Psychology of litigation: A plaintiff and insured perspective for insurers

In my opinion it has never been more important as a plaintiff or defendant lawyer to understand the other side, what makes them tick - where they are at, what do they want and how will they settle.

And also, actively engage in without prejudice resolution. Obviously with client instructions…

After all, costs and delay are key in litigation - this is not to mention the emotional tax of stress on a client which increases with time.

The combined effect is that pressure on litigants increases as one moves toward trial. Both plaintiff and defendant.

This is especially the case in litigation that seeks damages of $200,000 - $300,000 or less, in these cases costs become a key driving factor in litigation. This can also apply to larger cases less than $1m which in my opinion relates to the bulk of insured civil litigation.

Costs to trial are not unrealistically $100,000 - $250,000 or more in legal costs including counsel to trial in a Tribunal or Court case including say 3 - 5 day trial.

This is a rough estimate given so much can occur in pre-trial litigation but for the civil cases in building, insurance and professional liability cases often related to the family home or professional error these are not uncommon.

You might say, but Blair this has always been the case. However, what differs in say 2025 to say pre HIH collapse in 2000 is a lot. We now have so many mandatory and optional pre-court steps, commissions, authorities and dispute resolution steps (e.g. AFCA, DBDRV, FWC) in addition to Court and the Civil Procedure Act. Proportionate liability also drives up pleading and discovery costs.

Plaintiffs and insurers do not have money to burn. However, delay tends to weigh heavier on plaintiffs. They have the burden of spending money to chase money.

But here’s the thing for insurers. I am surprised how rarely an insurer makes early offers or offers shortly after filing that could bring the litigation to an end.

After all, for professional indemnity or public liability insureds there is nothing worse than an open unresolved matter when an insured faces renewal. For insurers they have to reserve as well.

So my comment here is to insurance claims handlers and to insureds. If you have an open litigated matter - has your insurance lawyer engaged with the viability of the case and made an offer? If not, why not?

Many solicitors whether plaintiff or defendant sit waiting for mediation, compulsory conference, dispute resolution in some form when a Calderbank Offer, Section 112 Offer at VCAT or Rules Offer at Court can create costs consequences, trigger negotiations and bring things to an end early.

I am surprised how little insurance lawyers use offers early and proceedings to seek to resolve a case.

This article is a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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• litigation