The unsexy art of compromise
Back in September 2015 I published an article about why the overwhelming majority of WorkCover damages claims settle out of court. Back then, in fact, out-of-court settlements were by far the most common way of resolving injury compensation claims generally, not just WorkCover claims.
So what’s changed in the years since? Very little actually, and for good reason – out-of-court settlements don’t make for blockbuster movies or gripping page-turner novels, but in the real world they’re the best option for most people in most cases. That was the situation back in September 2015 and it remains just as much the situation now.
The process by which out-of-court settlements usually occur is a very informal, understated and, for the parties anxiously awaiting their day in court, pretty anti-climactic one really. It generally involves either a face-to-face meeting between the parties and their lawyers in the conference room of one of the legal firms involved, or in some cases, simply the respective lawyers exchanging offers by phone or e-mail.
In neither situation is there very much in the way of courtroom-style formality, set procedure or high drama – Jack Nicholson memorably roaring “you can’t handle the truth” at cross-examining lawyer Tom Cruise in the 1992 film A Few Good Men is never part of the script!
Instead the parties simply state their positions in a conversational tone and debate their way to a compromise they can all live with. How they achieve this is entirely up to them, but if they can’t reach an agreement there are certain legislative hoops they must jump through before they will be allowed anywhere near the inside of a courtroom.
Generally the negotiations are carried out on what is called a “without prejudice” basis, which simply means that whatever is said by any party in the course of those negotiations can’t be used against them in court later. The idea here is obviously to allow people to speak relatively freely in the hope that this might increase the chances of an agreement being reached.
If an out-of-court settlement is agreed, it will usually involve money changing hands and in practice this tends to happen one to two months after the agreement is reached. The delay here is because of the legislative requirement that government agencies like Centrelink and Medicare are properly notified and given the opportunity to claim any refunds they are owed out of the settlement funds.
Once the money has changed hands, though, the claim is at an end and the parties go their separate ways and get on with their respective lives. They are not stuck in the court system for the next few years.
An out-of-court settlement does, however, inevitably involve an element of compromise and agreement, and sometimes we’re in no mood for that. Injury compensation claims can be very emotional for all parties, not to mention their respective friends and families. There’s usually at least one party who comes into the process harbouring a strong sense of injustice, which they believe can only be satisfied by “winning in court” rather than what seems like a wishy-washy compromise.
There are also often parties who are so absolutely convinced the court will see things precisely their way, that there seems no reason for them to compromise and end up with less.
Then of course there are the big-picture issues faced by insurers with test cases, the risk of opening the floodgates and stopping insurance fraud.
On top of all this, human decision-making can also be affected to some extent by simple pride.
So why is it that when so many people embark on injury compensation claims determined to fight to the bitter end, the vast majority of claims are in fact still settling out of court?
It’s because the journey to a courtroom remains a long, expensive one which is fraught with many dangers along the way, and an uncertain outcome at the end. People have a very long time in which to reflect on the costs, the dangers and the ultimate uncertainty that awaits them. For the injured person in particular, life can be very much put on hold during this time.
Even when a person secures the best possible result a court can give, it still falls far short of perfection – the legal costs, opportunity costs and sheer emotional toll necessary to achieve this result will be high and are never fully recovered. The shortfall between what a court awards an injured person, for example, and what that person eventually receives “in the hand” can be enough to make the whole exercise seem like a hollow victory. On the other side of the coin, an insurer can find itself paying costs which exceed the amount of the claim being fought over!
Seizing the opportunity of a quick, cheap and above all, certain, outcome can therefore become more and more tempting to both sides as time goes by and the anxieties multiply. A good lawyer should always warn a client about the hard road that lies ahead on the journey to any court room, and encourage the client to stay the course for as long as it is genuinely in the client’s best interests to do so.
However, a good lawyer should also spare their client this ordeal altogether by trying to secure them a better option. That’s what a good out-of-court settlement is – maybe not everything you hoped for, but all things considered, still a better option than going to court.
Whether a particular out-of-court settlement is the better option in your particular circumstances will obviously depend on many factors, but given how many claims do resolve this way it’s clearly something to bear in mind. Hughes and Lewis Legal can give you practical and well-balanced tailored advice on whether to fight on or whether (and to what extent) to compromise, and how to achieve the best result whichever way you go.
As with all the big decisions in life, it’s about knowing all your options and being well-positioned to secure the one best shaped for you.
About the author
Jason Lewis is a Director of Hughes and Lewis Legal