For the litigators who issue demand letters, would your initial demand be a reasonable one or purposefully inflated? On hand, you want room to negotiate. On the other hand you don’t want to come across as unreasonable. How do you balance this?

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It depends on the policy limits and whether you want them to perceive you going all the way to litigation. At our place, we generally ask for the policy limits ~ dependent on how high and how many medical specials are listed.

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For me it depends on the stage of the dispute, type of dispute, and my goals. If it’s commercial and pre-dispute and I have any hope of a reasonable settlement, I put the number at or near the top of what I believe should be reasonable, and then make my best case for it. If it’s personal injury (but I only do occasional PI defense), I see outrageous demands all the time and don’t give any credibility to the PI number or lawyer, but rather do my own investigation and come up with my own number independently. If it’s commercial and the other side is unreasonable, then I might use a high-ball demand (or low-ball offer, if defense) to send a message.

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For me, it depends on a lot of factors, the biggest of which is the defense lawyer on the case. If it’s someone I know and trust, I will give them a hair above what is reasonable and know they will appreciate that and return in kind. If not, you could handle it different ways, but it’s really going to be fact specific. Is liability clear? Is there a huge spread on possible damages (ie WD case in a wildcard venue)?

More often that not, I’m going to be hesitant to cut to the chase because I know most people are going to interpret my initial demand as 2x my last, best, final. If you do want to cut to the chase, though, make that clear in the demand. Also doesn’t hurt to call adjuster, defense lawyer, mediator, etc and tell them you have some room to move but not a lot.

Would be really curious to hear defense folks thoughts on this.

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I mean this is the balancing that occurs in every opening offer in every negotiation context. The answer is generally that you demand the very high end of what is genuinely defensible, but you have to calibrate that to the situation.

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Your demand letter should list the full amount stating plus interest, attorneys fees (you have to read what the contract sets forth is punishable if the contract is breached. In commercial you have to demand full amount stating plus- personal injury that depends on two factors (comparative negligence, mitigating factors and the injuries claimed (caused by the accident?, exacerbated or aggrevated, degenerative?

In personal injury your client is the determining factor this is why transparency from the onset is necessary. Their insurance do they have UM/UIM Supplemental Insurance? If so, that is a horse of a different color.

To demand policy on a low policy (25/50) liability in Plaintiffs favor with let’s say surgical intervention of any kind should be the policy. Only if supplemental coverage does not exist (pre-suit) I’d consider shaving off 1k prior to filing suit.

Thats just my unbiased to either side opinion

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I work in PI defense and have literally never seen a Morgan & Morgan attorney not demand the policy limits in a demand. Then the insurance company low balls back and there's zero fruitful negotiation.

This can even continue through litigation. I've handled several mediations that last 5 minutes because they demand policy limits on a max $20k case. Only closer to trial we start to see more reasonable negotiations.

If you ask me it's a waste of their client's time and our time (which at least we can bill for), but what do I know? They obviously feel it works for them, but would love to hear how their clients feel.

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It depends, but generally, it'd be at or just over the high side of reasonable.

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