure does not include attorney fees, costs and usually a lump-sum payment.

Consider this bonus tip: Insurance companies don’t listen to their own lawyers. Assuming adjusters bother to read what defense lawyers report, the biggest complaint I hear from my friends on the defense side is that no one bothers to ask their opinion anymore, even from the truly great lawyers. They get paid to carry water, and do what adjusters tell them to do. And then they have to watch as their bills are aggressively audited and cut to pieces, to boot.

If someone bothered to listen to them from time to time, it would probably save insurance companies a lot of money.

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Blog Author Steven M. Gursten
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