The problem with Mary Carter agreements is that they give the defendant a financial interest in the outcome, which distorts the plea process when the settlement is held before the jury. The following is a summary of the main findings of the Prescott et al. study on high-low chords. The authors first articulate a theoretical model of high-low chords. They then use a national insurance company`s claims data to describe the characteristics of these agreements and empirically examine the factors that might influence whether litigants discuss or enter into them. Their empirical results are consistent with the predictions of their theoretical model. The study looks at whether the agreements encourage more jury trials, what impact the agreements might have, who uses them, and why they are used. For our purposes, the main conclusions are as follows: Their model suggests that (1) if the expected litigation costs are high, they should observe more settlements and fewer lawsuits, including fewer high-low agreements, everything else is the same, and (2) if the outcomes of the judgment are sufficiently unpredictable (or if the variance in the amount of arbitration or payment is high because its distribution has a wider range), We should see that litigants are more likely to consider, discuss and make deals from top to bottom. Among other things, the study found that of the claims resolved without high-low activity, about five percent were brought to court or arbitration; On the other hand, among the claims that had high-low agreements, forty percent went to court or arbitration. Claims that are expected to have low litigation costs and highly volatile potential outcomes are the claims that are most likely compared to the baseline probabilities of involving high-low discussions and/or lead to a high-low agreement during the dispute. Top-down agreements greatly encourage going to court to resolve a case through a full settlement, and they make it more likely that the parties would go to court than if the top-down agreements were not vehicles that exist. Although top-down agreements are possible in all types of cases, special attention should be paid in cases involving minors. For example, in the case study above, although the parents are involved in the lawsuit and approve the high-low agreement with the plaintiffs` lawyer, the agreement should receive court approval to prevent annulment.
The judge will appoint an ad litem guardian who will approve or reject the settlement. If approved, all parties can be sure that the settlement is binding. A high-low agreement may provide some of these benefits, but an appeal is still possible if certain contingencies are not expected and are addressed in the written agreement between the parties. .