Housekeeping Matters at the Conclusion of Your Personal Injury Case

This blog will discuss the issues confronting a client when his/her civil personal injury case resolves. At the outset of the representation, there should have been a discussion of fees and expenses so that there will be no surprises. This understanding should also have been memorialized in the Contingent Fee Agreement. Does the attorney expect the case expenses to be paid by the client as they are incurred or does the attorney expect reimbursement upon the conclusion of the case? If the attorney does not expect reimbursement until the end of the case, there is still the question of whether reimbursement is dependent on the outcome of the case.

As I have stated in several previous blogs, my firm’s policy is to ask the client for reimbursement only upon conclusion of the matter, and to only expect reimbursement if the case is resolved successfully. Thus, my firm will cover these expenses in the unlikely event that the case yields no reward. Assuming a successful settlement or verdict, my office will go through our books and we will have our bookkeeper present the client with a list of expenses. We will, if asked, discuss these expenses with the client and explain why they were necessary in achieving the desired outcome. Additionally, we can provide actual invoices.

The expenses come out of the client’s share, as does the fee. As I explained in a recent blog, this is a contingent fee, rather than an hourly one, and that is beneficial to clients. The fee is usually one-third, after which the expenses are reimbursed. Unfortunately, there may be other deductions, chief among them medical liens. Medical liens can take up a significant amount of the client’s share. They arise when a health insurer or the like seeks reimbursement for the cost of the treatment. Please keep in mind that all health insurance contracts have a subrogation provision allowing for this claim on the “third party” result. But such liens can be negotiated. Our office spends a good deal of time on that aspect of closing a file. The second helpful point is that the liens are only proper if they relate to an injury for which a recovery was awarded. As an example, if a client suffered multiple injuries but was paid for only one of those injuries, then only the treatment for the compensated part of the injury is properly included in the final lien. I have even asked the liability insurer to provide corroboration to the medical lienholder.

There are other liens that can occur: workers’ compensation liens, set offs pursuant to a complicated doctrine in Massachusetts known as the Hunter offset, and Medicare set-asides, to name just three. Lastly, it is important for clients to understand that some settlements may be conducive to a structured settlement. Some clients may prefer a long payout. It is helpful for tax purposes because the entire payout stream is not taxable. The fact that it is paid out over time may be beneficial. Structured settlements protect those of us who may be inclined to spend a significant share of a recovery all at once. A later blog will discuss structured settlements in more detail.