High-Lows’ Ups and Downs

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It doesn’t take long in talking to B. Casey Yim to realize that the veteran Los Angeles trial lawyer has little patience for colleagues who, he says, lack faith in the jury system.

So when opposing counsel approach him with 11th-hour offers to curb the risk of an unexpected high or low award, Yim tells them he would rather pass.

High-low agreements, which set upper and lower award limits that the parties will accept, “take away that negotiating chip from the defense and give the plaintiff a free spin at the wheel of fortune,” Yim says.

But Yim’s aversion to high-low agreements may be a minority view these days. Although it is difficult to track how frequently they are used, trial lawyers nevertheless report that high-lows are on the rise. Some experts go so far as to argue that revealing their use more often would improve the public’s image of lawyers, making plaintiffs lawyers seem less greedy and defense lawyers more reasonable.

“I think they’re becoming more in vogue,” says Chicago trial lawyer Mark E. McNabola, who has used high-low agreements for nearly 20 years.

High-low agreements–also known as jury-directed set­tlements–have been around for at least 35 years. The parties negotiate a settlement range: The low figure sets the minimum the plaintiff is assured of receiving; the high figure is the maximum amount the plaintiff stands to gain, regardless of what the jury awards. The deals are usually struck mid-trial, often during jury deliberations.

To Yim, the likelihood that the plaintiff will walk away cash in hand, no matter what, offends him. He says high-lows finance the plaintiff’s litigation, with the only benefit being a “ceiling on the jackpot.”

But many lawyers have added high-lows to their menu of dispute resolution alternatives. State and federal courts have stamped the practice with their seal of approval, with many describing them as settlements, partial settlements or compromises.

Cook County Circuit Judge Richard J. Elrod says high-low agreements are discussed in 20 percent to 30 percent of the cases that make his trial docket. He estimates that about 10 percent of the cases that reach a verdict end up being resolved by the deals.

“Both sides have to protect the interests of their clients,” says Elrod, who is sometimes the first to suggest that the parties consider a high-low. Juries, he says, “oftentimes come up with good verdicts, but sometimes they don’t. If you can protect against a runaway verdict, I think you can do that by way of a high-low.”

McNabola attributes the rise in their use to the alternative dispute resolution movement. The days of down-and-dirty-trial practice, he says, “where everybody comes out bloody,” are fading.

A Form Of Closure

Many of his personal injury clients are wounded mentally, physically, financially and spiritually, McNabola says.

“Talk­ing about [the injury] in a negative fashion or getting cross-examined on it is not good for anyone’s psyche,” he says. If a high-low can achieve a level of closure for his cli­ent, he’s all for it.

The closure comes for both sides, he says. No matter how the jury decides, the parties go home and don’t fret over post-trial motions or prolonged appeals.

That’s not to say that the agreements come without contingencies. McNabola always includes caveats for costs incurred during mistrials and hung juries. “You have to think of a Murphy’s law situation,” he says. “You have to think of all potential outcomes.”

While courts recognize and generally enforce high-low agreements, Chicago lawyer Steven M. Levin says the case law surrounding them isn’t well developed. It’s rare for one party to back out after an agreement, but it can happen, he says. “The paperwork is not as solid as it should be,” Levin says. “It proceeds on a gentleman’s agreement.”

For example, in a New York case involving a motorcycle-van collision, the parties reached a high-low agreement in which the plaintiff would receive “anything the jury comes back with” between $150,000 and $900,000, the opinion said. Batista v. Elite Ambulette Service Inc., 281 A.D.2d 196 (N.Y. App. Div. 2001).

The jury returned a verdict for $225,000, attributing 75 percent of the fault to the plaintiff, thus dropping his take to $150,000. The plaintiff appealed to receive the full $225,000, but the state appeals court rejected the appeal because the high-low agreement didn’t address the issue of comparative negligence.

“Of course,” the court said, “the result would be otherwise had the stip­­ulation [high-low agreement] contained such language.”

To avoid that problem, St. Louis lawyer Morry S. Cole says he likes to preserve some appellate rights in a high-low deal. He fears that after penning an agreement without those ca­ve­ats, a less scrupulous lawyer might try to introduce improper evidence or statements. Without the threat of appeal, there is little incentive to keep all sides above board.

“You need to make sure you write the agreement so that it preserves the right to appeal issues other than the damage amount, which keeps both sides honest, and that removes the incentive for an unscrupulous lawyer to slop evidence in that they otherwise would not,” Cole says.

A 1997 Michigan slip-and-fall case involved the question of whether a high-low agreement reached during a retrial would cover the costs of an earlier mistrial. The defendant appealed the trial judge’s order that it pay for the mistrial, caused by a defense attorney’s disparaging opening statements.

But the Michigan Court of Appeals ruled that because the high-low agreement did not address those costs, the defendant had to pay up. Camarda v. Borman’s Inc., No. 191715.

Depending on the jurisdiction or type of case, a judge may need to approve the deal. If there are multiple defendants, high-low agreements may need to be revealed to the judge and jury before deliberations.

Cole sees high-lows used most often when there is substantial money at stake, when liability is questionable and when there is a likelihood of a runaway verdict. “Those are hard cases for either side to evaluate,” he says. “It’s a way to insulate the insurance carrier against a future bad-faith claim and it insulates the plaintiff from an out-and-out-loss.”

Damage Assessment

John Kirkton, editor of the Cook County Jury Verdict Reporter in Chicago, confirms he sees high-lows used most often in “big ticket” cases where “the defense is trying to cap its upside risk and the plaintiff is trying to cap its potential downside.”

But most of the time, the high-low has no impact if the jury’s verdict falls within the range. Indeed, McNabola and others observe, the jury’s verdict most often falls within the high-low range. Of the half-dozen or so high-lows that Cole has taken to verdict, he has yet to have one that fell below or above the range. “It’s an indication that both sides are doing an OK job of evaluating the case,” he says.

Some lawyers say the agreements ought to be encouraged. Their very existence, if better publicized, might go a long way in improving the image of the bar, according to Duke Univer­sity law professor Neil Vidmar, who studies the trial process and trends.

“Just look at the Web sites of some of the plaintiff lawyers who are involved in these cases,” Vidmar says. “They report only the verdict and not what the settlement was. They want [the public and clients] to see these big awards.”

Levin acknowledges that plaintiffs lawyers may be reluctant to report they took home less than the verdict, especially if the verdict is extreme. Lawyers, “for whatever reason,” he says, will stress to the media “the amount of the verdict as opposed to putting in the high-low.”

Vidmar believes that failing to acknowledge that awards are reduced by judges on post-trial motions or by post-trial or mid-trial settlements has a detrimental effect on the profession’s image and the public’s perception of the civil trial process.

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