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What Compensation for Damages Ends Up in My Pocket When a Claim Resolves?

Posted by Bradley Thayer | Mar 14, 2019 | 0 Comments

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It is important to understand, generally, how to determine what compensation for damages actually ends up in your pocket when a personal injury claim resolves.

As we've said before on this blog: “Sometimes, when a case is at its end — whether that is a settlement or a jury verdict – clients think that means the case is over. To many clients, it is a sad realization that a huge part of a personal injury case is parsing out how the money from the settlement or verdict is divided up.”

Here are the considerations in that parsing and divvying process (there are clickable hyperlinks offered below which take you to more in-depth blog posts on each individual topic):

  • What do I have to pay for an attorney fee?

We represent most of our clients on a “contingency fee” basis. A contingency fee is a fee charged for a lawyer's services only if the lawsuit is successful or is favorably settled out of court. Contingency fees are usually calculated as a percentage of the recovery, from the total amount received on behalf of the client. Not only does this mean our clients don't pay any attorney fee up front, but they won't pay any attorney fee at all unless and until we obtain a financial settlement or other recovery on their behalf.

Here is the exact language pertaining to attorney fees from our standard agreement applicable to a basic car crash or dog bite case:

ATTORNEY FEES: Client(s) agree to pay attorneys 33 1/3% plus case costs (see below) of any amounts recovered if the case is settled without having to start a trial or an arbitration hearing. Once a trial or arbitration hearing begins, the fee is increased to 40%. In the event of an appeal, the fee remains at 40%. The fee is  calculated before the costs are subtracted. If the funds recovered are used to purchase an annuity, the fee will be assessed against the present value of the annuity. If attorneys are able to recover attorney fees and costs from the other side, these monies will be added to the recovery before we calculate the attorney fee—except that, in any first-party action to recover Personal Injury Protection (PIP) benefits from your own insurance company, the fees and costs to the attorney shall be the amount of the fees and costs awarded by the finder of fact or agreed to in settlement.

In some more complex cases such as highway design or in cases where liability will be disputed and perhaps difficult to prove, we may discuss with you a higher percentage fee.

  • What do I have to pay in costs?

It is important to remember that attorney fees are separate from case costs.  Depending on the complexity of the case, costs typically aren't extremely high short of a case going through litigation. Should the case go all the way through trial, costs are considerably higher.

Here is the exact language pertaining to attorney fees from our standard agreement:

CASE COSTS: Client(s) agree to pay the costs on the case in addition to the attorney fees. If you are unable to pay, attorneys may advance the costs for you. Attorneys are not required to do so. If attorneys do advance the costs, client(s) agree to reimburse attorneys. This is so whether attorneys win or lose your case. Costs will include expert witness fees and other case expenses which attorneys, in their discretion, deem appropriate to incur with the goal of the successful prosecution of your case in mind. We do not track in-house photocopies, postage, nor other small office supply expenses. Larger mailings or carrier deliveries will be charged at cost and you agree to pay these and other expenses at the end of the case.

Attorney fees and costs are deducted from the total amount received in any settlement or verdict.

In most cases, yes.  Read more at the link provided above.

In most cases, yes—but, read more at the link provided above.

Again, yes, but read more at the link provided above.

  • Is there anything else I might need to account for?
  • Outstanding medical bills

Outstanding medical bills for incident-related medical treatment you received should be paid out of the total amount of the settlement or verdict to the extent there was not personal injury protection or health insurance that should have paid those bills and did not pay those bills in fact.

The reason it is important for these bills to be accounted for upon resolving your case is so you do not get turned over to collections or otherwise have these owed amounts hanging over your head after your claims are resolved.

Sometimes, your medical provider might ask you to sign what is called a letter of protection. This means they are asking you to guarantee payment of the medical bill incurred by you related to this claim for damages out of any future settlement or award or verdict obtained on your case.  Oftentimes, creditors make this request so they can continue to extend their patients credit in a situation where they are not receiving monthly payments.

We often recommend against signing a letter like this unless it is absolutely necessary (i.e., there is no applicable personal injury protection nor health insurance coverage).  Obviously, to the extent you sign such a letter, you must pay the corresponding medical bills from the settlement or other recovery upon resolving your claims.  

  • Medicare Set Aside

If you are or anticipate being a Medicare recipient, near the resolution time of your potential claims, there is a chance that you would need to account for a Medicare set aside in resolving your claims.

This topic is far more complex than a sentence or a couple paragraphs could possibly explain.  For purposes of this post, though, suffice it to say that if future care related to the incident is anticipated at the time of resolving your claim, it might be necessary to hold in trust some amount of monies from the verdict or settlement to be put in a special account set up so that you pay for future incident related care from it (in case Medicare denies coverage for those future bills).

  • Child support lien

Where there is a child support lien asserted by the state (whether it is Washington, Oregon or another state) department applicable—it is more likely than not necessary to account for that lien out of the proceeds of your recovery.  There are few, if any, statutory liens with more force and effect than a child support lien.

  • Legal funding loans

Certain companies offer pre-settlement funding or loans to injured persons with a pending personal injury or wrongful death case. These loans could allow you to obtain funds before your case settles, which might help pay for living expenses or other necessities prior to resolving your case.

These loans are typically very costly and using one is usually not a wise business decision.  For that reason, we typically advise against taking out any loan on your case.  We do understand, though, that sometimes it is truly urgent and necessary.

In conclusion, after all of the above potential considerations are accounted for—the remainder of the monies from the settlement or verdict are paid to you, the injured person.

While it might be discouraging to see how many different potential considerations must be accounted for upon the resolution of your case, it is important to remember that having all of the possible entities or providers that need to be paid back taken care of as part of resolving your potential claims is a huge step toward putting you back to where you were prior to getting injured with respect to your health and finances, etc., and that is the goal of personal injury law and our civil justice system (in the personal injury context).

About the Author

Bradley Thayer

Brad Thayer is a partner at the Schauermann Thayer firm. Brad is licensed in both Oregon and Washington. He has been practicing law since 2015. He was presented the 2018 Rising Star Award by the Clark County Bar Association. Brad's practice focuses on automobile collision, motorcycle, bicycle, pedestrian injury, dog bite, and myriad other types of injury and insurance cases. During his free time, Brad enjoys following the Portland Trail Blazers, playing basketball, going to concerts, and playing the drums. He especially enjoys hiking in the Columbia River Gorge and exploring other Northwest wonders.

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