New York Personal Injury Lawyers explain High Low Agreements
A high low agreement is made between the lawyers for the plaintiff and defendant with the consent of their clients. Such an agreement is a contract that sets a ceiling and a floor on the recovery thereby seeking to limit the potential payout defendants must make in the event of a large jury verdict while confirming the plaintiff will receive some baseline monetary amount. For example, in a personal injury action where the insurance policy limits are one million dollars ($1,000,000), the parties may enter into a high low agreement of $100,000 to $550,000. This means that if the jury comes back with a verdict of $550 or more, the plaintiff is capped at $550,000 and will not receive more. However, if the jury comes back with a defense verdict in which the plaintiff would normally receive no compensation, he would still receive $100,000. The same is true if the jury would award the plaintiff from $1 to $100,000. If the jury awards an amount in between the parameters, the plaintiff receives that amount. Such agreements can be useful tools to insure that injured parties receive sufficient compensation. Negotiating the parameters of the agreement is crucial. From a plaintiff’s perspective, a high low agreement is useful when you fear the probability of a defendant’s verdict because you are guaranteeing some recovery. It is also useful when the injury involved is not so serious as to command a very large verdict.