The Proposal for Settlement (PFS) is a crucial tool in legal negotiations that can significantly influence the outcome of a case, particularly in Florida. While many are familiar with the term, there are various nuances regarding its use, consequences, and timing that attorneys need to navigate carefully. Understanding what a PFS is, when it should be used, and how it can impact the resolution of a case is essential for anyone involved in litigation.

What is a Proposal for Settlement?

A Proposal for Settlement is essentially a formal offer made by one party to settle a case for a specific amount of money. This offer is made in writing and presented to the opposing side. In Florida, both plaintiffs and defendants are allowed to make a proposal for settlement. Once it is made, the recipient has 30 days to either accept or reject the offer.

  • Acceptance: If the offer is accepted within the 30-day period, the case will settle, and the matter is resolved.
  • Rejection: If the offer is not accepted, or if the 30 days pass without a response, it is considered rejected.

Real-World Examples of Proposal for Settlements in Florida

Case Story 1: A High-Value Settlement After Proposal Rejection

Our client was severely injured in a car accident, resulting in significant medical bills and a lengthy recovery process. Initially, we sent a Proposal for Settlement to the insurance company for $180,000, a figure that we felt was reasonable given the extent of our client’s injuries. However, the insurance company rejected the proposal.

When the case went to trial, the jury returned a verdict far exceeding our expectations, awarding $1 million. This exceeded the amount in our proposal for settlement by more than 25 percent, triggering a provision that required the insurance company to cover not only the judgment but also our attorney fees. As a result, our client received a much higher settlement, and we were able to secure full compensation for their injuries, including coverage for all legal fees.

Case Story 2: The Rejection That Led to Major Legal Fees

In another case, our client, who had sustained serious injuries in a pedestrian accident, was faced with a proposal from the insurance company offering only a fraction of what we believed the case was worth. The offer was rejected, and we proceeded to trial.

The jury awarded our client $150,000, significantly higher than the $100,000 proposal that was made earlier. Because the judgment was 25 percent higher than the proposal, the insurance company was required to pay not only the settlement amount but also the attorney fees incurred from the date the Proposal for Settlement was submitted. This ruling provided our client with additional financial relief, demonstrating how an effective proposal for settlement can play a key role in securing a favorable outcome.

The Role of the Insurance Company and Defense

When sending a Proposal for Settlement, it is typically directed to the opposing party’s lawyer. But insurance companies play a critical role in the decision-making process. Ultimately, the decision to accept or reject the proposal comes down to the insurer’s evaluation of the case and their potential exposure. In cases involving a defendant, the insurance company often holds the final say, especially in personal injury and car accident cases where insurance policies are in play.

What Happens if a Proposal for Settlement is Rejected in Florida?

If the defendant rejects a Proposal for Settlement, there are significant consequences if the case proceeds to trial. If the court delivers a judgment that is at least 25% higher than the offer, the defendant may be required to pay the prevailing party’s attorney’s fees from the date the proposal was filed. This is one of the primary motivations for making and considering these offers.

For example, if a plaintiff offers to settle a case for $100,000, and the defendant rejects it, but the jury awards the plaintiff $150,000, the defendant may be required to cover the plaintiff’s attorney fees, in addition to the $150,000 judgment.

Can Proposals for Settlement Speed Up Resolution?

A well-timed and well-formulated Proposal for Settlement can indeed help speed up the resolution of a case, especially when both parties are concerned about the financial implications of going to trial. By forcing the defendant to make a decision on the settlement offer, it can push negotiations in a way that may avoid the delays and uncertainties of a court trial.

Insurance Companies and Bad Faith

One important aspect of Proposals for Settlement is that if an insurance company unreasonably rejects a fair offer, and the case results in a judgment exceeding their policy limits, the insurance company could face a bad faith lawsuit. Bad faith claims are based on the insurer’s failure to act in good faith by not settling a claim that should have been settled within the policy limits.

If the insurer is found to have acted in bad faith, they could be required to pay more than the policy limits, and may also face legal fees and penalties. The proposal for settlement process can be used as evidence in a bad faith case, especially if the insurer ignored a reasonable settlement offer.

Legal Requirements for a Proposal for Settlement Statute in Florida

For a Proposal for Settlement to be valid in Florida, it must comply with certain statutory requirements under Florida law (Florida Statute § 768.79). This includes the amount being proposed for settlement, the deadline for acceptance, and other legal formalities. If a minor detail is wrong, the proposal may be invalidated, which could jeopardize a case and its potential for attorney fee awards.

  • Timing: A Proposal for Settlement cannot be made until 90 days after the defendant has been served with the lawsuit. It also cannot be filed later than 45 days before the trial date.
  • Structure: The proposal must be structured in a way that complies with legal standards and is carefully drafted to avoid any loopholes that might invalidate it.

Responding to a Lowball Offer

When a Proposal for Settlement is made, it is not uncommon for the offer to be far lower than what a party might consider fair. In such cases, the appropriate response is typically to reject the offer or simply let the 30-day period lapse. It is also an option to counter the offer with a new proposal.

The Importance of Client Involvement

A crucial factor in handling a Proposal for Settlement is ensuring that the client is involved in the decision-making process. Even though lawyers can initiate the proposal, they cannot accept a settlement without the client’s consent. It is essential that the client understands the implications of the offer and is fully informed before making any decisions.

Confidentiality of Proposals for Settlement

In Florida, Proposals for Settlement are not strictly confidential, but there are limitations on their disclosure. These proposals are not filed with the court unless the settlement is enforced after trial. This allows parties to negotiate without the fear that the settlement figures will be revealed prematurely.

The Value of Proposal for Settlement in Legal Cases

The Proposal for Settlement is a powerful tool in Florida’s legal landscape, offering an opportunity for both plaintiffs and defendants to avoid the uncertainty and costs of trial. By following proper procedures, understanding the statute of limitations, and ensuring the proposal is fair and reasonable, attorneys can use it effectively to push for settlements and potentially recover attorney fees. Whether in personal injury cases, commercial disputes, or insurance claims, understanding how and when to use a Proposal for Settlement can make a significant difference in the outcome of a case. If you’re facing a legal dispute, reach out to Abrahamson & Uiterwyk for guidance in utilizing Proposal for Settlement to your advantage.