How Legal Compensation Works (Damages, Settlements, More) (2024)

Tort law was created to ensure victims have a way to recover compensation for their losses after an accident where someone else's actions led to injury.

The purpose in these civil suits is to help the injured party recoup the money lost due to the accident, and compensate the injured party for medical expenses, lost wages and other non-economic damages stemming from the injury.

In some cases, the damages handed down in court are also designed to dissuade the defendant from similar conduct in the future - punitive damages.

Lawsuit compensation in civil litigation is designed to redress the wrongdoing done to the plaintiff through financial recovery from the defendant. This compensation is the legal right of anyone who has suffered monetary losses or damages resulting from another party's negligent actions.

About 15 million lawsuits are processed in the United States each year According to the Bureau of Justice Statistics (BJS).

A financial award won in court by a plaintiff's personal injury attorney, in the form of a judge's verdict or jury award in a lawsuit, is considered legal compensation.

Any payout amount agreed to in settlement negotiations will also be considered legal compensation.

Your civil litigation lawyer represents the plaintiff to make the injured party whole financially for economic and non-economic losses suffered by the victim. Settlement amounts are typically paid to the plaintiff by the entity in a negotiated agreement between involved parties and can alleviate the need to argue the complaint in court.

Court recovered compensation, is paid by the party, person or entity -- who is found to be responsible for the injury, or by their insurance coverage.

In most civil lawsuits, the amount that is paid out is a negotiated settlement. That is, the plaintiff and defendant, working with their attorneys, come to an agreement on a fair offer for what was suffered. When a fair settlement cannot be reached, after successful litigation a financial award may also be ordered by a judge or jury.

There are a number of strong incentives to settle a case out of court, including a need to avoid legal costs.

Attorney's fees, expert witnesses, lost time from work, travel expenses and court costs are all much higher when a lawsuit goes to trial. A settlement offer is often made early in litigation. If this settlement amount does not work for both parties, a settlement conference may be scheduled so each party can discuss their needs and reach an agreeable amount.

Some courts even require this before a case will be heard by a judge.

If a lawsuit cannot be settled out of court, then the case proceeds to trial. During the trial, the facts surrounding the incident will be presented in court by both sides, usually to a jury. Some litigants may wish to learn more about pre-settlement financing available for plaintiffs in order to access funds without waiting for the conclusion of a lengthy civil trial process. If an out-of-court settlement cannot be reached, upon the trials completion the jury (or judge, if there is no jury) will determine fault and calculate the amount of compensation due to the plaintiff.

Most civil lawsuits seek "compensatory" damages, meaning the plaintiff hopes to recover the expanses incurred and income lost that are accident-related through the compensation amount awarded by the court. This requires that the plaintiff's attorney -- as well as the judge and jury -- has to calculate the dollar figure that best represents the costs of the injurious incident.

Determining compensation when it comes to repairing property damage or paying for medical care often requires collecting the bills and tallying the financial injury incurred. Lost wages can be calculated based on averages from the past.

When it comes to things like pain and suffering or lifestyle changes, however, it can be more difficult.

There are three common types of damages awarded in a civil tort or wrongful death case: economic, non-economic, and punitive. Generally, economic damages are known as special damages, while non-economic damages are referred to as general damages. The types of damages that may be awarded in any specific case depend on the laws of the state, the circ*mstances surrounding the injury, and the judgment of the judge or jury.

Economic damages are awarded in order to compensate for the actual financial expenses brought by injury. Depending on the specifics of the case, economic damages may include medical bills, rehabilitation, devices or tools used to return to full mobility, past and future income lost due to not being able to work and any other costs directly caused by the accident.

Non-economic damages are not based on actual expenses but instead attempt to quantify recovery for emotional, mental, pain and suffering. This is often known as "emotional distress," although there are several categories of damages under this broad heading. Jurisdictional variances factor into what damages are recognized by law and can be recovered.Non-economic damages may be calculated using a multiplier, based on a judge or jury's judgment, or based on precedent set in previous cases.

In a settlement, the plaintiff and the defendant have the option of turning down any proposed amount that does not meet their needs. When lawsuit compensation is to be determined by a jury or judge, things aren't as predictable. A jury may react to a request for damages due to emotional distress, loss of enjoyment, loss of consortium, mental anguish, or pain and suffering in unexpected ways.

Additionally, some states also have caps on non-economic damage awards and may limit the amount that can be won after successful litigation.

Lets look deeper into the three types of compensatory damages that can be sought in a civil lawsuit.

Compensation for Medical Care

• The most common type of damages in an injury claim is compensation to cover the cost of medical treatment stemming from the accident. Even with minor injuries, medical bills from testing and emergency department treatment can quickly add up. Sever injuries can require extensive hospital stays, ICU stays, surgical treatment, critical care, and extended rehabilitation periods. If the injury leads to a permanent disability, the injured party may need ongoing treatment, special adaptive devices, and lifelong nursing care.
• Determining damages to cover medical costs, the plaintiff's attorney will collect documentation of every expense related to the accident, and may use medical experts to predict the cost of future needs.

Recovering Lost Wages

• Lost past and future wages are typically recoverable in a negligence claim. Those who are injured due to the neglect of another often have to miss weeks or months of work because they are receiving treatment or recovering from the incident. The court can award damages to the plaintiff in order to cover this loss of income. This also includes work days that may be missed due to the injury in the future, for example if they are now permanently disabled and unable to work. In some cases, the plaintiff may also be awarded damages if the injury has reduced their future income potential, such as preventing the injured party from continuing in the career field or if their injuries prevent their advancement.

Payouts For Emotional Distress

• Both medical costs and lost wages can be calculated through receipts and a history of income. Determining how damages should be awarded for emotional distress is more complicated. Even so, these damages can play a major role in a personal injury suit. In some cases, the amount of damages recovered for pain and suffering dwarf the economic damages recovered.

Whether or not this type of compensation is granted and in what amount can vary widely. Some jurisdictions limit how much and in what type of case. Other types of damages that are similar to emotional distress include:

• Loss of Companionship: Most common in wrongful death lawsuits, damages for loss of companionship or consortium claims compensate the family because of the loss of their relationship with their loved one.
• Mental Anguish: Attempt to compensate a plaintiff for the psychological effects of the accident.
• Stress and Anxiety: Being involved in a severe accident and enduring the resulting lawsuit can be extremely stressful. Damages for stress and anxiety may be recovered in some cases when plaintiffs' law firm makes a winning case for the impact.
• Negligent Infliction of Emotional Distress: NIED claims are unique from a traditional emotional distress claim in that no physical injury had to take place in order to recover these damages.

Not all states allow punitive damages in a personal injury claim or wrongful death cases to punish the wrongdoer. Unlike other damages recovered in a personal injury suit, punitive damages aren't used to reimburse the plaintiff for medical expenses, to pay for future care or missed work, or even to compensate for emotional distress.

Punitive damages are meant to punish the liable person or entity for their actions resulting in the incident leading to the complaint. Punitive damages may also be awarded in States that allow when the defendant injured someone else intentionally or through gross negligence.

Usually only granted in cases of especially repugnant intentional wrongdoing or negligence, paying out these damages is designed to deter the defendant or others from repeating the behavior that led to the accident.

Punitive damages are awarded in addition to any other compensation meant to pay for any actual losses.

While these are designed to deter the defendant from participating in similar behaviors in the future, the U.S. Supreme Court has placed a cap on how high these payouts can be. Many states have even lower caps. Previous to the Supreme Court decision in July of 2003, it was not unusual for punitive damages in a case to dwarf the compensation for actual losses. In some cases punitive awards have exceeded the $10 million range and above.

Most lawsuits resolve without ever resorting to a trial, with the parties agreeing on a fair settlement instead. This settlement defines the legal obligations of the parties to one another. In most cases, the defendant agrees to pay the plaintiff a certain amount of money, and in return, the plaintiff agrees to waive their right to pursue the suit in court.

In addition to the benefit of much lower legal costs, there are many advantages of an out-of-court settlement over going to trial. These include:

• Less stress than the preparation for a trial, mainly if the settlement occurs early in the process
• More control over the financial settlement because in a trial, it is based on the jury or judge's discretion
• A courtroom trial and the following appeals process can last for months or even years
• Settlement agreements can be kept private, where trials are almost always a matter of public record

There are downsides to settling out of court to consider. The primary downside is that the defendant does not have to admit fault in a settlement. While this isn't a big deal for some civil suit plaintiffs, others desire an admission of guilt in order to hold the responsible party accountable. When the defendant loses in court, the legal system has decided he is legally liable for the incident.

You are under no obligation to accept a settlement offer.

Working with your lawyer whether taking your case to trial or accepting an out-of-court settlement is in your best interest.

In some cases, the plaintiff may also be partially responsible for their own injuries or losses. In court, this can affect the compensation awarded in a number of ways, from reducing it to preventing it from being recoverable at all.

Comparative negligence is a standard that comes into play when the plaintiff is partially at fault in an accident and is used in the most states.

Partial-at-fault comparative negligence reduces the amount of compensation based on the percentage of fault that lies with each party. Contributory negligence, by contrast, disallows damages for a plaintiff if any of the fault can be placed on them. This is used in only four states: Alabama, Maryland, North Carolina, Virginia and the District of Columbia.

Many states have laws that require plaintiffs to take reasonable action to minimize the physical, emotional and financial damage done by an accident. These are often known as "failure to mitigate damages" laws.

In general, if an injured party does not act in a way that most people would -- to get proper medical care or to return to work as soon as possible, for example -- to mitigate the losses from the accident, the defendant cannot be held responsible for the extra damage done. If a plaintiff refuses to take action to mitigate, their lawsuit compensation may be reduced by the courts.

Limits on Lawsuit Damages

Some jurisdictions have passed tort reform laws to protect companies and individuals from having to pay exorbitantly high damages in these negligence suits. While politically contentious, these reforms effectively cap the amount of non-economic damages a defendant can be forced to pay in some personal injury cases. This is an important consideration when it comes to determining with your civil litigation attorneys how much may be recovered in a personal injury or wrongful death suit.

If someone's negligent or intentional actions resulted in your injury, loss, or the death of a loved one, you have a legal right to pursue maximum compensation under the law.

At Lawsuit Legal our attorneys have a winning track-record helping the injured obtain compensation. If you have a personal injury case contact our lawyers right away to discuss your legal options. Our award-winning legal team has a history of winning big settlements in high profile cases and can help you obtain the best possible outcome. Let our civil litigation lawyer help you recover what you're owed. Call (888) 713-6653 now for a free legal consultation, or fill out the form to review your case today.

Need a Lawyer?