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Think before signing off on settlement

An ICBC settlement follows a predictable pattern, even though the end result is always uncertain.

At some point, the “recovery phase” ends with the injured victim reaching a permanent plateau after pursuing and following all treatment options available and letting “time heal”.  It is at that point when it becomes appropriate to enter into settlement negotiations with the ICBC adjuster.

Often, ICBC has already made an offer during the recovery phase.  Sometimes, there has been more than one offer.  Those initial offers typically represent a small percentage of the fair level of financial compensation that is eventually negotiated.

Once settlement negotiations commence, the amount of back and forth with offers and counter-offers depends on a number of factors, with both sides feeling out how firm the other side is in their settlement position.  In a previous column, published August 26, 2007, I commented about a negotiating tip I had heard “on the street”, that you should not accept ICBC’s first offer.  I countered, tongue in cheek, with: “Don’t accept the insurance company’s fourth offer”.

In a real estate transaction, you hire an agent to assist you with the negotiation, but you put pen to paper when making offers and counter-offers for the purchase or sale of a home.  It is your signature, not that of your realtor, that goes on those offers and counter offers.

By contrast, a personal injury claim settlement is reached through communications between your lawyer and the insurance adjuster.  Your lawyer helps you make the final settlement decisions, and follows your instructions, but the actual communication to reach a settlement could be as unofficial as a telephone message from your lawyer:  “Your latest offer is accepted”.

After the settlement is reached, ICBC sends over the settlement funds along with a document called a “Release” containing your formal, written acceptance of the offer.  Your lawyer is unable to release the settlement funds until you have signed the Release.

What happens if you change your mind between the time you instruct your lawyer to accept ICBC’s last offer and the time you are sitting across your lawyer’s desk to sign the Release?  You haven’t signed anything yet.  Can you just choose to send back the settlement funds and resume negotiations?

A July 2, 2013, court decision, Gaida v. McLeod dealt with a similar issue.  Mr. Gaida had instructed his lawyer to accept a settlement and that acceptance was communicated to the defence.  Later that night, Mr. Gaida changed his mind.  He says that he had felt pressured when deciding to accept the offer.  His lawyer did what he could to re-open the negotiations but the defence applied to the court to enforce the settlement, and the application was successful.  Quoting from the decision: “A solicitor acting for a party in settlement negotiations acts as the agent of the client, and is presumed to have the authority to bind the client ‘unless the client has limited his authority and the opposing side has knowledge of the limitation…’”.

Once the “trigger has been pulled” on a settlement, the deal is done.  Your signature on the Release is a mere formality.

Whether or not you choose to sign that Release, your case was settled by that telephone message.

What is the lesson here?

One lesson is to avoid making settlement decisions when you feel pressured.  You should have the opportunity to be fully advised by your lawyer and to carefully consider your options.  If you find yourself feeling pressured,  wait.  Have the words of that Meatloaf song in your mind, the song in which the young lady, “by the dashboard lights”, stops the action in full swing:

“Stop right there!”

Demanding her boyfriend’s commitment that he will love her forever.  Like the wise boyfriend, respond with

“Let me sleep on it.”

There is always the chance that an offer will be withdrawn before you have the opportunity to fully consider it, but that occurs only very rarely and I recommend against feeling pressured by that potential.  Only once in my practice do I recall an offer being withdrawn before my client had a full opportunity to consider it.  The case ended up settling at approximately $100,000.00 more than the withdrawn offer.

Don’t be like the boyfriend in the Meatloaf song who ends up giving into the kind of pressure no man should have to withstand and lives with regret for the rest of his life.  Had I only been there to reassure him that the offer would almost certainly be on the table again the following night.

Another lesson is to realize that when you give a thumbs up to your lawyer, the deal is done.  There is no turning back.

Published July 11, 2013 in the Kelowna Capital News

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2 Comments

  • I have to pay back all my long term disability money and my lawyer is taking 33.3 percent off the top..meaning..he is going to take 33.3 percent of the approx 80,000 I have to pay back. Is he allowed to do that? I think it is CRIMINAL!

    • Susan,

      I understand your feelings!

      In my view, however, the problem here is your disability insurance policy, not your lawyer.

      Consider a situation where you did not have disability insurance. You hire a lawyer to pursue fair, financial compensation for your injuries and losses. You agree to pay your lawyer 1/3 of your claim as fees.

      Your losses include $80,000.00 of income loss. Your lawyer does his job and recovers fair compensation for your losses, which includes that $80,000.00. As agreed, you pay your lawyer 1/3 of that amount in fees (along with 1/3 of all other amounts recovered on your behalf). You end up with approximately 2/3 of that income loss (I say approximately, because you pay taxes on the 1/3 fees).

      But you DO have disability insurance. Unfortunately, the disability insurance policy requires you to pay back the disability insurer 100% of the amount paid, without any reduction for the legal expense you incur extracting that money from ICBC. You end up in exactly the same position, though. You received, dollar for dollar, the $80,000.00, and ended up having to pay 1/3 of that in legal fees.

      A more fair disability insurance policy is one that allows you to deduct the amount paid in legal fees when reimbursing the disability provider. The disability provider, not you, should be the one paying for those legal fees that were incurred to get them their money back.

      At the end of the day, though, your lawyer did his job to extract, from ICBC, the full amount of your losses, and is entitled to his fee for that service.

      Sometimes, the disability provider is not entitled to 100 cents on the dollar. Sometimes, in fact, they are not entitled to anything in reimbursement for the insurance proceeds they have paid out. A careful review of the disability policy and the facts of the case can lead to finding ways to deal with the disability provider’s claim. Your lawyer should be doing that work and you could request a full explanation of this issue. If you are not satisfied with his response, you could seek an independent opinion.

      Also, lawyer bills are always subject to review by the court. Even after you have paid a lawyer’s bill, you can request that the court review it to ensure it is/was fair in all the circumstances. Please note that there are time deadlines that must be followed: http://www.bclaws.ca/civix/document/id/complete/statreg/98009_01#section70.

      I hope I have been some assistance….

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