When the holiday season rolls around, most people think of thanksgiving dinners, Christmas shopping and spending time with family and friends. As folks prepare for the holiday season, insurance defense counsel prepare for the increased potential for year-end insurance settlements. Both the plaintiffs and the defendants have incentives for settling cases before the beginning of the new year. Plaintiff’s would enjoy some extra shopping money for the holidays. From a tax perspective, money received in the current year is better than turning the tax calendar year over, since taxes are usually only going up. This is an incentive for individual plaintiffs and their attorneys to receive the settlement money and fees before the next tax year.
From the defense perspective, some carriers want to try and clean out old claims that are filling up their books. The type of claims that could be a target for year-end settlements will vary. The majority of the case that are good candidates for year-end settlements are newer, lower value cases. Small value claims are always a good candidate for settlement to decrease costs and legal fees. The end of the year provides a great incentive for plaintiff’s attorneys to settle these cases in the current year, before taking them over into the new year, when they are smaller value.
Older, larger value claims are also good candidates for potential year end settlements. The end of the year provides an incentive to try to settle the old claims before taking them on for another calendar year. One good way to move an older claim is through mediation or pre-trial settlement conference. Mediators and Judges are heavily booked during the October through December months. They are booked due to adjusters and plaintiff’s attorneys trying to close out smaller and older files before dragging them into the new year.
The end of the year settlement months are not for every case. The insurance defense attorney should not try and settle cases just because it’s the end of the year. The management of each case dictates appropriate times to settlement. If the case needs further discovery, then that discovery takes a priority over settlement. The defense attorney should never initiate settlement talks without first speaking with his insured and the adjuster. But, something about the holidays makes attorneys on all sides pick a few cases to see if a settlement can be reached before the new year.
Please contact Alex Sweis at McKenna Storer or questions about this topic or other Insurance Defense matters.
If you found this article helpful, you may value other insurance litigation defense articles by our attorneys.