Settlement Negotiation Tactics Flashcards

What is the primary risk of making an oral settlement agreement without following up in writing?

Answer: The terms may be disputed or denied, leaving the settlement unenforceable

Oral agreements can lead to disputed terms and enforcement challenges; a written release with clear terms is essential to finalize a settlement.

A claims professional is negotiating a workers' compensation settlement. The claimant's treating physician indicates full recovery is expected. How does this impact the settlement value?

Answer: It generally reduces the settlement value by limiting future medical and disability projections

A prognosis of full recovery reduces the projection for future medical costs and permanent disability benefits, lowering the overall settlement value.

What is 'principled negotiation' as developed by the Harvard Negotiation Project?

Answer: Focusing on interests rather than positions to find mutually beneficial outcomes

Principled negotiation separates people from problems, focuses on interests over positions, and generates options for mutual gain based on objective criteria.

In a multi-claimant scenario where the total claims exceed policy limits, what is the insurer's primary obligation?

Answer: Attempt to achieve a global settlement that equitably distributes available limits among all claimants

The insurer has a duty to act reasonably and equitably when handling multiple claimants competing for limited policy proceeds to avoid bad faith exposure.

What does 'BATNA' stand for, and why is it critical in settlement negotiations?

Answer: Best Alternative To a Negotiated Agreement; it defines the walk-away point

BATNA (Best Alternative To a Negotiated Agreement) defines a party's best outcome if negotiations fail, which determines how aggressively to negotiate or when to settle.

A claimant seeks compensation for emotional distress unaccompanied by physical injury. In most U.S. jurisdictions, how are such claims generally treated?

Answer: They are disfavored and often require a physical manifestation or independent tort to be compensable

Most U.S. jurisdictions require a physical impact or manifestation for standalone emotional distress claims, though rules vary by state and cause of action.

When is it appropriate to use 'splitting the difference' as a closing tactic in settlement negotiations?

Answer: When both parties are relatively close and a quick resolution serves both interests

Splitting the difference works best as a closing move when the gap is small and both parties prefer efficiency over holding out for marginal gains.