AuthorLeonard H. Bucklin
22. Settlement
Breathes there a case with soul so dead that settlement is not discussed sometime
during a deposition or trial? The forms in this Settlement section will be: (1) your
portable memory of important facts bearing on negotiations and settlement, (2) your
chart on where you want to go in negotiations, and (3) for plaintiff’s counsel, a record of
the client’s direction to settle.
§22.1 Warning: Disbursing Settlement Proceeds
The first item of business is a warning to you. When a plaintiff gets money from a tort
suit through a judgment or settlement, the creditors of the plaintiff can assert claims
against those proceeds. Watch out! You as an attorney (whether plaintiff’s or defen-
dant’s attorney) may have a duty of notification, payment and accounting to those cred-
itors. The risks of liens are not just for plaintiff’s attorneys and plaintiffs anymore.
Defense counsel, defense insurers, and the defendant personally may have risks if the
settlement does not adequately address liens.
Most trial attorneys are vaguely aware that subrogation rights may exist and that statu-
tory or contract lien rights might also exist. However, most attorneys are not aware of the
strength of those creditors’ rights against the attorney who disburses the lawsuit proceeds
to the plaintiff without proper notification, payment or accounting to the creditors. This is
not the place for a textbook of information to you on the particular liens in your state, but
it is the time to impress upon you the need to fill in the provided forms ... especially in the
blanks that ask you to list the insurers and lienholders that you know exist.
In personal injury lawsuits, medical providers, subrogated insurers, government enti-
ties, and others can and do assert lien rights against the settlement funds. As a conse-
quence, liens have a significant impact on the way settlements are negotiated, the
amount offered by defense insurers, the ways in which settlement releases are drafted,
and the possibility of legal malpractice.
Avoid disappointed clients. It is important to either make an agreement with a subro-
gated insurer, or else discuss with the client the possible claim by an insurer to a portion
of the recovery before the settlement is agreed upon. Otherwise your clients may be dis-
appointed when required to give money to their own insurer for the insurer’s rights of
subrogation, and netting less money than they had expected to receive.
Now you know why we supply forms that ask you to fill in names and numbers
regarding insurance policies, liens, subrogation interests, and letters of protection. The

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT