How Does a Settlement Agreement Work?

What Is a Personal Injury Settlement?

A settlement agreement works by the parties coming to terms on a resolution of the case. The parties agree on exactly what the outcome is going to be. They put the agreement in writing, and both parties sign it. 

Then, the settlement agreement has the same effect as though the jury decided the case with that outcome. Next, the parties execute the judgment by following the terms of the settlement, including making payment.

How Do Personal Injury Settlements Work?

You may be wondering, “What is settlement agreement finalization?” To answer, it is the resolution of an insurance claim. Personal injury settlements begin with a claim filed against an insurance company. Before filing the claim, however, victims must take great care to include all of the losses they have experienced. Losses that do not appear in claims do not get compensated. 

For this reason, it is important to have an experienced and skilled personal injury lawyer on board before making a claim against an insurance company. A personal injury lawyer will meticulously and accurately calculate the personal injury damages you deserve. No damages will be left behind with an experienced attorney. 

Because insurance companies are for-profit companies, initial settlement offers from insurance adjusters are usually far below what they should be. Paying out claimants cuts into insurance company profits. Victims need experienced counsel to properly appraise the value of their claims. 

So, what is a personal injury settlement going to include? Dollar amounts in these injury claims will be based on the following damages available in most injury cases, which include:

• Medical and hospital costs
• Prescription medication costs
• Lost income
• Expenses related to the injuries involved
• Property damage, if applicable
• Pain and suffering
• Loss of enjoyment of life
• Mental anguish and emotional distress

Remember that insurance companies will fight your claim and seek to pay you less. Without an experienced attorney fighting for you, you will not likely receive what you deserve. 

Many victims of personal injury accidents wonder what happens when a settlement cannot be reached. The answer is that the parties will likely move to litigation. Litigation may or may not involve trial.

There are alternative avenues to taking a case to trial when a settlement can’t be reached. These include mediation and arbitration. However, the vast majority of personal injury claims in Nevada get settled without the need for trial or other negotiations.

What Is Included in a Personal Injury Settlement?

A personal injury settlement will have various components, each of which plays a specific role in resolving the claim. They include:

• Settlement amounts
• Payment time frames
• Payment terms 
• Release of liability

The keen eye of a lawyer is crucial to evaluating the terms of an agreement for fairness. 

How Long Does a Personal Injury Settlement Take?

Settlement times vary from case to case. More complex cases can take many months or even years, while more straightforward cases might be resolved in a matter of months. Attending a free initial consultation with a lawyer will give you the answers you need about the duration of your claim. 

How Do You Negotiate a Settlement Agreement?

You negotiate a settlement agreement by talking with the other side about how they might be willing to resolve the case. There could be factual issues that may be helpful to have evidence with you to show and discuss. 

The parties might review factual disagreements in-depth or only talk about options to resolve the case. To negotiate a settlement, you strategically discuss the terms on which you might be able to agree. Then, you put the settlement in writing and submit it to the court for signature.

Overall, the stronger your case and the more evidence you have to back up your claim, the better. For this reason, your personal injury lawyer should build a robust legal strategy before trying to negotiate a settlement on your behalf. Your personal injury settlement amount offer pivots around the strength of your case.

What Should Be Included in a Settlement Agreement?

What should be included in a settlement agreement is all the terms that you want to be part of the final judgment. For example, it might just state the amount that one party is going to pay to the other party. 

However, it might also say the timeline for payment or specify what the payment is for. There may or may not be an admission of liability.

RELATED: Structured vs. Lump Sum Personal Injury Settlements

Once a settlement is signed, it’s difficult to reopen the judgment even if circumstances change in the future. That means anything that a party wants to be included in the final resolution must be in the settlement agreement.

Is an Offer of a Settlement Binding?

No, a settlement offer is not binding until the other side accepts it. A settlement offer is just a proposal to resolve the case. The parties have to agree on the resolution of the case mutually and prepare the appropriate documents for an offer to become binding. By itself, without agreement from the other party, a settlement offer is not binding.

The party who receives a settlement offer from the other side may accept it, reject it, or make a counteroffer. If the parties can’t mutually agree on the case’s resolution, then there is nothing binding on either party, and the case proceeds to trial.

When Does a Settlement Agreement Become Binding?

When a settlement agreement is binding depends on the jurisdiction that presides over the case. In some states, a settlement agreement is binding when both parties sign it. 

If this is the law in the jurisdiction, a settlement document can be enforceable even when it’s handwritten on notebook paper. For other jurisdictions, a settlement agreement is not binding until it’s submitted to a court and signed by a judge.

Can You Overturn a Settlement Agreement?

You can overturn a settlement agreement by demonstrating that the settlement is defective. A settlement agreement may be invalid if made under fraud or duress. A mutual mistake or a misrepresentation by the other party can also be grounds to overturn a settlement agreement. 

However, overturning a settlement agreement isn’t easy to do. It’s up to the person who wants to have the judgment set aside to prove that there is a reason to invalidate the judgment.

Settlement Agreement Counteroffers

A settlement agreement counteroffer is a response to an initial settlement offer. When one party receives an offer from the other party, they have three options: they may accept it, reject it, or propose something else. 

A counteroffer is a proposal of a different resolution. In making a counteroffer, the party essentially rejects the initial offer. Most settlement agreements are the result of offers and counteroffers.

Motion To Enforce a Settlement

Once the parties execute a settlement agreement, it becomes a judgment of the court. Then, the parties have to carry out the judgment. A question then arises of how a party should respond when the other party doesn’t take the required steps to execute a judgment. 

If one party has to pay the other party, the one who receives the money needs to have a recourse if the other side doesn’t pay. The party who doesn’t get paid can make a motion to enforce the settlement.

In a motion to enforce a settlement, the party states that the other side hasn’t complied with their obligations under the judgment. They ask the court to demand compliance. The other side may even be found in contempt of court with the correlating remedies available to the party who is the victim of non-compliance.

RELATED: Can a Personal Injury Settlement be Garnished?

Making a Settlement Agreement Work

There are a few things to be aware of when making a settlement agreement work. The agreement must include all of the things that you want to be a part of the final judgment. It must take into account projected future losses and suffering. 

The judgment must spell out any details that go along with the agreement. Additionally, the agreement cannot be made with misrepresentation, duress, or fraud. Finally, the parties should understand when a settlement becomes final, whether it is when the parties sign a rough draft or when a judge finalizes the agreement.

RELATED: Reasons You May Not Want to Settle Your Case.

Is a Personal Injury Settlement Taxable?

Personal injury settlements are generally not taxable in the state of Nevada. However, certain parts of an injury settlement may be subject to taxation. Victims should work with their attorneys to understand their personal injury settlement tax obligations at the state and federal levels.

Types of Taxable Personal Injury Settlements

Nevada has no income tax. However, the state and the IRS will likely want taxes on:

• Interest earned on the settlement 
• Punitive damages
• Some property damage compensation

Failing to pay taxes can lead to serious financial and criminal issues and should be avoided. 

What Is the Average Personal Injury Settlement?

There is no average settlement amount for personal injury cases because there are virtually countless types of personal injury cases with unique circumstances. To understand how much your case might be worth, you should attend a free consultation with a personal injury lawyer. 

Factors That Determine Personal Injury Settlement Amounts

Various factors influence the amount of money offered in a settlement. These include:

• The seriousness of the injuries
• The amount of work missed, and income lost
• The quality of the evidence
• The skill and experience of the personal injury lawyer involved

Because each case is unique, it is difficult to estimate average personal injury settlement amounts. However, an experienced lawyer can evaluate your case during a free consultation. 

Why Choose Adam S. Kutner as Your Personal Injury Attorney? 

Adam S. Kutner, Injury Attorneys, stands out as an excellent personal injury law firm because of our years of successful representation in Las Vegas and communities across the state. We have won settlements for tens of thousands of injured victims in need and are ready to listen and help. 

Your future is important to our firm. We take the time to understand your needs so we can properly serve and represent you during this challenging time. 

Get the Help You Need

Working with an experienced personal injury attorney will put you in the best strategic position to receive a fair settlement because you have a strong case. The lawyers at Adam S. Kutner, Injury Attorneys, pride themselves on being strong legal advocates and compassionate guides for our clients. We will be by your side through every step of your case, whether negotiating a settlement agreement or taking the case to trial. 

Contact us today for a free case evaluation.

Citations:

Chapter 38 – Mediation and Arbitration.

IRS Publication 4345.

Tax Information for Nevada.