Managing Client Expectations in an Injury Case

A client is similar to a screenwriter. They have fantastical ideas, which turn into grandeur images in their head. Most of those ideas involve unrealistic expectations as to what the true value of their case is. For some reason they believe that an accident claim is a ticket to retirement. Most often, it is not.

Managing client expectations is not only important for the client, it is important for the attorney. For one, an attorney should never create a false impression. Controlling the narrative of what to expect will help an attorney remain disciplined in how he or she communicates with clients. Two, relationships are the foundation of a good law practice. One relies on referrals to survive. A happy client, which means a client who is not surprised with a result of a case, will refer family and friends in the future.

Communicating to the client about the value of his or her case can be difficult. Case value is subjective. That is why claims are fought over in litigation. As one may guess, the defense will value the case less than the plaintiff, and vice versa.

But evaluating a case can also hinge on objective factors. Any case has value when there are damages that can be proven. Damages can be shown via medical bills, lost earnings, etc. A bigger case may involve more medical bills because the accident required significant treatment. For example, if a plaintiff broke both legs, he or she will have higher medical bills than a person who only suffered whiplash (although many whiplash clients experience horrible nerve pain, which affects them for a lifetime). Indeed, the plaintiff with broken legs may not be able to work, while the whiplash plaintiff may continue on with work the very next day after the accident. Under the law, a plaintiff is compensated for those medical bills incurred and the earnings lost because of injury.

Other factors go into determining the value of a case. The reliability of the client will go a long way. Remember that the point of litigation is that both parties are satisfied with the case going to trial by jury. Each side is preparing for a jury trial, meaning that they are organizing when witnesses will testify, and what they will testify to. A client who comes across well-liked, truthful, sympathetic, and aggrieved will increase the value of a case. An attorney does not want a client who will testify poorly in front of a jury.

Putting all of the pieces together and telling a client what a case should settle for remains a risk. The judgment, or arbitration award, or agreed mediation proposal, could be lower than what was communicated. That is why an attorney should give a range, beginning with the worst case scenario (we could lose!) to the best case scenario (the best case scenario should be lower than what you actually think the best case scenario is). More importantly, the attorney should clearly communicate that it is an experienced guess but not a guaranteed opinion. Nothing in personal injury law is guaranteed. If someone tells you different, I would speak with someone else.

Always consult with an experienced injury attorney after an accident. An attorney should not only manage expectations, they should give you, or a loved one, peace of mind.

What is a Settlement in a Personal Injury Case?

Personal injury lawyers like to spit out legal terms. "We sent the defense a 998 offer to compromise." "I warned the Plaintiff's attorneys that I will have to file a MSJ." "Before the CMC, I need to run down to central to file an Oppo." I know. It can get confusing.

Some terms like "settlement" are widely recognized, but the mechanics of a settlement in a personal injury context is not well known. This blog post will go over a "settlement" in greater detail.

A settlement can occur prior to, during, or after a lawsuit is filed. Most motor vehicle accidents, for example, involve automobile insurance. When a person is injured as the result of another motorist, he or she will make a claim with the automobile insurance of the other motorist.

Once the insurance is involved, a claim could be "settled" before a lawsuit is filed. A civil lawsuit can be filed when there exists a "cause of action" against another individual, or entity. "Negligence" is the cause of action most utilized in automobile accidents. The other driver may have ran a red light, and thus been negligent. The negligence resulted in injuries to the plaintiff, who filed the lawsuit against the driver who ran the red light -- and the bad driver then becomes the defendant in the lawsuit.

But again, it might not be necessary to file a lawsuit. The negligent driver's insurance will contact the injured person to try to "settle" the claim. A number of factors go into the decision of when it is appropriate to settle a claim. Experienced attorneys can advise on when a settlement would be prudent.

As an illustration, let's say that it makes sense for the claimant to settle a claim. The other driver has no assets; he also has a low policy limit, $15,000 in bodily injury liability. So far, the claimant has over $8,000 in medical damages, and continues to experience excruciating pain. The insurance company, recognizing that the claim likely exceeds $15,000, offers to "settle" the claim for the policy limit of $15,000. Claimant accepts. What happens?

Well, the claimant must execute a release of all claims against the negligent driver, in exchange for a sum of money, which was in this hypothetical $15,000. A release prevents the claimant from filing a lawsuit against the negligent driver. No lawsuit was filed, but a "settlement" was reached.

After a lawsuit has been filed, "settlements" get a little more complicated. Automobile insurance will always provides liability coverage for a negligent driver. Insurance also pays for the cost of litigation, meaning that: if the negligent driver is sued, the insurer will pay an attorney to defend the negligent driver in the lawsuit.

Therefore, a settlement will involve a new party once a lawsuit has been filed: the defense attorney. The defense attorney represents the negligent driver, but answers to the insurance company. Once a defense attorney reaches an agreement with the plaintiff's attorney (and is authorized by the client), a few things must be done before settlement.    

The defense attorney, or plaintiff's attorney, must file a "Notice of Settlement" with the court. This ensures that future court dates are vacated. Then, a release is executed, which, as explained above, will be a payment in exchange for the plaintiff to forfeit his cause of action against the negligent driver. Once payment has been satisfied, the plaintiff will file a "Request for Dismissal with Prejudice." Once a dismissal has been filed, the case is closed forever.

Settlements will always involve consideration, something in exchange for something else. Predominantly it is a sum of money in exchange for the injured party to forego pursuing money from the negligent party. It can occur at different stages of a claim, and will require different steps, but it will always result in the conclusion of a case.

Before you, a friend, or loved one settles a claim, it is important to contact an attorney to seek advice. One should not be quick to rush to a decision. 

Subrogation in Third Party Accident Cases

"Good news: your case has settled." The client asks in response, "When do you think I will get my portion of the settlement?" There is a pause over the phone. The personal injury attorney -- experienced and familiar with post-settlement -- was expecting the question. "We cannot disburse any funds until the liens are satisfied." "When will that be?" The lawyer's answer did not satisfy the client: "it depends..."

The general public is unfamiliar with the term, "subrogation." However, it is an important concept to attorneys and insurers. Subrogation allows insurers to recover costs that they may have expended on  behalf of their insureds. Simply put, when there is a third party accident, the first party's insurance carrier is able to recover monies from the third party who is at fault. The insurer steps into the shoes of the insured and gets the right to be paid what it has lost.

An example may help. Let's say Frank, the first party who was injured, retained Adam the attorney. Frank was hurt in an accident, so he needed medical treatment. Frank went to his primary care provider for help. All of the medical bills from his primary care provider were sent to Frank's health insurance carrier, "HealthIns."  HealthIns was made aware by Adam, Frank's attorney, that the treatment was related to a motor vehicle accident.

Meanwhile, Adam was able to prove that Tom, the third party, was at fault for the accident. Tom's insurance policy had a liability limit of $15,000. Due to the extent of injuries to Frank, Tom's liability insurer offered to settle Frank's claim for the full amount of $15,000. Adam relays the offer to Frank, and Frank accepts.

There is now $15,000 in settlement funds. Before the funds are disbursed, however, HealthIns reminds Adam that it will enforce its right to subrogation. HealthIns paid $5,000 to Frank's medical provider. Adam and HealthIns must now settle the subrogation lien prior to the disbursement of funds to Frank.

Sometimes it can take months for a case to be closed after it has been settled. It is frustrating but it is the law. In some circumstances, the insurer will not be able entitled to subrogation.

A health insurer may not be entitled to subrogation if the insured was "not made whole." The "made whole doctrine" is an equitable principle that states, absent an agreement to the contrary, an insurance company may not subrogate until the insured has been fully compensated for his or her injuries, or "made whole." See Sapiano v. Williamsburg Natl. Ins. Co. (1994) 28 Cal.App.4th 533. This principle will sometimes apply when there is a catastrophic injury and a low liability policy.

Needless to say it is obvious that personal injury law is complex. It is best to retain, or consult, with an experienced personal injury attorney after an accident. Not only should the attorney be able to recover a settlement or judgment, he or she will be able to advise on the intricacies of subrogation, liens, and rights to reimbursement.

Liable but broke: Why some legal battles aren’t worth fighting

While it may sound cynical, lawsuits are really about money. Injured people initiate lawsuits because they need money to cover their medical bills, help them cope with disabilities and time off work, and replace lost or damaged property. In fact, a basic principle of the tort legal system is that almost all injuries can be converted into a dollar amount. Of course, attorneys also need to be paid in order to keep their practices open and continue serving clients, and finally the legal system itself costs money to operate. As a result, after all the legal questions have been addressed, all the evidence gathered, lawsuits come down to a collection effort. The amount due, whether from an insurance settlement or a court ordered judgment, must be paid or the entire effort will have been for nothing. Unfortunately, some defendants simply don’t have any money, or at least not enough to pay for the damages they caused. Even where money is available on paper, actually getting those dollars to the proper person can sometimes be challenging.

Because of these issues, one of the factors that significantly impacts the viability of a lawsuit is the predicted ability to collect on any positive outcome; in short, the question of whether or not the plaintiff can actually get paid at the end. There are many reasons why collecting on a judgment might be difficult. Sometimes even the best cases, those with clear liability on the part of the defendant and serious damages to the plaintiff, are just not viable in practice.

Indigent Defendants

The most common of these heartbreaking cases involve situations in which the defendant simply does not have any resources from which to satisfy their legal obligations to the injured plaintiff. It might be that the at-fault driver of the car that caused the pile-up only carried state-mandated minimum levels of car insurance (currently a mere $15,000/$30,000); nowhere near enough to cover a prolonged hospital stay or major surgery for even one person, let alone several passengers. Or perhaps the responsible party is simply low-income and has neither property nor a steady source of revenue from which to pay a judgment. Whatever the circumstance, the collectability of a suit may make even good legal situations into poor practical cases.

Bankruptcy

The threat of paying out on a judgment or settlement may drive a defendant to seek refuge in the bankruptcy system. In bankruptcy, many legal judgments can be discharged for mere pennies on the dollar, or sometimes for nothing at all. The bankruptcy process essentially gathers all of a defendant’s assets into a single pool and uses that pool to pay as much of the defendant’s debts as possible. In other words, if a defendant has 100,000 worth of debt and only 50,000 worth of assets (property, savings, etc.), the bankruptcy courts will use their authority to distribute that 50,000 evenly among the creditors; each of whom will collect approximately 50 cents for every dollar they were originally owed. At the end of this process, each of the debts that were addressed by the court will be considered settled in full, thereby wiping out any further capacity to collect on those debts. In many bankruptcies, the debtor has so few assets that almost nothing is paid to creditors. Where those creditors include an injured plaintiff, even the best of legal judgments may not earn the plaintiff any real payment.

Medical Providers and other outstretched hands...

In many personal injury cases, a plaintiff is left with substantial medical bills. Even where some portion of these bills is covered by health insurance, the policies frequently include provisions which give the insurer some right to at least a part of any eventual legal settlement. Known as subrogation rights, these provisions may mean that a successful plaintiff obtains a settlement or judgment, collects the money, and then has to turn around and give a large portion of those dollars to an insurance company to repay them for the cost of earlier care. Where there is no insurance, medical providers may seek payment from a legal settlement directly. In some situations, cautious defendants will even seek to pay such providers directly, in others insures may get a court order to directly pursue some of the settlement or judgment. Effective attorneys understand when and how these kinds of subrogation and payment demands will develop and can advise a prospective client about the repercussions of the case right at the outset.

Costs of trial

Even where eventual payment seems likely given the resources of the defendant in question, the costs of running a trial to the point of collection can be prohibitive. Sometimes to win a trial money must be spent; occasionally large amounts of money. To make matters worse, some cases take many years to work their way through the courts. In these situations, someone has to cover the ongoing costs of managing the case. These costs don’t just include lawyer’s fees but can also stem from the charges of experts, document fees, or the costs of obtaining evidence. While many personal injury attorneys work on a retainer system under which they get paid only at the end of a successful case, the risks involved might be simply too high to merit a substantial up-front investment.

What it all means

In the end, what most plaintiffs really care about is being made whole for their injuries; about collecting money to cover their expenses, pain, and other losses. Unfortunately, even where there is a clear legal case, even experienced attorneys may sometimes be unable to take it because of the low probability of obtaining payment or because of the high costs of trial. While most personal injury attorneys really do understand and appreciate the pain and suffering of their clients, some cases just do not have a sufficient likelihood of a positive collection effort to be worth taking. No matter how much an attorney wants to take a case, no matter how sympathetic a client’s plight, if there is no way to get paid at the end, no one comes out better off from a fruitless legal battle.