@Logicfest -- True, and insurance companies will often use the same type of formula, only they multiply by a smaller number. If the attorney is multiplying special damages by five, the insurance company my multiply by three. Both sides, then, hope to meet somewhere in the middle through negotiation.
If they can't agree, it is off to court. That is exactly why it is usually better to settle. Having any case tied up in court these days can take a heck of a lot of time to resolve. Plus, attorneys take those cases on contingency and they will usually take a larger chunk of the settlement if the case goes to trial.