What is a Private Settlement Agreement?
Private settlement agreements are exactly what they sound like; a confidential agreement made between the two parties of the auto accident or car crash. They can have many variations, but between two parties they usually include a relatively straightforward and concise release and remittance. If necessary, the parties may include a provision for future or ongoing medical care. In an ideal world, the settlement agreement should be drafted in such a way that it specifies payment dates for the full settlement amount and includes any possible interest fee for late payments (e.g., one percent per month). These specifications provide clear guidelines for future compliance by both parties. When an agreement is reached , the terms are often reduced into writing to detail the agreed-upon arrangement and make it binding. The written document is emailed or mailed to everyone involved to ensure all relevant stakeholders are aware of the agreement.
As mentioned earlier, court settlements are likely to be capped by law. Therefore, if the statutes in your state or area prohibit damages from exceeding certain amounts, the settlement will not exceed those amounts. Auto accident settlements that do not come from court, however, are not controlled by statutes so there is no limit as to how much money can be provided for settlement. Thus, the parties are free to negotiate and make arrangements that fit their needs. Private settlement agreements may also have the potential to speed up the process of settlement and save the inquiring party money.
Advantages of a Private Settlement
Private settlement can also be advantageous if you are concerned about maintaining privacy. All lawsuits, including those associated with car accidents, are public records. Every piece of evidence submitted into court – including verbal testimony – is made part of the public record, and that means it’s accessible on the internet. While attorneys like myself don’t usually recommend filing a lawsuit unless it’s necessary, some clients want to file a suit against their car accident injury lawyer after realizing that such information is public record. At that point, they realize they should have avoided filing entirely. Any settlement after the lawsuit is filed is considered part of the public record as well. A private settlement allows you to bypass this public record, so the facts of your case remain confidential.
Using a private settlement can also save you money. Think about all the costs involved with filing a lawsuit: attorney fees, filing fees, court fees, expert witness fees, and indirect costs such as the loss of time you must take from work to testify at trial, travel to other locations to meet with attorneys and experts, and stress during trial while waiting for a verdict.
Key Elements of a Private Settlement
A few fundamental components make up any settlement agreement, whether for a personal injury claim, a property damage claim, or both. When discussing a private property damage settlement, some of the same elements are necessary, but the scope of the property damage may be much more closely linked to the state of the vehicle than it is to a more complex issue of physical harm to the individual.
The parties. The identity of the parties is key to any agreement, and the agreement should include the names of all individuals involved in the car accident. If a corporation is a party, then the name of its registered agent is included in lieu of a personal name.
The facts of the car accident. A brief summary of the circumstances surrounding the car accident helps ensure each party has the same understanding of how the car accident occurred. Including information regarding other people involved in the car accident, including insurance companies, may also be a good idea.
The amount agreed upon. The total dollar value of the settlement amounts to a sum certain that is the basis for a release from liability. This assures each party that the settlement covers the entire extent of the damages claimed and gives the defendant certainty that the plaintiff does not intend to pursue any more dollars for the car accident.
The requirements of the agreement. Often, sufficient steps are required of either party to complete the terms of the agreement. The release from liability is typically drafted to reflect not only that the plaintiff is released from any liability related to the accident, but also that the defendant will be free from responsibility for medical bills, lost wages, loss of consortium, or other claims. The defendant may also be required to complete further releases for insurance claims or medical providers to release the defendant from any secondary claims, such as subrogation.
Creating a Bill of Release
To be legally binding, a private settlement agreement should be in writing, and both parties should sign it. The parties may also want to have a neutral witness to their signature to avoid potential issues about the validity of it later on. Including the date when the parties sign the document is also a good idea so that there is no dispute about when the contract was finalized. In general, it is best for the parties to indicate that they agree to the terms of the private settlement agreement in clear language so that there is not a question about what the intentions of the parties are, and then to list the details following this sentence. The parties may also want to include a dispute resolution clause that will help allow them to settle any disagreements without going to court. Once the private settlement agreement is signed, if the settlement agreement has not previously been filed, a party should file it with the court and serve the opposing party so that the private settlement agreement becomes effective. Once it has been filed, it can potentially be enforced just like any other contract.
Negotiating a Suitable Settlement
When negotiating a private settlement after a car accident, it is crucial to approach the process with a clear understanding of the priorities of each person involved. For the victim, this typically means seeking the compensation necessary to pay for medical costs and lost wages caused by the injury, as well as for the pain and suffering caused by the incident overall. The insurance adjuster for the negligent party, however, will likely be focused on minimizing the amount of money that must be disbursed.
As such, it is important for both parties to do their best to avoid any and all misunderstandings during their negotiations. This may require that each party takes some time away from the table in order to consult with their legal representation and arrive at the best possible outcome for all involved .
Being aware of the law as it pertains to the claim at hand can also help the parties reach a mutually agreeable decision in a timely manner. When the victim of an accident has a dedicated attorney with experience handling such cases, the insurance company will realize that they are not facing someone who is unaware of their rights or who may accept a lowball offer simply because they wish to be done with the matter as quickly as possible.
In some instances, however, disputes may require the assistance of a mediator. This is often more likely to be the case if the person who caused the accident denies liability or claims that the event occurred just as much due to the victim’s own negligence. Messy liability claims should begin early with an experienced legal professional, who will understand how to navigate the law and devote all of the required time and attention to the case.
When to Skip Private Agreements
While private settlements can be beneficial in some car accident cases, there are circumstances where settling terms can have negative implications. Not seeking fair compensation by delaying your case or the way your insurance company handles payments to another insurance company can end up making obstacles to resolving your case. Here are some examples of when a private settlement may not be advisable:
Catastrophic Injuries
In cases such as traumatic brain injury, amputation or loss of limb or disfigurement, there is no way to tell how much treatment, rehabilitation and recovery time the injured victim will need. Having the means to provide for ongoing expenses is crucial. It can be a costly mistake to settle before you are able to determine how much ongoing medical care will be needed. Your prognosis may change or circumstances may alter your course of treatment.
Disputed Liability
In some car accident cases, the liability is not clear cut. If you are partly at fault, then the amount of the settlement will be reduced according to the degree of your responsibility for the crash. The negligence of the other driver may also be an unknown factor. In cases where liability is uncertain, it is often a good idea to wait until fault is determined. The statute of limitations usually bars individuals from bringing a claim unless the case was initiated within a certain time period. In cases where liability is disputed, allowing your attorney to file first can help ensure payment compensation to the fullest extent. Additional evidence may be obtained as new information comes to light.
Unclear Insurance Coverage
If it is unclear whether your insurance policy will cover medical expenses or the other driver’s policy will kick in, settling with the other driver’s insurance company can lead to problems. Limited or no coverage on the part of the at-fault driver is one reason why it is best to pursue seeking compensation with your own insurance company.
Legal Issues and Professional Insights
While the allure of a quick and private settlement following a car accident is understandable, it is essential to grasp the complete picture from a legal standpoint. A private settlement agreement in this context typically refers to a mutually agreed-upon arrangement between the accident victim and the responsible party, which aims to compensate the victim without going through a lengthy lawsuit.
From a legal perspective, while such agreements are generally enforceable like any other contract, there are critical factors to consider. Both parties must fully understand their rights and potential entitlements. This means that the victim should be fully aware of the full extent of damages they may claim not only in the current matter but for any future implications as well. The finality of such an agreement can often prove to be a double-edged sword; on one hand, it provides certainty and closure post-accident, but on the other hand, it could prevent the victim from seeking further compensation if unforeseen injuries or losses arise later that relate to the original accident.
It is highly recommended that individuals do not rush into a private settlement without seeking specialized legal counsel. An attorney with experience in handling car accident claims can provide valuable guidance on the appropriate course of action. Additionally, your attorney can ensure that the private settlement agreement is legally binding and comprehensive enough to protect your interests now and in the future. It is also worth noting that some jurisdictions have specific rules or requirements regarding such agreements, which a knowledgeable attorney would be able to navigate.
Conclusively, it is not only vital to understand the legal implications of a private settlement following a car accident but it is equally important to seek appropriate legal advice before entering into such a settlement. It could save you from immediate and future repercussions that could have otherwise been avoided.
Examples of Case Studies and Their Outcomes
To illustrate the importance of the final step in the process of negotiating a private settlement, we will discuss how two different cases resulted in vastly different outcomes based on the way that their private settlements were structured.
A successful private settlement:
A 63-year-old woman is rear-ended by an 18-wheeler truck. The rear-ender was cited for driving too fast for conditions but the woman’s own speed gets her 50% liability. Expert testimony establishes that she will need a hip replacement and that the truck’s substantial rear-end collision crashed her closed left chain of events resulting in severe reflex sympathetic dystrophy with foot drop. She is eventually able to maintain a permanent limp in her left foot. She settled the truck case right before the discovery deadline for $250,000 — the case was worth more than that.
A simple breakdown of accident analysis illustrates why the case was settled for less than it is worth:
The plaintiff’s expert gives the plaintiff a 50% chance of full recovery from the RSD. The person leaves her office believing that a settlement for $250,000 was more than fair and the case is settled at the deadline. The case is then tried against a 50% responsible defendant and a $750,000 verdict is rendered. The case could have been settled for anything in the $500 , 000-$1,000,000 range.
A nine-figure disaster:
A 39-year-old construction worker is injured when a dump truck with defective brakes rolls down a hill and crashes into 3 parked cars, killing two people and permanently disabling him. The manufacturer of the truck agrees to a $10,000,000 settlement and the deceased pedestrian is settled for $1,500,000. The truck company refuses settlement. The manufacturer’s agreement appears to the plaintiff to be valuable but in fact, the money is worthless.
The reason is that the manufacturer’s agreement does not settle the lawsuit against the companies involved in the construction work because the plaintiff does not yet know which companies are at fault. These companies can never buy back into the lawsuit because they cannot now know that they should settle with the plaintiff while the lawsuit is pending. The $11.5 million of cash in settlement agreements must be distributed now. The only thing the plaintiff can do is settle the entire lawsuit for defendants of her own choice. A settlement here can be worth many millions more than the case against the manufacturers.
Both of these examples are real. Both settlements occurred without the assistance of counsel and both resulted in settlements far less than the case’s worth.
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