High Low Settlement Agreement Template for the United States

A High Low Settlement Agreement allows you to proceed with trial while establishing predetermined boundaries for potential recovery or liability. This contract guarantees you receive at least a minimum amount if you're the plaintiff, while ensuring you won't pay more than a maximum amount if you're the defendant, regardless of the actual trial verdict.

When do you need this document?

You need this agreement when facing uncertain trial outcomes in civil litigation. Personal injury attorneys frequently use these agreements when medical bills and damages are substantial but liability is disputed. Insurance companies often propose high-low agreements to cap their exposure while avoiding the costs of appeals. Medical malpractice cases benefit from this structure when both sides want trial certainty. You'll also find these agreements valuable in commercial disputes where business relationships need preservation despite ongoing litigation.

Key legal considerations

Your agreement must clearly define the high and low amounts, payment timing, and release provisions. Insurance carrier participation requires careful drafting to ensure coverage obligations remain intact throughout the trial process. You need specific language addressing how the agreement interacts with existing insurance policies and bad faith claims. Tax implications demand attention, as settlement payments may have different tax treatment than jury awards. The agreement should address confidentiality terms and whether the arrangement can be disclosed during trial proceedings. Consider including provisions for appeals and post-trial motions that might affect the final outcome.

Legal requirements in United States

Under Federal Rules of Civil Procedure, particularly Rule 68, your agreement must comply with offer of judgment procedures if applicable. State-specific civil procedure rules vary significantly, requiring compliance with local settlement agreement requirements and court approval procedures in some jurisdictions. Contract law fundamentals apply, including proper consideration, capacity to contract, and mutual assent between all parties. Insurance law regulations govern carrier participation and require adherence to policy terms and bad faith prevention measures. You must consider IRS regulations regarding settlement payment taxation and associated reporting requirements. Some states require court approval or filing of settlement agreements, while others allow private arrangements. The agreement must preserve your rights under applicable statutes of limitations and ensure enforceability under the governing state's contract laws.