Typically, lawyers calculate pain and suffering settlements by using the multiplier method, which takes the economic damages incurred by the client, such as property damage, medical expenses and lost income, and multiplies their value by three or four. Insurance companies typically insist on lower multiplier values when the injured party's recovery is certain, claims the Ingerman & Horwitz law firm. However, the settlement amount depends on the condition of the client, his needs and his future.
A less common method lawyers use to calculate pain and suffering damages is the daily rate method, which takes a flat dollar amount and multiplies it by the number of days that the client experiences pain or suffering. Typically, the daily rate is a figure close to the client's daily earnings, states Ingerman & Horwitz. However, this method may not be applicable to cases involving lifelong or permanent injuries.
Some law firms compare the pain and suffering that a client experiences with that of past clients in similar situations and use these precedents to determine the settlement amount. Many claim professionals use computer systems such as Colossus to estimate pain and suffering damages. Ultimately, the judge or jury determines the appropriate settlement amount based on the material facts of each case, notes Miller & Zois, LLC.