Valuing Personal Injury Claims
This article is the product of a presentation given by the authors on January 23, 2020, to over 100 lawyers and insurance claims professionals regarding how to value personal injury claims. During the presentation, the authors surveyed the audience regarding different issues. The results of those polls are posted throughout this article. They are not scientific, but they are interesting.
The principles, which are set out here, are based upon Judge Ahalt’s 52 years of experience as a trial lawyer (15) and judge (37). As a Judge on the Circuit Court for Prince George’s County, Maryland, he tried over 1,000 jury trials and handled over 10,000 settlement conferences. For many years, he has tracked all verdicts in the Circuit Court for Prince George’s County and published those verdicts to the bar. The verdicts now can be found on MontyAhalt.com. The reason that Judge Ahalt originally went to the effort of tracking verdicts was to give the bar a frame of reference as they evaluated cases. Additionally, Judge Ahalt regularly talks to his colleagues in Prince George’s County, and around the state and region in an effort to know if the results in Prince George’s County differ. As discussed in more detail below, they are not markedly different. Judge Ahalt also was very fortunate to have very experienced mentors, colleagues and evaluation experts in Judge Albert Blackwell, Judge Jacob Levin and Judge William McCullough.
The principles set forth below also are informed by Ben’s day-to-day experience handling personal injury cases over the past decade, his literature review regarding this topic, and his observations of the insurance adjusters, counsel, mediators, and juries that he encounters.
These principles apply to typical run-of-the-mill general liability bodily injury cases. They may not uniformly apply to toxic tort cases, medical malpractice cases, or wrongful death claims.
The principles also may not apply to “stale” claims. “Stale claims” refers to claims where there has been little to no activity, and a party places unusual value on the claim to get the case moving toward resolution.
Battle of Persuasion
Evaluating the jury value of a personal injury claim requires an understanding of the courtroom process of a jury trial. It is not like everything is thrown at the jury and they render a monetary verdict. A jury trial is an adversarial proceeding where each side has an opportunity to present evidence, cross examine witnesses and make arguments.
The process amounts to a battle of persuasion. Each party is competing to grab each of the six jurors’ minds. A judge tells the jury that they must be persuaded by a preponderance of the evidence as to each element of the claim. That is, each juror must be persuaded—more likely so than not—for an argument to prevail.
Persuasion requires the evidence to be logical, have an emotional appeal, and be credible. This is the Logos, Pathos and Ethos that Aristotle identified as the key elements of persuasion.
The first step in the analytical process is to identify specifically what the jury is going to be required to decide. When a jury is sent from the courtroom to begin deliberations, they are accompanied by a verdict sheet that the Judge has prepared. The Judge has given the jury instructions with regard to each item on the verdict sheet. Each item on the verdict sheet (liability, economic damages (i.e., medical expenses, lost wages, and sometimes loss of household services), and non-economic damages) requires a specific analysis, as different arguments might apply to each item.
Speaking & Non-Speaking Evidence
The process of evaluating a case needs to be disciplined and organized. A word of caution: You cannot—we repeat, cannot—properly evaluate a case until you know all of the facts that are relevant to the issues of liability and/or damages. You want to accurately identify all risk factors that will affect the case. There are positive and negative risk factors. Positive factors increase the value of the case, while negative factors decrease the value of the case. Both are important. You do not want to miss any. What will catch a juror’s attention depends on the persuasive appeal of the evidence. To evaluate the persuasive appeal of evidence, experience teaches that it is helpful to categorize evidence as “speaking” or “non-speaking.”
“Speaking evidence” includes bodily conditions, documents or photographs that do not require words to describe their importance. The evidence speaks for itself, and requires no explanation. For example, speaking evidence includes a totally destroyed car, a helicopter ride to shock trauma, or a scar on a face. Speaking evidence is like a rocket booster: it propels your case. The more you have, the faster and further you go. You want rocket boosters.
“Non-speaking evidence” requires words—of an expert and a lawyer—to describe its importance. Examples of non-speaking evidence include a permanency determination by a doctor or a causation opinion relating to a pre-existing condition. The existence of non-speaking evidence is like a hedge that a race horse has to hurdle. Each hedge slows down the horse. The horse that has to jump over the most hedges loses that race. So, watch out for the hedges.
A good example of the difference between speaking and non-speaking evidence is the difference between a compound fracture as opposed to a strain or sprain. The former being speaking evidence, and the latter being non-speaking evidence.
Not all evidence is speaking or non-speaking. There are factors which would, on the surface, appear to affect the value, but actually do not—the red herring factor.
Once you categorize the speaking and non-speaking evidence, it is important to count the number of points of speaking and non-speaking evidence. When a party relies on more than two pieces of non-speaking evidence, the party’s ability to persuade a jury dramatically decreases. On the other hand, when a party has more than three pieces of speaking evidence, the party’s ability to persuade a jury dramatically increases. With regard to a plaintiff in that respect, when a plaintiff has more than three pieces of speaking evidence, six figure verdicts can result.
Generally, there is no such thing as a perfect liability case, except where it is prudent for a defendant to concede liability in their opening statement. Below are some examples for the starting point of a liability evaluation in typical cases. Of course, every case is different, and these probabilities can shift depending on the facts of each case. Nevertheless, the probabilities set forth below are a good starting point for any evaluation.
|Type of Case||Probability of Plaintiff’s Verdict|
|Rear End Motor Vehicle Accident||90%-100%|
|Slip & Fall Where Defendant Had Actual Notice||75%|
|Red Light / Green Light||50%|
|Lane Changes By Both Parties||50%|
|Motor Vehicle Accident Involving Snow Emergency||50%|
|Left Turn by Plaintiff Without Traffic Device||25%-35%|
|Slip & Fall Where Defendant Had Constructive Notice||25%-35%|
Non-Economic Damages Modifying Factors
The following factors may add or detract value from non-economic damages in a personal injury case.
- Adjuster’s Need to Decrease Pending: An individual adjuster may be willing to settle a case for more than its value when the adjuster faces internal pressure to decrease the adjuster’s pending claim load.
- Age of Claimant: Current anecdotal evidence suggests that very young and the elderly are not treated as well as expected. This is contrary to the traditional Belli valuation method that valued a young plaintiff’s case more than an elderly plaintiff’s case.
- Bankruptcy/Economic Disaster for Plaintiff: If the injury destroys the plaintiff’s livelihood, the jury is more likely to award increased non-economic damages.
- Bulging Disc or Herniation: Jurors do not typically understand the difference between bulging and herniated discs, and jurors often do not depend on the experts to resolve the distinction. To the extent that experts offer contradictory opinions regarding conditions, jurors tend to split the difference.
- Counsel’s Ability: Only exceptionally good or exceptionally bad quality makes a difference. Verdicts will deviate from the norm positively for parties with exceptionally good lawyers. The inverse is not true. Verdicts do not tend to deviate from the norm negatively for parties with exceptionally bad lawyers. To the contrary, jurors tend to go out of their way to treat fairly, or more than fairly, litigants with exceptionally bad lawyers. Remember: a great lawyer will lose a case where the facts and law are bad, and a poor lawyer will win a case where the facts and law are good.
- Defendants Blaming Each Other: One way for defendants to anger a jury such that the jury awards increased damages is to spend a trial pointing at and blaming each other, instead of defending the Plaintiff’s claims. The jury likely will conclude that someone is at fault, and are likely to split the difference between the defendants if they cannot determine who is liable.
- Dental Injuries: Dental injuries do not hold as great a value as you may think.
- Double Trouble: Two contested issues (i.e., liability and medical causation) can result in a decreased deviation from ordinary case value.
- Employment: When an injury impacts a plaintiff’s ability to work in the future, there may be a deviation from the norm.
- Expenses: Future or past litigation expenses may encourage a plaintiff’s lawyer to settle a case. Avoiding future litigation expenses may encourage a plaintiff’s lawyer to resolve a case for less than the case’s full value. Incurred litigation expenses may make it more difficult for a plaintiff’s lawyer to resolve a case if settlement funds are needed to cover those expenses.
- Expert Witnesses: Juries do not view expert witnesses as persuaders, and experts rarely greatly factor into a juries’ damages award.
The prevalence of experts retained solely for the purpose of litigation in run of the mill bodily injury cases has fluctuated over time. Decades ago, plaintiffs rarely retained experts solely for the purpose of litigation, and, instead, relied on treating physicians. Defendants began retaining IME physicians. However, plaintiffs criticized the credibility of these IME physicians at trial. Additionally, defendants observed that the presence of the IME physician at trial tended to legitimize the plaintiff’s claim.
In response, defendants stopped retaining IME physicians, and merely relied on cross-examining the plaintiff’s treating physicians.
When plaintiffs’ lawyers grew tired of treating physicians falling apart on cross examination, they began retaining their own IME physicians. Plaintiffs enjoyed success when defendants did not call a countervailing expert and merely relied on cross-examining the plaintiff’s IME physician.
Consequently, defendants returned to retaining IME physicians, and the common modern day scenario is for both the plaintiff and the defendant to retain experts solely for the purpose of litigation.
- Fracture: A fracture is a typical example of the type of “speaking evidence” that can drive verdicts higher when combined with other types of similar evidence. The Blackwell Rule—five times economic damages—comes into play.
- Household Services Loss: Juries ordinarily do not award much for the loss of household services as long as it is not a death case, and the plaintiff has not sustained a life altering mobility related injury. Even when the plaintiff has a legitimate loss of household services claim, juries’ awards rarely equate to the plaintiff’s evaluation. Juries have a difficult time believing that life care can cost as much as plaintiffs claim because jury members generally exist on less income than the life care plans. In other words, it is difficult for a jury member living off of a $50,000 annual salary to believe that it will cost $200,000 for the plaintiff to subsist.
- Insurance’s Existence & Extent: The applicable insurance contract’s liability limits may result in a case resolving for more or less than it is worth. Often times, an insurer faces less pressure to settle when it is dealing with higher limits and there is no risk of extra-contractual liability exposure.
- Insured’s Lack of Cooperation: An insurer may pay less or more to settle a case depending on the insured’s level of cooperation and the implications of the same for the insurer and the insured in terms of coverage and the outcome of the underlying liability case.
- Liens: Contrary to popular belief, liens rarely prevent settlement. More often than not, lienholders are wiling to accept 1/3 or less of their liens such that the plaintiff’s lawyer still can get paid, and the plaintiff still can receive a reasonable amount. The one exception is a workers’ compensation lienholder who attempts to play hard ball to recover its lien. They seem to take harder lines than other lienholders.
- Lost Wages & Earnings: Juries are far more skeptical of future lost wage claims or loss of earning capacity claims than they are claims for past lost wages. Juries know that situations change and often improve. Juries are reticent to award damages for future lost wages or loss of earning capacity unless there is collateral support for the claim, such as education, professional or family background, and there is evidence that the plaintiff’s situation is going to stay the same and will not improve, or will deteriorate.
- Marriage/Children: Plaintiffs who are primary bread winners tend to receive verdicts that deviate from the norm when their injury impacts their ability to perform their caretaking functions.
- Medical Assistive Devices: Medical assistive devices, like braces, walkers, canes, and Cam walking boots are typical examples of the type of “speaking evidence” that can drive verdicts higher if combined with other types of similar evidence, as long as there is no evidence that the device is unnecessary.
- Medical Bills: It depends on what the medical bills are for. Juries will compensate plaintiffs for medical bills for emergency services, fractures, and surgeries, but do not automatically do so for and are more skeptical with regard to medical bills incurred for physical therapy, chiropractic treatment, and pain management. Future medical expenses rarely are awarded when there is not a prescribed operative event.
- No-Fault Coverage Payments: A plaintiff who has been compensated with a no fault payment, such as med pay or PIP, may be more amenable to resolution of their personal injury case.
- Number of Claimants: The number of claimants can decrease the settlement value of each claim if there is limited insurance.
- Number of Defendants: The number of defendants usually increases the settlement value of the claim because there is more insurance, and more parties attempting to avoid incurring additional expenses. When defendants blame one another at trial, it can increase the jury verdict. However, for a plaintiff, it can be difficult to overcome the advocacy of several very good defense lawyers working together in concert to defend the plaintiff’s claims.
- Permanency: Permanency has very little effect, unless the permanent condition interferes with employment. The exceptions to this general rule are the loss of limbs, or a permanent condition in children.
- Physical Therapy, Chiropractic Treatment, & Pain Management: Jurors ordinarily do not apply multiples to medical bills associated with physical therapy, chiropractic treatment, and/or pain management, or, at most, award nominal sums for associated pain and suffering.
- Prior Settlements or Verdicts with Claimant’s Counsel: The plaintiffs’ bar tracks settlements and verdicts and exchanges information just like insurers. A plaintiff’s lawyer likely will know the amounts for which a particular carrier has settled other similar claims with the plaintiff’s lawyer’s firm, and perhaps others, in the past.
- Property Damage Payments: A plaintiff who has not received compensation for property damage caused by the incident may seek a higher personal injury settlement.
- Property Damage Evidence: Property damage or a lack thereof influences the amount of non-economic damages awarded. It is classic “speaking evidence.”
- Psychiatrist/Psychologist/Mental Health Treatment: Juries refuse to award damages or award decreased damages for medical expenses relating to mental health treatment more than any other category of medical expenses.
- Publicity: The potential for bad publicity for a defendant or its insurer may increase the value of a case. Conversely, the public airing of private matters may encourage a plaintiff to resolve the case instead of proceeding to trial. Generally, the mention of publicity in settlement negotiations can poison productive discussions.
- Reptile Theory: Anecdotal evidence suggests that it works in cases with limited economic damages about 1/3 of the time. Ordinarily, the increase in verdict amount is not excessive or dramatic, but there are outliers. The typical soft tissue case involving $20,000 in economic damages that usually results in a $40,000 verdict may result in a verdict of $80,000 to $100,000.
- Scar, Disfigurement, or Lost Limb: These are typical examples of the type of “speaking evidence” that drives verdicts higher.
- Soft Tissue: A soft tissue injury is the type of “non-speaking” evidence to keeps jury verdicts down.
- Venue: Generally, there is very little difference between verdicts in different venues with 80% of the verdicts. The exceptions or outliers (the 20%), however, break against the plaintiff in the conservative jurisdiction, and against the defendant in the liberal jurisdictions. Indeed, there is not as much deviation amongst different venues as is the common belief, except with respect to outliers. Some venues tend to offer larger outlier verdicts than others. However, the middle range of verdicts tends to be similar between all venues.
Methods for Monetizing the Risk
The process of evaluating the value of a personal injury claim is mainly a focus of discovering risk in the claim. Any method used to monetize risk must include a focus on the results of similar cases in the same jurisdiction where the case will be tried.
It is helpful to realize that the results will be different if any case is tried multiple times. However, 80 out of 100 trials on the same issues will be very close to each other. Ten might be very high or 10 might be very low, but the focus should be on the middle 80 results.
Any experienced golfer knows not to count on or bet that he will make an eagle or that his opponent will make a bogey. Care needs to be taken not to be overly influenced by the eagles and bogeys.
The following is a description of twelve methods that can be used to value a personal injury claim. The methods range from simple to complex. The simple methods may be useful when handling a high volume of lower exposure cases. For higher exposure cases, using multiple methods is advisable. All of the methods require some subjective input.
1. One-Third of Claimant’s Initial Demand: Experienced adjusters report that many cases ultimately settle for one-third of the claimant’s initial settlement demand. The explanation is unclear. It could be that plaintiff’s lawyers are trained to initially demand three times as much as they think that the case is worth.
2. Experience: Many adjusters and lawyers rely on their experience to value claims. Relying on experience is problematic for those who lack experience. In this sense, experience does not mean one’s length of time in the industry. Rather, experience refers to one’s experience with the specific type of case at issue in the venue at issue.
Experience is not necessarily individual. It can be collective amongst the claims department, as long as the experience is accurately shared. Many carriers use “roundtables” amongst adjusters to discuss and value claims. These roundtables are only effective if the participants share their analysis openly.
Relying on experience alone also is problematic from a documentation perspective. That being said, it is necessary to draw on experience to some extent or another no matter what valuation method is used because all valuation methods, no matter how complex, technical, and/or technological, require some input based, at least in part, on experience.
3. Two- or Three-Times Economic Damages: Calculating the value of a case by multiplying the economic damages by two or three times is a longstanding and widespread method for valuing personal injury claims. Critics disdain its simplicity and lack of appreciation for each case’s nuances. However, empirical evidence suggests that it remains a useful tool. A 2016 study from the University of Chicago on one-third of the personal injury trials nationwide found that the average verdict was around two times the economic damages. Other earlier studies are in accord.
4. Software: Software programs can evaluate the value of a personal injury claim. Data is inputted into the software regarding key factors with respect to past claims. Data regarding the same key factors in the claim at issue is inputted into the software. The software then calculates the value of the claim at issue based on the outcome of the past claims.
The origin of such software can be traced back to Australia in 1988. At that time, the Australia Governmental Insurance Office reportedly was losing money. It asked a company called Computations (later called “Continuum”) to develop software, which would become known as Colossus, to reduce claims payments.
The Australia Governmental Insurance Office reported great success in achieving lower payments. Shortly thereafter, the consulting firm, McKinsey & Company, recommended that Allstate use the product in America. USF&G followed suit. By 2002, twelve of the top twenty insurance companies in North America were using Colossus.
The plaintiff’s bar attacked insurers using the software in the 2000s, culminating with Allstate paying $10 million to 45 states to settle a National Association of Insurance Commissioners multi-state market conduct examination of Allstate’s claims handling. The examination reportedly found that there was a failure to modify or “tune” the software in a uniform and consistent manner across its claims handling regions.
While these software systems aim to inject objectiveness into the claim evaluation process, the issues leading to Allstate’s settlement illustrate how the software still is dependent, in part, on subjectivity, just like many other claim valuation methods.
5. Lloyd’s Method: The Lloyd’s Method is named after the London-based home to international insurance syndicates. Under the Lloyd’s Method, the person evaluating the claim assumes that liability is not disputed and calculates the expected jury verdict (“EV”) usually based on their experience. The person evaluating the claim then calculates the probability of an adverse verdict for the plaintiff (“AV”). The person evaluating the claim then depreciates that the expected value with the probability of a plaintiff’s verdict by multiplying the expected value by the probability of the plaintiff’s verdict. The result is the settlement value of the claim (“V”). The Lloyd’s Method can be expressed in the following formula: EV * AV% = V.
For example, if a liability issue results in a verdict for the plaintiff 75% of the time, then risk can be monetized by multiplying that percentage by the likely monetary verdict. If the expected verdict is $90,000 to $110,000 then the risk is monetized at $67,000 to $82,500. Or, to make it easy, a $100,000 dollar injury becomes a $75,000 settlement.
6. Belli Method: Melvin Belli was a famous plaintiff’s lawyer known as the “King of Torts.” In the 1950s, Belli authored a seminal handbook entitled “Modern Trials.” In it, he described how he uses a point system to evaluate cases.
Each case is worth a maximum of 100 points. Liability is awarded 1-50 points depending on the probability of a plaintiff’s verdict. One to ten points each are then awarded for five other categories: injury, age of plaintiff, type of plaintiff, type of defendant, and economic damages. The total points for the case then serves as the numerator (“TP”) in a fraction where 100 is the denominator. The person evaluating the case then determines the value of the case on its best day in court (“BV”). Next, the person evaluating the case multiplies the best value of the case by the aforementioned points fraction (“TP/100”). The result is the settlement value (“V”).
The following equation expresses the Belli Method: BV * TP/100 = V.
7. Decision Tree: A decision tree illustrates a logical decision-making process that evaluates the probability of how the factfinder will decide each issue in the case. The decision tree starts either by assigning a probability to a plaintiff’s verdict on liability or assigning the maximum possible damages. If the maximum possible damages are assigned first, then the probability of a plaintiff’s verdict on liability then is assigned and the maximum possible damages are depreciated by that probability. In any event, the decision tree then assigns probabilities to whether the factfinder will award certain components of the damages. The probabilities are multiplied by the value of each damages component. The results are then added together. The sum is the settlement value. This is a labor-intensive method. Furthermore, the probabilities are subjective.
8. Neutral Case Evaluation: A party or both parties submit(s) the evidence in the case to an experienced neutral party who is not affiliated with either side and not involved in the case. The neutral party advises the parties about the value of the case for a fee. The neutral’s opinion is non-binding. This method can increase costs because each side has to expend resources on their submissions to the neutral, and each side must compensate the neutral. Furthermore, this method is only as good as the neutral. This method is rarely used by defendants because of the increased costs, and the fact that defense counsel and insurance adjusters often are equipped to accurately evaluate case value. This method can be useful for plaintiff’s lawyers whose clients require a second opinion on the value of their case.
9. Jury Verdict & Settlement Research: When one considers multiple trials of similar liability issues, history will demonstrate a ratio or percentage of typical results. Analyzing the findings mechanically works as follows.
Prior jury verdicts and settlements in similar cases in the venue at issue are researched. Once a sufficient sample size is obtained, the person evaluating the claim determines the average multiple of non-economic to economic damages in each case (“AM”). The person evaluating the claim next multiplies the average multiplier by the economic damages at issue in the instant case (“ED”). The result is the settlement value. The research can be time consuming. The following formula illustrates the Jury Verdict & Settlement Research method: ED * AM = V.
There are several criticisms of jury verdict research. First, no two cases are the same. Second, the results are skewed because plaintiffs’ lawyers report more results than defendants’ lawyers, and plaintiffs’ lawyers are more likely to report positive results. Third, it can be time consuming.
10. Mock Jury: A mock jury is a focus group conducted before trial. Mock juries can be done in numerous different ways. The main point is for the mock jury to advise the presenters about how they would view and value the case if they were on the real jury. This can be an expensive method because you have to pay for someone to present to the mock jury, and you have to pay the mock jurors.
11. Shadow Jury: A shadow jury is a focus group that attends the real trial. The shadow jury then reports about how they are viewing and valuing the case as if they are on the real jury in realtime while the trial is ongoing. This can be an expensive method because you have to pay the mock jurors and those to whom they report.
12. Calendar Method: In this method, the person evaluating the claim assigns a per diem value to the daily pain and suffering of the claimant (“PD”). This initial action is subjective. The person evaluating the claim then multiplies the number of days that the claimant was under treatment or disabled (“D”) by the daily value. The person evaluating the claim then adds the result to the economic damages (“ED”). The sum is the settlement value of the case. The following formula illustrates this method: (D * $PD) + ED = V. This method does not account for liability issues.
Value Over Time
You must keep in mind that the value of claims is not static. Value changes over time, and, most often, increases. The value today may not be the value—and likely will not be the value—five, ten or twenty years from now. After all, ordinary economic inflation increases the value of economic damages, as the costs of medical care and labor rise. At times, the phenomena of “social inflation” can increase the value of non-economic damages when society places higher value on non-economic damages.
Sources report that this phenomenon occurred in the 1980s, in the 1990s with respect to medical malpractice cases, and currently is occurring as well. Observers blame the currently occurring social inflation phenomena on nuclear runaway jury verdicts, corporate distrust, income inequality, third-party litigation funding, and the expansion of tort liability, among other things.
 Upon his retirement in 1999, Judge Ahalt commenced a career as an ADR neutral and technology innovator. He is currently recalled by order of the Court of Appeals of Maryland to sit on specially assigned cases and conduct pre-trial, settlement conferences and ADR sessions. Judge Ahalt has been certified as a mediator by mostly all of the Courts of Maryland. He has also been certified to mediate Medical Malpractice Disputes by the statewide Medical Malpractice panel and the statewide panel for Complex Business and Technology disputes. Judge Ahalt has successfully mediated tens of thousands disputes in areas including complex business transactions, construction, personal injury, medical malpractice, real estate, landlord and tenant, and contracts.
 Ben Peoples is a partner in the Washington, DC office of Thomas, Thomas & Hafer, LLP, which is a regional civil defense firm with over 80 lawyers in 10 offices throughout the Mid-Atlantic region. Ben is barred in Maryland, DC, and Virginia. Ben graduated from the University of Maryland School of Law in 2008. He clerked for the Honorable James R. Eyler and the Honorable Judge Robert Zarnoch on Maryland’s Court of Special Appeals between graduating from law school and beginning to practice law. He currently is an officer for the DC Defense Lawyers Association. He can be reached at firstname.lastname@example.org or 202-945-9501.
 Yu-chien Chang, et al., Pain & Suffering Damages in Personal Injury Cases: An Empirical Study, Coase-Sandor Working Paper Series in Law & Economics, University of Chicago, No. 749 (2016).
 Neil Vidmar, et al., Jury Awards for Medical Malpractice and Post-Verdict Adjustments of Those Awards, 48 DePaul L. Rev. 265, 296 (1998); W. Kip Viscusi, Pain and Suffering in Product Liability Cases: Systematic Compensation or Capricious Awards?, 8 Int’l Rev. L. & Econ. 203 (1988).