In my previous post, I talked about why your personal injury lawyer might be advocating an out of Court settlement rather than risking the uncertainty of a jury trial.
But there is another reason why personal injury lawyers tend to avoid jury trials: The way the Courts define ‘winning’ and ‘losing’.
Understanding Rule 49
Rule 49 of the Rules of Civil Procedure in Ontario inflicts consequences, in the form of payment of legal costs, on the party (plaintiff/victim or defendant/insurance company) who does not accept a reasonable offer to settle. It’s known as ‘cost exposure’.
In other words, unlike the USA, where each side pays their own costs, in Ontario, the loser pays the winner’s costs.
It sounds easy, but here’s the rub: With Rule 49 in place, the concepts of winning and losing are complex.
I’ll explain it using three scenarios.
(By the way, I’m using unrealistically small numbers here that are only meant to illustrate the concept)
Scenario 1 — The Award Does Not Beat The Offer = LOSE (you pay their legal costs)
Prior to the trial, the defense/insurance company offers the plaintiff/victim $10k for their injuries.
The plaintiff says no, believing that their injuries are worth far more than this, and they counter-offer for $20k. The defendant says no to this.
As neither party can be forced to accept an offer, the matter goes to trial.
A typical personal injury trial runs for about two weeks, during which time the jury is never told about these earlier offers. No one except the two parties – not even the judge- is aware of these offers.
At the end of two weeks, the jury awards the plaintiff/victim $10k.
‘A win!’ you might think, but in fact, it’s a loss in the eyes of the Court because the award does not beat the 10k offer the insurance company originally made.
Result? The plaintiff/victim has lost the case and will, at least partly, have to pay the defense’s legal costs.
If these costs are in the neighbourhood of $75k, for example, the plaintiff will literally have to pay out of pocket. If the victim doesn’t have the funds, the insurance company will quickly look to the victim’s personal assets to pay the costs, like a home, vehicle, etc. For an insurance company, it’s simply business.
Scenario 2 — The Award Is Similar To The Offer = TIE (You pay your own legal costs, more or less)
Imagine the offers as above, but the award from the jury is now $15k.
This changes things for the better.
In this case, the award is larger than the insurance company’s offer of $10k, but less than the counter offer of 20k.
Under this circumstance, the plaintiff does not largely bear his or her own costs – they have won fair and square and will get legal costs awarded to them on a partial indemnity basis, so yes while you will still bear some of your own costs, the defence will pay a lot towards them.
Scenario 3 — The Award Beats The Offer By A Large Sum = WIN (They pay your legal costs)
Again, image the same offers (10k offered by the insurance company, 20k offered by the victim) but the award from the jury is $25k.
In this case, not only would the insurance company have to pay the plaintiff’s legal costs, but the plaintiff may also receive enhanced costs from the date of the plaintiff offer. One doesn’t need to beat the offer by a substantial amount either – one could beat it by a dollar and they would get enhanced costs covered.
Should Juries Know About Previous Offers?
Not allowing the jury to know of earlier offers might seems harsh, but the intent here is two-fold: To ensure that juries are not swayed by either offer and to encourage parties to settle out of Court.
When we take a wider view of the issue, personal injury cases tie up Court resources (like a judge and jury) that could be put towards criminal or family law cases. Nobody understands better than the Courts that these personal injury cases are best settled out of Court.
Bottom line? It’s generally best to avoid a jury trial because, when dealing with a jury, you can never be sure you will beat the offer. Even insurance companies have to watch themselves in this regard. Thanks to Rule 49: If they lose case after case, their shareholders will not be happy.
Give me a call if you have any questions or if you’re not sure about your position! I’m here to help.
Image credit: Old City Hall April 2012, Skeezix1000, Wikimedia Commons