SFTLA CLE Presentation April 25, 2017
By Arnie Levinson and Chuck Geerhart
The Mandatory Settlement Conference is your next to last chance at a formal settlement negotiation (you might get ordered to a day of trial settlement conference.) The Court usually schedules the MSC to occur about three weeks before trial. This means that sometimes costly expert depositions will still not have been taken, which in a smaller case can make a huge difference to the plaintiff’s bottom line recovery. The looming trial date also should mean that both sides have fully evaluated their cases and are ready to deal. Alas, we have found this is not always the case.
SF Superior Court Local Rule 5 (http://www.sfsuperiorcourt.org/general-info/local-rules) states requirements for the MSC. Attendance by all decision makers is required (see LR 5D). LR 5E requires counsel to ascertain what liens will affect settlement and request in writing that lienholders attend the settlement conference. That request is supposed to be attached to the MSC statement.
LR 5F requires the parties to engage in settlement discussions before the MSC. Plaintiff must make a demand five days before and the defense must make an offer two days before the MSC. LR 5F also states in detail what is required in an MSC statement. The local rules state the ideal. The reality we have seen as Settlement Conference Officers is far from the ideal. Attorneys for both sides often show up unprepared, sometimes having not even thought about offers or demands until that very moment. Here are the main pitfalls plaintiff counsel need to avoid in order to succeed for their clients:
1) Have a complete set of medical records and bills (including proof of what was paid under the Howell case). If you are missing this proof, the insurance carriers reduce the value of your claim. The total amount of medical expenses is not relevant to the defendant. It will only assess the case based on the Howell number. Get this to the defense well in advance of the MSC. The carriers often send claims reps who are unfamiliar with the case. The decision about value has already been made before the MSC by a supervisor who is not present.
2) If there is wage loss, be prepared to show medical proof that plaintiff needed to miss work, and proof of his earnings. Without this proof, be prepared to take a haircut on value.
3) Know the value of every lien, and have communicated with the lienholders. If you don’t know the value of the liens, the defense probably can’t settle with you that day. More important, you can’t tell your client what her bottom line is. For Medicare and Medi-Cal, you need to start communicating with the governmental agencies months before the MSC. You will not be able to get a lien amount the week before the MSC.
4) Know your client’s medical prognosis, preferably via a written report or deposition of the doctor. Claiming permanent residual injuries increases case value, but you can’t just make the bald assertion that your client is hurt forever without medical proof. Get the physician nailed down about prognosis and provide the proof to the defense.
5) The other side of the prognosis coin: if the defense medical exam has happened, demand a copy of the report before the exam happens, and push the defense to get you the report well before the MSC. That report can help both sides.
6) If you need a key deposition , say of a defendant’s employee, take that depo long enough before the MSC that you have a transcript. Speculating about what a witness might say does not help in negotiations.
7) Very important: meet with your client well before the MSC. Get her prepared for what will happen. Have a well thought out settlement demand, and a strategy for negotiating against the defense. We have seen many instances in which the plaintiff’s counsel and his client are butting heads over the direction of settlement, simply because the attorney didn’t take the time to craft a strategy with his client’s involvement.
8) Talk to defense counsel and try get an offer on the table before the MSC. Tell them LR 5F requires it.
9) It is highly unlikely that the settlement conference officer will be able to read through extensive exhibits. Attached the critical ones to the brief and highlight the relevant portions.
Once you are in the MSC, what do you need to do to succeed?
- The fact of the matter is that both the defense and the plaintiff usually want to settle the case. And, where parties on both sides of the case have carefully evaluated the case, it is highly likely to settle. While public evaluations may vary widely, in reality, the parties often have similar evaluations. Or at least their evaluations are close enough that trying the case over the difference does not make sense.
- Most clients are risk averse and don’t really want to go to trial and don’t have any idea what will happen at trial. They will often take less than the case is worth to avoid trial or believe in the concept of “a bird in the hand is worth two in the bush.” Indeed, this concept is very true. Trials are expensive, time consuming and unpredictable.
- It is not always true that the amount offered at the MSC will still be available thereafter. If you leave the MSC without a settlement and thereafter agree to the amount offered by the defendant, you may be on a slippery slope trying to get the defendant to settle.
- The more candid you are with the settlement conference officer, the better chance you have of settling your case. Point out the strengths in our case, but also acknowledge the weaknesses in your case. The more credible you are, the more the SCO will tend to rely on your version of events. Nonetheless, be careful about giving the SCO your bottom line too early.
- Expect to settle for a low amount if you are not ready to try the case. If you are unable to answer important questions about the case at the MSC, the SCO will likely assume that you are not ready for trial and that you will need to settle the case. This is, of course, not true, if depos of experts and others are on calendar.
- Small cases are sometimes the hardest cases to settle. The insurance company assumes that you cannot afford to try the case or will choose not to do so.
- You need to make a decision whether it is better to have your client involved in the settlement conference or speak with the settlement conference officer on your own. Speaking with the SCO on your own allows you to be more forthright but can also lead to client difficulties if the client feels left out. If your client has unreasonable expectations, the settlement conference officer can often temper those expectations. If you speak with the SCO on your own, be clear about whether your client control is good, bad or ugly.
- If you can, let your client talk to the SCO during the settlement conference. Often the key to settlement is that the client has been able to tell his/her story to a judicial officer. Once that is out, clients are often much more amenable to compromise.
- Settlement conferences are not mediations and the mediation privilege does not apply in settlement conferences.
- If you leave the settlement conference without a CCP §664.6 agreement, you risk the settlement being unenforceable or subject to further changes.
- If your demand is excessive, the higher your demand, the farther you will have to come down to get to a settlement. The concept that you have moved much more than the defense falls on deaf ears if the initial demand is too high. Rather than dropping in a precipitous drop, you may wish to steadily drop in amounts greater than the amount the defense has dropped.
- Everyone is negotiating around the “midpoint.” Assume that the opposing side is calculating the “midpoint” after every move. The “midpoint” however, can only be fairly calculated after both parties have moved.
- Think about the next few moves before you make a move. If for example, your target is well below the midpoint, you will need to figure out a way to gradually move down to that midpoint as you get closer to settlement.
- The rule of “bidding against yourself” is out of date and inapplicable in today’s world. If you need to make another move, do so. You can always hold the line on the next move