A high-low agreement is a private contract between a plaintiff and a defendant that sets a guaranteed minimum recovery and a maximum liability cap before the jury returns its verdict. The trial still runs its course. The jury still deliberates. But both sides already know the actual payment will land somewhere inside a pre-negotiated range, no matter what number the jurors write down.
The tool exists because jury verdicts are unpredictable. In a personal injury case, the same facts can produce a defense verdict from one jury and a seven-figure award from the next. A high-low agreement lets both sides keep the trial while removing the extremes.
How the Verdict Translates Into a Payment
The math is simple. Say the parties agree to a floor of $100,000 and a ceiling of $500,000.
- If the jury returns a defense verdict or awards $40,000, the plaintiff still collects $100,000.
- If the jury awards $275,000, the plaintiff receives exactly $275,000, because the number sits inside the corridor.
- If the jury awards $1.2 million, the plaintiff receives $500,000, the contractual cap.
The contract only overrides the jury when the verdict falls outside the range. Inside the range, the jury’s number controls dollar for dollar.1The Civil Jury Project at NYU School of Law. High Low Agreements: When Are They Enforceable? Do They Encourage Jury Trials?
When the Deal Gets Made and Who Knows About It
Negotiations typically happen in one of two windows: right before trial starts, or while the jury is out. The second window often produces the most realistic numbers. By then both sides have watched the evidence come in, read the jury, and have a sharper sense of the risk.
Once both sides sign, the trial continues as if nothing has changed. The jury is never told. Concealing the deal from jurors is considered essential, because knowing there is a guaranteed floor or a hard cap could change how they evaluate the evidence and set damages. In multi-defendant cases, courts have required disclosure of the agreement to the judge and to any non-agreeing defendants, but the jury still stays in the dark.
What the Written Contract Should Cover
A handshake will not hold up. High-low agreements are enforceable as contracts across U.S. jurisdictions, and several states impose procedural requirements beyond ordinary contract law.1The Civil Jury Project at NYU School of Law. High Low Agreements: When Are They Enforceable? Do They Encourage Jury Trials? Getting the deal in writing is the minimum. A workable contract also addresses several recurring pressure points.
Interest
State the treatment of prejudgment interest explicitly. Statutory rates run roughly 5% to 12% annually depending on the jurisdiction, and a silent contract invites litigation over whether interest applies on top of the agreed figures. Post-judgment interest also deserves a line, since eliminating the appeal removes the period during which it would otherwise accrue.
Costs and Expenses
Trial costs mount quickly. Medical expert witnesses generally charge $500 to $700 per hour for testimony, with some specialties above $1,000. Filing fees, deposition transcripts, and demonstrative exhibits push complex cases into five figures. The contract should say whether costs are absorbed by each side or offset against the payment.
Appeal Waiver
Most high-low agreements include a mutual waiver of the right to appeal, and this is one of the biggest practical benefits. Appeals cost money, take months or years, and generate post-judgment interest the entire time. A waiver locks in finality the moment the verdict comes in.
Jury Deadlock
If the jury hangs, the contract needs a fallback. Some agreements set payment at the midpoint of the range. Others require retrial under the same terms. Without this language, a hung jury can leave both sides in limbo.
Comparative Fault
This is the provision most often left out, and the one most likely to blow up the deal. It gets its own section below.
Why Comparative Fault Language Is the Biggest Trap
In comparative negligence jurisdictions, the jury does two things: it fixes the damages and it assigns a percentage of fault to each party. A $300,000 award against a plaintiff found 40% at fault becomes a $180,000 recovery. The question is whether the high-low corridor gets compared to the gross verdict or the net one.
Courts have held that when the contract is silent, the fault reduction applies first. A verdict that looked like it landed inside the range can drop below the floor after the reduction, and the plaintiff does not automatically get pulled back up to the minimum. In one well-known case, the jury awarded damages within the corridor but assigned the plaintiff 75% fault. After reduction, the number fell below the floor, and the court held the plaintiff to the reduced figure because the contract never addressed comparative fault.
The fix is one clause: state whether the floor and ceiling apply to the gross verdict or the net amount after any fault reduction. Skipping it can cost the plaintiff the entire safety net.
Multi-Defendant Cases and Disclosure
A high-low agreement between the plaintiff and one defendant in a multi-defendant case raises fairness problems that do not exist in a two-party dispute. Once one defendant has capped its exposure, the plaintiff has an incentive to steer fault away from that defendant and onto the non-settling defendant, whose payout is still open-ended.
Courts have responded. In a leading New York asbestos case, the Court of Appeals ordered a new trial because the trial court failed to disclose a high-low agreement to a non-agreeing defendant, reasoning that secret agreements of this kind “may distort the true adversarial nature of the litigation process and cast a cloud over the judicial system.”1The Civil Jury Project at NYU School of Law. High Low Agreements: When Are They Enforceable? Do They Encourage Jury Trials? Several jurisdictions now require that the existence and terms of the agreement be disclosed to the court and any non-participating defendants.
A related boundary is worth flagging: a high-low agreement is not a Mary Carter agreement. In a Mary Carter deal, a settling defendant stays in the case and its own obligation shrinks as the non-settling defendant’s grows, which creates a direct incentive to help the plaintiff win against the remaining defendant.2Mercer Law Review. Still a Deal with the Devil? Mary Carter Agreements and the Integrity of Civil Jury Trials A standard high-low agreement creates no such incentive distortion. Many jurisdictions have banned or heavily restricted Mary Carter agreements; high-low agreements remain enforceable everywhere.
The Insurance Carrier’s Role
In practice, the defendant’s insurance carrier is almost always at the table, because the carrier controls the defense and writes the check. Defense counsel usually cannot commit the carrier without its consent.
The carrier often has a specific reason to want the deal: a ceiling at or below the policy limit eliminates bad faith exposure. Without the agreement, a verdict above the policy limit can support a bad faith claim for failing to settle within limits when the chance existed. A cap that stays inside coverage takes that risk off the table, and for insurers facing volatile trial exposure that is frequently the strongest reason to sign.
Tax Treatment of the Payout
A high-low payment is taxed like any other personal injury settlement or judgment. Federal law excludes from gross income damages received on account of personal physical injuries or physical sickness, whether paid as a lump sum or in periodic payments, and whether the case ended in verdict or settlement.3Office of the Law Revision Counsel. 26 USC 104 – Compensation for Injuries or Sickness
Two limits matter. Punitive damages are always taxable, even when the underlying claim involves physical injury, with a narrow exception for wrongful death cases in states where punitive damages are the only available remedy.4Internal Revenue Service. Tax Implications of Settlements and Judgments Emotional distress damages not tied to a physical injury are not excluded, except to the extent they reimburse actual medical expenses for treating the distress.3Office of the Law Revision Counsel. 26 USC 104 – Compensation for Injuries or Sickness
The IRS looks at the purpose of the payment, not the label. A high-low payout on a physical injury claim is excludable. The same structure applied to a defamation or contract dispute is not. Settlement documents should characterize the nature of the damages clearly.
What Each Side Gives Up
Neither party gets something for nothing. For the plaintiff, the floor guarantees a recovery regardless of how badly the trial goes, and ensures that counsel recoups out-of-pocket trial expenses even on a defense verdict. The price is the ceiling. If a jury would have returned $2 million and the cap is $500,000, that lost upside is the cost of certainty.
For the defendant, the ceiling erases the tail risk. The carrier can reserve for the worst case and avoid a runaway verdict that blows through the policy. The price is the floor: the defendant pays something even on a defense verdict, which is hard to accept in a case with strong liability defenses.
The agreement also shortens the timeline. Both sides skip the cost of post-trial motions and appeals. In some cases the parties even streamline the trial itself, limiting experts or shortening testimony, because the range of outcomes is already bounded.
Closing the Case After the Verdict
Once the jury returns and the payment under the contract is calculated, the case still needs to be formally closed on the docket. The usual mechanism is a stipulation of dismissal or a satisfaction of judgment, the latter being a signed document confirming that the financial obligation has been paid in full.5Legal Information Institute. Satisfaction of Judgment Filing deadlines and procedures vary by jurisdiction, so check local rules for timing. Because most high-low agreements waive appeal, neither side can reopen the case after the documents are executed. The verdict triggers the contract, the contract fixes the payment, and the payment closes the file.