What Is A High Low Settlement Agreement?
The wonderful thing about settling a case is that you have control over what happens instead of leaving it up to the jury. One way of settling cases that are in trial (in can happen before but normally happens during trial) is called a "high-low" agreement.
Basically, this means that the parties set an upper limit (the "high") and a lower limit (the "low") and then the jury returns the verdict. If it is higher than the "high", then it is reduced to the high number. If lower than the "low", then it is increased to the low. If it is between the high and low then that number is kept.
Here is an example. We had a case where the high was around 1 million and the low was around $400,000. If the jury verdict was 2 million - the settlement would actually just be the 1 million. If the verdict was a defense verdict, the settlement would still be the $400,000 because that is the lowest possible settlement. If the verdict was $600,000 then that would stand as it is in between the high and low.
Ronald Miller has a good post about some problems that can result from a high-low agreement - namely if all the details are not covered such as pre-judgment interest. Make sure and check out Ronald's blog - good stuff there.
