Is an Auto Accident Attorney Necessary? Not According to Your Insurance Company

If you haven't already been in an auto accident, consider yourself lucky. In 2005, the National Safety Council reported 2.4 million Americans were injured in car accidents, with 45,800 people losing their lives. The odds are it's just a matter of time before you find yourself dealing with the pain and inconveniences of an accident.

So what if you've been in an auto accident and it's not your fault. You're lying in the emergency room waiting for a doctor and your thoughts turn to possible months of painful recovery, missed work, doctor's visits, soaring medical bills, and the inevitable insurance nightmare. Your life just got more complicated.

When to Hire a Lawyer

As you contemplate the unfairness of life, the thought arises: Should I retain an attorney? Do I need an attorney? If I deal with the insurance company by myself, is it even possible to get a fair and full settlement? If not, will an attorney get me more than enough to cover the costs and pain of the accident as well as the extra legal fees?

Obviously personal injury attorneys and their television messages say yes. On the other hand, the insurance company and its adjustors on the phone say no. Who's right? To get a fair answer, the best answer may lie with internal statistics generated by the insurance industry itself.

What Insurance Companies Think

Attorneys Get Two to Three Times More Money for Their Clients

In 1995, Allstate produced a training manual for its claim adjustors [Allstate Insurance Co., Unrepresented Segment Training Manual, 15-30, July 1995]. This document stressed the importance of convincing claimants to represent themselves and not retain an attorney. Why? Allstate explained its position with a number of telling statistics: With settlements under $15,000 injured claimants represented by an attorney averaged $7,450 in a total settlement. Those who represented themselves to Allstate averaged only $3,464.

Doing the math, retaining an attorney for a small claim on average more than doubled (a 115% increase) the likelihood of a better settlement. The manual also stressed overall claimants with attorneys generally recovered 2 to 3 times more than self-represented claimants. No wonder Allstate doesn't want to encourage claimants to get an attorney.

Injured People Benefit Most from a Lawyer

In 2003, the insurance industry's chief research organization, The Insurance Research Council (IRC), released an internal document [Auto Injury Insurance Claims: Countrywide Patterns in Treatment, Cost, and Compensation Malvern, PA: December 2003] to its member insurance companies. On page 112, the Insurance Research Council, outlined data that showed the vast majority of dollars paid out to bodily injury claims are paid out to claimants who retain attorneys. The study indicated those insurance claimants who were represented by attorneys (47% of all claimants) received 79% of all liability payouts.

Legal Fees are Much Less than the Benefit

What do the numbers from the insurance industry tell you? In general, having an attorney does increase the settlement payout to the claimant, even after the legal fees are deducted from the final settlement.

Insurance Offers vs. Legal Negotiation and Litigation

Sometimes a more telling statistic is the margin between what the insurance company issues a claimant as a "final offer" and what the personal injury attorney ultimately negotiates or wins through arbitration, mediation or trial. One of the Intermountain West's largest personal injury law firms, Gregory & Swapp PLLC handles thousands of auto accident claims each year.

In 2007, the firm conducted an internal study among 120 successful litigation cases, which showed total settlements of $2,159,439 ($18,000 per claimant) vs. "final offers" by insurance company totally $363,864 ($3,000 per offer) – a margin of nearly $1.8 million, or an additional $15,000 per case (or 5 times the original insurance offer). In looking further at the insurance companies' "final offers," the study showed that 52 of the 120 successful claimants had "no offer" from the insurance company.

Insurance Companies are a For-Profit Business

The question arises: Why does the insurance company low-ball or deny claims, if it only causes claimants to enlist the help of attorneys (which ultimately produces higher settlements)? The one telling statistic is that 53% of all claimants without attorneys only receive only 21% of the settlement dollars. As large corporations, profits are central to success for insurance companies. With every claimant who is convinced to self-represent him or herself, the insurance company achieves greater margins per settled case and hence produces greater profits.

The Bottom Line

Some claimants see an attorney fee as an extra slice of their settlement "pie." However, the above statistics and studies show that when an attorney is involved, the pie significantly increases in size and the attorney more than pays for him or herself.

From the author: Utah injury personal lawyer

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