Almost every case we take is against an insurance company. Although the name on the lawsuit is that of the insured – person or company – it is the insurance company that is paying the lawyers and calling the shots. (Honestly, it’s an ethical problem. The insured is the client, but the client doesn’t get to make any of the decisions in their own defense.)
On rare occasion, we pursue cases against defendants without insurance. This can only happen when the defendant has liquid assets (there’s no point suing unless there’s something to get) and isn’t judgment proof (with their assets protected by trusts, shell corporations or other legal mechanisms).
Pursuing an uninsured defendant is an entirely different ballgame. Not only does that defendant have to pay the settlement (or verdict) out of their own pocket, but they pay all their own legal fees. An insurance company may waste tons more money on legal fees fighting a case than it is actually worth, just out sheer cussedness or not wanting to set a precedent for the value of a particular type of case.
The uninsured defendant does not have that luxury.
Every dollar an uninsured defendant spends in legal fees is a dollar less that they can use towards paying a potential settlement. Sure, the uninsured defendant may also possess a certain level of cussedness and spite, but those legal dollars start to add up quickly.
For example, in a case with an insured defendant, mediation is often one of the best opportunities to settle the case—it allows the insurance company to feel like the lawyers have jumped through the necessary hoops and checked the boxes that justify settling. For an uninsured defendant, though, mediation can be an expensive proposition.
Because plaintiff’s attorneys work on a contingency fee, the only cost of mediation to the client is half the cost of the mediator and the only cost to the lawyer is the opportunity costs of the other work they could be doing at the time. The uninsured defendant, however, is not only paying half the cost of the mediator but they are paying their lawyer by the hour to be there. Mediations are usually scheduled for four to eight hours and can go longer than that, so to have an attorney sitting there that entire time for three to five hundred dollars per hour is not what any defendant wants to do.
It certainly adds a unique dimension to negotiating, knowing you may be depleting your own pool of resources…and should be an excellent motivation to review your insurance policies and ensure you have appropriate coverage.