(2) On the second category of questions: This article provides an overview of the main findings of a recent study (and the corresponding article articulating the results of the study) conducted by J.J. Prescott, Kathryn E. Spier and Albert Yoon (“Trial and Settlement: A Study of High-Low Agreements”) [1]. In this study, the authors first articulate a theoretical model of high-low chords. Then, using data on claims from a national insurance company, they describe the characteristics of these agreements and empirically examine “the factors that may influence whether litigants discuss or enter into them.” [2] Their empirical results are consistent with the predictions of their theoretical model. The study looks at whether the agreements encourage more jury trials, what impact the agreements might have, who uses them, and why they are used. Among their various conclusions is the conclusion that top-down agreements actually significantly favor the resolution of cases in a court case rather than through a full settlement. Parties are more likely to go to court than if there were no high-level agreements. These and other results are explained in more detail below.
High/low agreements are attractive and useful for both plaintiffs and defendants. When entering into a high/low agreement, the defendant is protected from excessive judgment and the plaintiff is guaranteed some compensation. Before the verdict is rendered, it is important that both parties assess their case and consider the possibility of reaching a high/low agreement. High/low agreements can also be used during arbitration to keep litigation costs low. Regardless of the forum, high/low agreements should be considered if the damage is high and liability is uncertain. Since the parties can hastily reach an agreement from the top down, not all issues may be properly considered. One topic concerns, for example, the possibility of a wrong procedure. A high-low settlement agreement requires judgment to determine the amount of compensation. However, it may not be clear what is meant by the term “judgment”. For example, is a jury at an impasse a “verdict”? Will a deadlocked jury be considered a “no reason” verdict for the purposes of the agreement? It is up to the parties to anticipate this (and other possibilities) and to achieve a (written) understanding of how to deal with a dead end. Similarly, if counsel for the plaintiff requests an erroneous trial by intentionally violating the court order or otherwise, does this constitute a “judgment” or is it “without reason”? These issues are part of a variety of related details that should be addressed by the parties when drafting their top-down agreement. Top-down agreements are legal and enforceable.
However, there are limits to the type of agreements that can be concluded. Shortly before the trial, the plaintiff and Niagara entered into a high-low agreement with a maximum of $185,000 and a minimum participation of $155,000. Thus, Niagara`s undertaking – beyond the minimum it had already agreed to pay – was capped at $30,000, a range that the Court of Appeal described as “fairly narrow,” suggesting that the plaintiff`s and Niagara`s real reason for entering into the agreement was to gain a tactical advantage at Garlock`s expense. Since the parties may seek to enter into a high-low settlement agreement, not all issues may be adequately addressed. Some issues concern, for example, the possibility of a procedural error or the admissibility of the appeal. The high-low settlement agreement must make it clear that the imposed costs, interest and other sanctions will be cancelled. High-low settlement agreements aim to give the case a purpose when the verdict is rendered. Before entering into a high-level agreement in a trial with multiple defendants, the lawyer must inform the court and any non-consenting defendants. The New York Court of Appeals has ruled that if a plaintiff and a defendant reach a lofty agreement in a lawsuit with multiple defendants and the consenting defendant remains a party to the dispute, the parties must disclose the existence and terms of the agreement to the court and to any defendant who disagrees. In Eighth Judicial District Asbestos Litigation (Reynolds v. Amchem Products Inc.), 8 N.Y.3d 717, 872 N.E.2d 232, 840 N.Y.S.2d 546 (2007). The case in question concerned claims against various manufacturers and distributors of products allegedly containing asbestos.
The applicant stated that he contracted mesothelioma as a result of his exposure to asbestos in the refinery. Prior to the trial, the plaintiff reached an agreement with all but two of the defendants: Garlock Sealing Technologies LLC and Niagara Insulations, Inc. What about an agreement where the defendant pays $1 X if defendant #2 is found negligent by the jury, and $$Y if defendant #2 is found not guilty? Such agreements are legal and enforceable, according to the Second District Court of Appeals, but only if no contribution action is pending. Wingo v. Rockford Memorial Hospital, 292 Ill.App.3d 896, 686 N.E.2d 722 (2nd Dist. 1997). In wingo, a lawsuit for medical malpractice, a settlement agreement was reached whereby the physician would pay $1 million if the hospital was found to be negligent and $3 million if the hospital was not found negligent. The agreement was reached after the closing arguments, but before the conclusion of the deliberations by the jury. Moving from a below-median gap to a higher gap to above the median when litigation costs are expected to be high (in other words, replacing HC-LV claims with HC-HV claims) increases the likelihood of a high-low discussion or agreement on average by more than 4 times the problem with Mary Carter agreements is that they give the defendant charged a financial share of the result.
which distorts the adversarial process if the comparison is not disclosed to the jury. Even in Virginia, as in New York, the court must be aware of the high-low agreement and consider it enforceable. High-level agreements are subject to the provisions of sections 8.01 to 55 and 8.01 to 424, both of which require the courts to participate in settlement agreements. In addition, the Code expressly provides that approval is ensured by a petitions procedure and that the petitions process “the convening of interested parties .” PAH Code § 8.01-55. While a Virginia court could approve the post-fact high-down, it would be up to the parties to seek approval before the trial begins. .
