Often times the plaintiff and his or her attorney will make an agreement with the defendants and their attorneys called a high low agreement. The purpose of such an agreement is to set a high or ceiling value as well as a low or floor value for which the case will be resolved. This guarantees the injured plaintiff will receive monetary compensation thereby eliminating the possibility of obtaining no recovery in the event of a dismissal or defense verdict after trial. It also sets a ceiling on the recovery which defendants favor because it prevents them from having to pay a large amount in the event a jury awards a very large sum to the injured party. An example of a high low agreement may be a car accident case with a $500,000 insurance policy. The parties may enter into a high-low of 250/75 meaning the plaintiff will get at least 75,000 and no more than $250,000. The trial or arbitration proceeds the same way it would without the agreement but the above parameters are controlling. Therefore, if the jury renders a defense verdict, the plaintiff still gets $75,000 and if the jury awards $1,000,000, the plaintiff only recover $250,000.
These types of agreements are used by counsel for plaintiffs and defendants and can prove helpful. It is important to negotiate the terms of the agreement carefully.