October 29, 2016

By: Jonathan J. Russell, Esq.

In a prior article, we discussed whether you should settle your personal injury case without going to trial.

If you have decided to settle your case, it is critical that both you and your attorney understand the concept of Best Alternative to a Negotiated Agreement, or BATNA. (The term BATNA was coined by authors Roger Fisher and William Ury in their groundbreaking book, Getting to Yes, and is now part of the lexicon of negotiation practice.) To successfully negotiate your personal injury claim, you need to understand both your and your adversary’s BATNA.

For example, suppose you were seriously injured in a slip-and-fall case in Pennsylvania. Suppose you sustained substantial damages, but the other party disputes liability. Your BATNA equation might look something like this:

Percent of liability attributable to the defendant: 80 percent; multiplied by the projected jury verdict: $100,000; minus the one-third attorney fee: $26,666; minus the costs of suit: $10,000; equals your BATNA net recovery of $43,333.

Accordingly, if you could settle your case for a net of $43,333 (your BATNA), or greater, you should do so.

The difficulty in determining your BATNA is that no one (including your attorney) has a crystal ball and knows for certain how a jury would decide a particular case. Unfortunately, sometimes juries reach verdicts that seem to have little basis in fact or law. Thus, you must also consider your adversary’s BATNA in order to fully appreciate the value of a settlement offer.

In the example above, if a jury determined that your adversary was only 49 percent at fault, your adversary’s BATNA would be his costs to defend the claim through trial, say, $15,000. Even if the jury found that you sustained $100,000 in damages, your 51 percent fault level would prevent you from recovering any money for your claim.

If you know that your Best Alternative to a Negotiated Agreement is a net award of $43,333, and your adversary’s BATNA has a cost of $15,000, it would be wise to consider offers falling between your BATNA and your adversary’s BATNA. Of course, your goal will be to achieve a net settlement as close to your BATNA as possible.

The BATNA equation only accounts for the monetary factors involved in trying your case. There are social, psychological and other important factors as well. Some plaintiffs are eager to exact their pound of flesh. Others are frustrated by their adversary’s refusal to accept responsibility for the harm they caused. These factors are highly personal, difficult to quantify and vary from case to case.

As trial attorneys, our job involves managing both risks and expectations. In evaluating a settlement offer within the range of our client’s BATNA, we seek to assure that our client understands and is comfortable with the risks associated with accepting or rejecting the offer. If your adversary has not made a reasonable offer, there is little risk in trying the case. (It will also be emotionally easier for you to go to trial.) However, as the offer approaches your BATNA, your risk in going to trial increases. Thus, even though we as attorneys may be eager to try your case, we may recommend that you settle if the offer is close to, or in excess of, your BATNA.

Each client is unique, especially when it comes to risk tolerance. Some clients are willing to take great (sometimes excessive) risks; others are very risk adverse. There are extremes on both ends of the risk spectrum. We have had cases where the client rejects the defendant’s last, best offer but then obtains a higher award at trial. We have also tried cases where the client is disappointed by the jury verdict and wishes he or she could go back and accept an earlier offer of settlement. A good trial attorney never forces a settlement on a client, but rather provides the client with reliable information and good counsel to enable the client to make the best decision under the circumstances.

At Drake, Hileman & Davis, we have been winning cases for your neighbors for more than 30 years. We also help clients assess and manage risk. If you are seeking wise counsel to resolve your personal injury claim, we invite you to see what some of clients have to say about how we have assisted them through this process.  We also invite you to  contact us directly for your free case analysis and evaluation.