Should I accept my first offer of compensation?

The aim of personal injury law is to put the Claimant back in the position they would have been in had the accident not occurred. It does so by awarding compensation to the victim. In legal terms, the compensation award is referred to as ‘damages’. Clearly, there are many cases in which the harm sustained by a Claimant is so severe that financial damages simply cannot restore them to their pre-accident position.

However, their compensation can go some way towards making good their economic losses, such as loss of earnings, contributing to any ongoing expenses they may have, such as medical treatment, and alleviating their concerns about their and their family’s financial stability if they cannot work following their accident.

Damages in personal injury cases are divided into two categories, known as general and special. General and special damages compensate the victim for different things.

General damages compensate the Claimant for their pain, suffering, and loss of amenity. It can be incredibly tricky to accurately predict a general damages figure since, when calculating them, the Judge will consider numerous factors, including the severity of the Claimant’s injury and its impact on the Claimant’s life.  As a result, two seemingly similar injuries can warrant significantly different general damages awards.

Take, for example, two victims who suffer similar serious leg injuries in no-fault accidents. If one of the victims was a keen sportsperson, their loss of enjoyment of life resulting from the accident may be considerably greater than that of someone whose hobbies are largely sedentary.

As a result, the first Claimant may receive a higher damages award than the second. Every personal injury Claimant is different, and the general damages awards will reflect those differences. 

Having said that, the Judicial College has devised a set of Guidelines that provide Judges with a suggested range of compensation values for specific injuries.

For example, the Guidelines state that appropriate damages for post-traumatic stress disorder (PTSD), which is a mental health condition brought on by a traumatic experience such as an accident, will likely be between £4,820 where the victim should make a full recovery, and £122,850 where the effects of PTSD are likely to be permanent.

Medical evidence plays a vital role in assisting Judges in determining the level of general damages due to the Claimant. Your personal injury solicitor may instruct a medical professional to examine you and give their opinion on the nature of your injuries, how they likely impact your life, and provide a long-term prognosis. 

The Judge will refer to the Judicial Guidelines and take account of the medical evidence when deciding how much to award for general damages. However, they will also consider the nuances of the individual case and ensure the amount awarded reflects the injury’s impact on the victim.

Special damages are intended to compensate the Claimant for the financial losses they have sustained as a result of their injury.

Examples of the types of special damages Claimants often include in their compensation claim include the following:

• Loss of earnings.
• Medical expenses.
• Travel expenses.
• The cost of any special equipment required due to the injuries, including home alterations.
• The cost of care and assistance needed as a result of the injuries.

The following information and documentation can assist your personal injury solicitor in proving your special losses:

• Receipts and invoices for any expenses you incur due to your injury. These may include invoices for care costs, train tickets to and from medical appointments, and receipts for treatments and medication.
• Payslips or other documentation showing your net average income prior to the accident. 
• Documentation relating to other potential income you have lost due to your accident, such as bonuses and pension contributions.

Personal injury claims are subject to rules that govern what the parties must do before they resort to Court proceedings. These rules are known as ‘pre-action protocols’.

Specific pre-action protocols apply to medical negligence claims, low-value traffic accident claims, and disease and illness claims. All other personal injury claims are subject to a general personal injury pre-action protocol.

The main aim of the personal injury protocols is to encourage the parties to exchange information and documentation relating to the claim. This enables each side to understand the other’s case, assess the merits of their own, and partake in meaningful settlement negotiations. 

The protocols insist that litigation should be a last resort and that parties engage in settlement discussions, which may involve some form of alternative dispute resolution (ADR), such as mediation. In higher-value personal injury claims, settlement negotiations may be commenced at a joint settlement meeting between the parties and their legal advisors, which is often referred to as a ‘JSM’.

During the course of settlement discussions or ADR, the Defendant or their insurers may make a compensation offer to settle your claim. Sometimes, they may make an offer early in the negotiations, particularly if they suspect you have a strong case and are keen to extricate themselves quickly and for the lowest possible payout. Their offer will likely be way below what your claim is worth. Therefore, it’s rarely sensible to accept the first offer of compensation.

Instead, your personal injury solicitors will likely advise you to make a counteroffer to the Defendant. A counteroffer is a response to the Defendant’s initial offer, suggesting a higher compensation amount that your personal injury solicitor believes is more suitable in your case.

Whilst it’s difficult to assess the level of damages accurately a Judge may award, your personal injury solicitors will use various materials to calculate the highest amount of compensation they consider appropriate in your circumstances.

This will likely form the basis of your counteroffer. Examples of the types of material your personal injury solicitors may use to calculate your counteroffer include the following:

• Medical evidence. Medical evidence will detail the full extent of your injuries and explain how long it will likely take for you to recover fully. It’s seldom a good idea to accept a settlement offer before medical evidence has been obtained.
• The Judicial College Guidelines referred to above to get a feel for the range of damages that a Judge might award.
• Your evidence of the financial losses you have incurred and will likely incur in the future as a result of your injuries. These losses will constitute your special damages. In complex cases, such as those involving complicated pension losses, your personal injury solicitor may instruct a specialist forensic accountant to calculate the sums due.

Even if the Defendant has made an apparently fair settlement offer, your personal injury solicitor may draw on their experience of settlement negotiations to devise a strategy that secures the highest possible settlement amount. This may involve continuing settlement negotiations and making a counteroffer.

It’s important to understand that any compensation you accept will be in ‘full and final settlement’ of your claim, which means you cannot go back and claim more if your injuries worsen or prove to have a longer lasting impact than expected. Therefore, it’s vital to have all the facts regarding your symptoms and prognosis before accepting a settlement offer. 

Your personal injury solicitors will advise you on whether you should accept the Defendant’s first offer of compensation. In some cases, it may be sensible to do so and move on, particularly if the offer is sensible and there are difficulties with your claim. However, as we have explained above, the first offer the Defendant or their insurers make is unlikely to reflect the true value of your claim. In these cases, accepting the first offer of compensation can result in a serious under-settlement.

The purpose of no win no fee agreements is to ensure that anyone injured in a no-fault accident has access to justice, regardless of their financial circumstances.

Under these arrangements, a Claimant does not pay their solicitor’s costs (success fee) unless and until their claim succeeds. Most no win, no fee arrangements define ‘success’ as winning at trial or reaching an out of court settlement.

Accordingly, the terms of your agreement apply in the same way if you settle your case as they would if you win in Court. Your personal injury solicitor should take you through the terms of your no win, no fee agreement before you sign it, to ensure you understand its effects in every eventuality. 

To find out more about claiming compensation, call free on 0800 234 6438 and speak with a trained legal advisor today.