Kevin Alexandersen, Burns White

It has become commonplace in many jurisdictions for plaintiffs attorneys to make settlement demands far in excess of the verdict potential—hoping a defendant will throw settlement dollars in an effort to bring a reasonable number to resolve the case. What happens if you value a case settlement at $500,000 with a verdict potential of $3 million, but the settlement demand is $5 million? What are your options to help ensure a reasonable demand? This article outlines a defense attorney's options, and serves as a quick refresher course for those facing unreasonable demands.

From the time a new mass tort case or claim is reported to in-house counsel or the insurance professional, the process of evaluating the claim commences.

• Should we attempt to resolve early?
• Is this a no liability case or a case to try?
• What will the defense costs be in this matter?
• What is the overall case value?

All of these issues emerge from the very beginning of the process, and continue when the case is filed and assigned to defense counsel.

Initial case evaluation is based on available information, i.e., the complaint jurisdiction, disease process and exposure information, job site, trades, the number and type of defendants. Most importantly, consideration must be given to the plaintiff's law firm. Does the firm capture low hanging fruit and resolve reasonably, or is it very aggressive? It may be appropriate to do jury verdict research or review prior similar cases for values. The task of obtaining a working verdict and understanding the settlement potential is imperative at this time since you may want to target the case as one to watch during the entire litigation process.

In most cases, there will be sufficient information to evaluate a case fully after liability depositions are completed, the disease process is confirmed, bankruptcy information (depending on jurisdiction) is reviewed, and apportionment and potential pecuniary and non-pecuniary loss is determined. It also may be necessary to review any potential punitive damage issues in the matter, again depending on the jurisdiction. The production of expert witness reports or depositions, in the context of mass tort cases, is generally not necessary, since many of the experts have offered the same opinions in prior cases.  This is also about the time when summary judgment practice commences. The value of the case assumes that the summary judgment motion will be denied. Unlike plaintiff's counsel's assertions, the case has no greater value after the motion is denied, and the value assumes that most pretrial motions will be adverse to the defendant's interests.

The case value will be reviewed and assessed by in-house counsel and the insurance professionals.  It is usually a collaborative process, but defense counsel must be prepared to justify values and present the chance of success at trial. After this process, you have your verdict and settlement potential and authority to resolve the case.

Now you have a monetary value. What is your next move? The answer to this question is multi-faceted. You need to consider:

• The jurisdiction in which your case is sited,
• The assigned plaintiffs counsel,
• Prior history with plaintiffs' firms, and most importantly, and
• Whether you are a target or a peripheral defendant.

In the past, peripheral defendants were given reasonable demands, and the case resolved without issue. Even target defendants were given reasonable—or at least workable—demands, and the cases were resolved before trial.  This, however, has changed significantly in recent times.

Plaintiffs counsel are now making settlement demands far in excess of verdict values for both target and peripheral defendants. These plaintiffs firms are trolling for risk-adverse defendants who are willing to provide significant settlement dollars in the face of these demands. In most cases, plaintiffs counsel are not reducing their demands significantly, or even attempting to resolve cases on a good-faith basis. Rather, they will move dollar-for-dollar based on the offer.

For example, if you estimate the case's verdict value at $1.5 million, and place your settlement value at $100,000, it is not advisable to offer $50,000—or any amount—when the plaintiff is in the $3 million dollar range or far in excess of your verdict potential. The plaintiff will only reduce the demand by the amount of the offer—in this case, going from $3 million to $2,95 million. Plaintiffs counsel are just testing the waters to determine how much money you will place on a case in the face of these excessive demands. Simply put, increasing your offer does not give plaintiffs counsel any incentive to resolve the case. Plaintiffs counsel will always believe that there is potential to obtain more settlement dollars as the trial date approaches.

Whether you are risk-adverse or not, the best course of action is not to respond to unreasonable demands. If you feel the need to respond, offer a nuisance value with the suggestion that there could be additional dollars available if plaintiffs' attorneys become more reasonable. Without a realistic demand, you must be in a position to move forward to try the case. It is always of paramount importance to be in a position to mount a successful defense of the matter. Again, plaintiffs counsel believe that they will obtain the highest settlement dollars on the courthouse steps. Even at this juncture, plaintiffs must have a reasonable expectation as to the value of the case. If not, you must be ready to try the matter.

You may have to try the case for several days to resolve the matter within the settlement authority. The case may get resolved after voir dire or opening statement as plaintiffs will not want to go to the expense of calling expert witnesses and increase trial court costs if the case can be settled. Nonetheless, there are plaintiffs firms assigning some cases to younger attorneys for trial experience; hence, another reason for the unreasonable demand.  In this context, you may end up trying the case to verdict.

If the client does not take a hard line, stick to its settlement values and try the case, in all likelihood the following with transpire: The case will be overpaid, settlement values in other jurisdictions may increase substantially, and the client will continue to receive excessive demands in future matters. Plaintiffs counsel will continually push the issue and attempt to have the client overpay the case, which could also result in higher defense costs.

Many of the points raised in this article are obvious to many defense attorneys. However, it is important to reiterate these issues, and continue to have an open dialogue with your clients concerning all the potential downsides of abandoning the approved settlement and verdict values. From the beginning, the client invests a lot of time and money placing values on cases.  We must adhere to those numbers or the process is wasted. The defense bar and insurance professionals are usually spot on in valuing cases, and for this reason, we must stand by these values, even if we have to try a matter to verdict. If we win, great. However, if we receive a less than ideal result, plaintiffs counsel will at least learn that the client is willing to try a case to verdict if a settlement offer is not reasonable. This will give the client credibility when negotiating a given case in the future. Plaintiffs counsel will know, when you state your bottom line, that you are serious. In the end, stick by your verdict and settlement values as the potential downside for not doing so can be severe.

Kevin C. Alexandersen serves as the chair of Burns White's maritime and co-chair of the mass tort practice groups. Alexandersen concentrates his legal practice on mass tort litigation, representing numerous industrial and transportation clients against personal injury and wrongful death claims. He has appeared in cases involving thousands of plaintiffs in Ohio, Pennsylvania, Michigan, New York, Virginia, Mississippi, Texas, and West Virginia in state, federal and appellate actions.