A high-low agreement is a private contract that constrains the future damages payment to lie between a minimum and maximum amount. Parties are free to craft the terms of the agreement on the record setting forth any terms that are mutually acceptable. This can include not only the amount of the high-low but also percentages of liability, under what circumstances the parties may appeal or move after the verdict and terms of payment. High-low agreements are entered into because trials are costly and risky to both sides. These agreements can be in the parties’ mutual interest because the “high” limits the risk of outlier damages verdicts, while the “low” assures some return on the time and cost invested in litigation.
Two important issues to be aware of concerning high-low agreements are first, these agreements are, when triggered, considered conditional voluntary settlements of an action: Cunha v Shapiro 42 AD3d 95 (2d Dept 2007). The second is if the agreement is considered a settlement, and not a judgment, it means the plaintiff must exchange a general release and a stipulation of discontinuance to commence the defendant’s 21 day payment period under CPLR 5003-a before plaintiff may file a judgment and collect interest, cost and disbursements. It should also be noted that if the verdict is inconsistent, the court on its own, may order a new trial regardless of the parties agreement. Flores v 731 Blvd. LLC 2017 NY Slip Op 07213
In summary, anyone entering into a binding high-low agreement should be specific when placing the terms on the record and take into consideration the issues of payment, interest, liens, the parties’ rights to appeal or move the court, as well as the possibility of an inconsistent verdict. A well-crafted agreement will make clear the parties’ intentions and plan for any unexpected outcomes.