High - low settlement agreements

On Sep 11, 7:07 am, jcyeo...@gmail.com wrote:
> Assume that the claimant has offered to settle for $5 million and the
> respondent has offered to settle for $2 million. Therefore they
> cannot reach a settlement and they proceed to trial.
*  *  *
> They agree that if the claimant wins, the respondent will not have to
> pay more than $5 million, regardless of what the jury awards.  Also,
> If the jury awards the claimant less than $2 million, the respondent
> will pay the claimant $2 million.  Only if the award is greater than
> $2 million or less than $5 million will the resondent pay the
> claimant the exact amount of the award.

Around here we call that simply a "high-low" agreement.  Of course, the terms of any such agreement need to be kept secret from the fact-finder to avoid biasing the results.

You didn't ask, but it is far more common for such cases to be submitted to private arbitration once this much of an accord is reached rather than a full blown jury trial.  Going to trial typically is a lot more expensive than arbitration in terms of expert fees for live testimony (multiple doctors, economists, life care planners, vocational rehab counselors, accident reconstructionists, engineering/product defect experts, and so on), fancy demonstrative exhibits, focus groups, etc. not to mention the huge savings in time in presenting such a major case that might take weeks to fully try.  The arbitrator is not bound by the formal rules of evidence so most such info can be presented at arbitration in the form of written reports rather than live testimony from experts, which the arbitrator can consider either before or after the actual hearing, and only the claimant (and occasionally other fact witnesses to the extent of his damages) usually needs to actually testify.

It is usually only when a defendant (or its insurer) wants to insist on the chance of getting a complete defense verdict ($0 to the plaintiff) that they insist on a formal jury trial (or force the plaintiff to do so by coming nowhere near the plaintiff's lowest settlement figure in making their offer).  As you recognize, in a trial the risk is much greater for both sides.

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Mike Jacobs
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