Agreements

High-Low Agreements: A Good Way to Hedge Risk at Trial

As any smart attorney will tell you, in most cases, accepting a reasonable settlement in your personal injury case is preferable to allowing the case to be decided by a jury.  Among the reasons for this include (i) the fact that juries are extremely unpredictable, (ii) jury verdicts are subject to damages reductions (i.e., a reduction in the amount of money you get) both by the trial judge and by appellate courts and (iii) jury verdicts as to liability (i.e., the fact that the defendants are responsible in the first place) can be overturned both by the trial judge or by appellate courts.  With a settlement, there are no appeals, and the money is payable immediately upon the sigining of a settlement agreement.

However, in some cases, you and the defendants may be very far apart in terms of your views of the value of the case.  The defense may think that your injuries are only worth a fraction of what you believe you deserve, but may make a settlement offer; you may prefer to settle your case to ensure that you don’t end up with nothing, but believe that the offer on the table is far too low.  Assuming that the defense cannot be persuaded to pay you more in settlement, what solution, other than taking a risky jury verdict, can your personal injury lawyer divise in order to get you a better deal?

The answer to this conundrum is the “high-low” agreement.  Your personal injury lawyer and the defendants negotiate a range within which an award can be made; it will be agreed that you, as the plaintiff, are guaranteed at least a certain amount, but, in exchange, you can only be awarded up to a certain maximum amount of money. This way, you, as the plaintiff, will not walk away empty handed; and the defendants can be sure that their risk is capped, thus not leaving them subject to a potentially sky-high jury award.  High-low agreements are also not subject to appeals, adding to the certainty they provide for both plaintiffs and defendants.  These features make “high-low” agreements very good ways for personoal injury attorneys to hedge risks, and make sure that an acceptable outcome for their clients can be achieved.

Category: Personal Injury