Reasons for Filing a Suit Before Negotiation

The great majority of personal injury claims are settled short of trial. However, some claimants in personal injury cases will file a lawsuit first before any talks about negotiation for one or a combination of several reasons: such as (a) when the statute of limitations is about to run, or (b) to be able to conduct formal discovery, or (c) to simply show the defendant that the claimant is serious about pressing for a cause of action.

Normally, personal injury claims have a two-year statute of limitations:

CCP § 335.1

“Within two years: An action for assault, battery, or injury to, or for the death of, an individual caused by the wrongful act or neglect of another.”

A lawsuit may be filed  to start discovery, because formal discovery, normally, is not available until a lawsuit is filed. Discovery may involve finding out about insurance coverage. Absent appropriate authorization from the insured, insurance carriers are statutorily barred from disclosing “policy limits” and other coverage information to third party claimants before a lawsuit is filed.

Ins.C. § 791.13

“An insurance institution, agent, or insurance-support organization shall not disclose any personal or privileged information about an individual collected or received in connection
with an insurance transaction unless the disclosure is:

(s) To an insured or the insured’s lawyer when the information disclosed is from an accident report, supplemental report, investigative report or the actual report from a government agency or is a copy of an accident report or other report which the insured is entitled to obtain under Section 20012 of the Vehicle Code or subdivision (f) of Section 6254 of the Government Code.”

Even if a lawsuit has been filed, parties may still consider negotiations to settle the case and there is no statutory or ethical rule barring the parties personally from negotiating directly with each other. However, when negotiations are conducted through either party’s counsel, the ethical limitation on communicating directly with the adverse party applies: An attorney cannot communicate “directly or indirectly” with a party known to be represented by counsel on a controverted matter unless that party’s attorney otherwise consents.

CRPC 2–100

“(A) While representing a client, a member shall not communicate directly or indirectly about the subject of the representation with a party the member knows to be represented by another lawyer in the matter, unless the member has the consent of the other lawyer.”

Accordingly, if the other side has retained an attorney, settlement proposals must be directed to that party’s attorney because settlement agreement executed in attorney’s absence may be set aside if it was negotiated in violation of Rule 2–100 [Marriage of Wickander (1986)].

It is very important to be properly represented by an experienced lawyer in personal injury and accidents, and most importantly, an expert negotiator. Work with one to ensure that the case will be handled professionally and settled properly.

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