How did the Defendant Come up with this Counteroffer?

We can ask this question a lot. Answering it is a little bit like trying to explain Google algorithm.

We never get to look behind the curtain. But we have a pretty good idea about the primary influences and what goes through the heads of insurance companies and self-insured defendants:

1. Perceived Liability Risk. In other words: "Were we responsible for what happened?" If so, was there anyone else (including the injured person) who contributed to those injuries?

2. Damages. How much were the treatment expenses? How much was the wage loss? How have the inuries impacted the person and their family?

3. Negotiation Strategy. Should we start low and give ourselves room to work or come out of the gate with something close to our last, best and final number?

The way that we response the counteroffer also depends on a lot of factors (and the factors can differ from case to case). But the starting point for us is what we think the likely range of outcomes is for the client at arbitration or trial. That tells us where we’re trying to end up. How we get there is frequently going to depend on where the other side started.

There are no pre-established steps in this dance. It’s interpretive and our moves—to one degree or another—either reflect or acknowledge what’s our opponent is doing.

We settled a case for $1,000,000 (after a long day of negotiating) even though the defendant only started at $5,000. Because the opening counter was so low, we made correspondingly modest move and it took a long time for the parties to get to either side of the probable range of outcomes. But we eventually got there. And then we settled the case.

The dance is flexible and accommodative if you let it unfold. It’s not the first number that matters. It’s the last number that matters.

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