Published February 2018
By Lawrence Gordon
Have you ever heard the following: a stitch in time saves nine; time is money; no time like the present; the early bird catches the worm and the sooner the better. These are all time worn phrases that are often used to address the issue of the relationship between time and money. Many if not most people feel that it is generally better to spend time, effort and money dealing with a challenge early on. In other words, the sooner an issue is dealt with, the less it usually costs. If left unaddressed, the challenge may get worse, take longer to deal with and cost much more money than originally budgeted or anticipated.
If you believe that in many situations, time is indeed money, one must ask the question. Why are plaintiff attorneys and insurance carriers missing a fantastic opportunity to resolve bodily injury claims through the use of presuit and early mediations? Earlier resolution of bodily injury claims could be a win-win for the injured party, plaintiff attorney and the insurance carrier handling the claim. In other words, a positive result for all concerned. The injured party receives much needed funds and reduces the stress that goes along with litigation and the claims process. Their attorney minimizes the cost that the plaintiff is ultimately responsible for under most injury claims contracts and earns their fee in a more timely manner. The insurance company resolves an injury claim that could cost substantially more if it is allowed to stay around for a significant time as an open claims file. Additionally, claims staff and resources are freed up to move on to other matters.
In the mid nineteen seventies, I began my career as a bodily injury claims adjuster in Jackson, Mississippi. Little did I know that I would move to Florida, secure a Florida Adjusters license and maintain the license for over thirty five years. I was employed as an adjuster negotiating and handling serious bodily injury claims for three different major insurance carriers. This meant that I had to go through the adjuster training for three different insurance companies. I negotiated injury claims and represented insurance companies throughout Florida at many mediations along with defense attorneys.
The training program at each of these carriers varied. However, one thing that was emphasized by all three companies was the belief that the longer a claim remained open the more it cost the company to finally get it resolved. This type of thinking led to many insurance companies opening field claims offices and emphasizing claimant contact within twenty four to forty eight hours. The goal was to settle claims as quickly as possible prior to personal injury attorney involvement. One has to wonder why insurance carriers do not use the same urgency when handling claims in which the injured party is represented by an attorney.
The claim file usually stays around for a minimum of six months, followed by the submission of a demand package from the injured party’s attorney. At this point, the adjuster often extends a relatively low offer which usually results in the injured party’s attorney filing a lawsuit followed by discovery and possible trial. The claims file can stay open for years costing the carrier and plaintiff attorney thousands of dollars and loss of valuable time.
In my opinion, both the insurance carrier and the plaintiff attorney are missing a golden opportunity to settle the case for a fair amount. Why not mediate the case during the demand phase or before the expiration of the twenty days that the defendant has to respond to the suit. It could be beneficial to both parties to agree to a mediation at this point before time and thousands of dollars are lost to the litigation process.
Many if not a majority of cases settle at mediation. Additionally, many of those cases that do not settle at mediation often settle shortly thereafter due to the foundation laid at the mediation. Thousands of dollars normally spent on items such as attorney fees, cost of discovery, cost of medical experts, cost of accident reconstruction, engineers, transporting witnesses, housing witnesses, claims people attending trial and other cost could be saved or greatly reduced.
Mediations usually last a few hours, half a day or whole day depending on the issues and complexities of the case that is being mediated. While there is no guarantee that a case will settle at mediation it will probably increase the odds that the case will settle in the near future. Remember, trial brings its own risk and one side always loses. Mediation often leads to a positive result for both sides. Think about it, a few thousand dollars spent on mediation or tens of thousands of dollars spent on litigation, trial and possible appeal. To paraphrase a famous quote, “A dollar saved is a dollar earned”. Do not forget that cooperation through mediation can be the key to success.