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How Does Liability Translate Into Compensation in an Injury Case?

Personal injury law is based on the idea that a liable party will make up for the damages they've caused by paying compensation to a victim. It's a fairly straightforward concept, but the execution can sometimes end up being a bit more complicated. That often leaves clients asking personal injury lawyers to explain how and why a proposed settlement is the amount it is. Let's look at how a personal injury law firm tries to translate the defendant's liability into the claimant's compensation.

The Simple Math

Fortunately, the starting point for any demand package, the documents a lawyer sends to the defendant explaining why the client deserves compensation, is easy to understand. Direct economic damages are calculated on a one-for-one basis.

To be clear, though, this doesn't presume the claimant gets every dollar in economic damages. It just provides the starting point for doing the math.

You can claim a number of direct economic losses. Unsurprisingly, the cost of medical care usually features prominently in a demand package. This covers immediate medical treatment, surgeries, therapies, drugs, and medical devices. You shouldn't have too much trouble calculating these because the bills for every item will tell you what they are.

Likewise, you can claim lost wages. This covers what you would have earned from the time of the accident had you been able to work.


Several additional forms of damages are compensable, too. These are harder-to-calculate ones, such as losing future earning potential, enjoyment of life, and consortium with a spouse. Generally, these numbers are based on government-designed actuarial tables quantifying the values of occupations and lifetimes.


Liability doesn't always fall entirely on the defendant. A claimant may be liable for some of what happened. In calculating damages, personal injury lawyers take the percentage of the claimant's responsibility out of the demand. If a claimant was 20% responsible in a case involving $500,000 in damages, the compensation figure would land on $400,000.


In personal injury law, pain and suffering are calculated based on a multiplier. Whatever the medical damages were, an attorney will typically multiply them by a factor between 1.5 and 5 to account for pain and suffering.

This is a common bone of contention between a personal injury law firm and an insurance company. Lawyers for the claimant will present evidence documenting the client's misery after an incident, and the defense will often make a lower counteroffer. Eventually, the two sides will either reach an agreement or the claimant will sue.