Arnold & Itkin has long argued that people should hire an attorney as soon as possible in order to maximize their recovery. As plaintiff attorneys, we’re firm believers that injured people have the best chance for success when they speak with an attorney as soon as possible after their accident. Unfortunately, given that settlement results are confidential and it’s impossible to compare settlements on a broad scale, it’s tough to prove once and for all that hiring an attorney early is good for plaintiffs.
However, at least one study published by the insurance industry indicates that when you hire an attorney does have an effect on the size of the settlement.
In “The Plaintiff’s Attorney in the Liability Insurance Claims Process: A Game Theoretic Approach,” Lisa Posey applies game theory to the liability insurance process to see how the hiring of an attorney impacts the claims process. Her conclusion is simple: when claimants hired an attorney on a contingency fee basis before the insurer made an offer, it gave the claimant a stronger bargaining position.
The study compared how hiring an attorney during the settlement process, just before trial, or not hiring an attorney at all might affect an insurer’s settlement offer. They also compared two models: one where the insurer did not know how much the damages from the accident would be worth, and one where the insurer knew exactly what the damages were worth.
In situations where the insurer knows the value of the claimant’s damages, the claimant is theoretically able to maximize the size of their settlement by hiring a lawyer on a contingency fee basis before the insurer makes an offer (which is early in the settlement process).
Why Does It Matter If You Hire a Lawyer Before the Settlement Process?
Under Posey’s model, claimants who hire attorneys early are more likely to get a larger settlement for a simple reason: the threat of trial. Insurance companies who know the worth of your case understand that they’ll have to pay more if the case goes to trial, particularly if your attorney has been working with you through the settlement process.
“By retaining an attorney on a contingency fee basis, before the insurer makes an offer, the claimant gains some bargaining power and a higher net payoff. The threat of trial governs the smallest amount the insurer can offer and avoid trial.”
In other words, having an attorney early in the settlement process means the insurer is incentivized to offer the full worth of your damages.
What This Means for You
Given that liability insurers settle 98% of third-party claims, it’s vital to know how to give yourself the strongest possible outcome during the settlement phase of the case. If you wait to hire an attorney until you decide to go to trial, the path to recovery may take even longer.
We’ve long advised claimants that one of the advantages of calling Arnold & Itkin is our record at trial. Very few law firms have extensive trial experience, as evidenced by the fact that 98% of cases settle out-of-court. A large portion of cases settle before trial, which means many attorneys may never see the inside of a courtroom. Meanwhile, our firm is a true trial law firm; much of our best work is done in front of a jury. This study validates our counsel by making it clear, once-and-for-all, that insurance companies will pay higher settlements to avoid going to trial.
For you, this means it’s in your best interests to call an attorney as soon as possible after an accident. Don’t wait until the insurance company sends you an offer; having an attorney in your corner early gives you the strongest possible chance at recovery. If you or someone you love is harmed, call us as soon as possible.
Arnold & Itkin represents clients on a contingency fee basis, which means there is no upfront cost to getting our help. Call (888) 493-1629 today for a free consultation to discuss your options.
