Because I – as your lawyer – have to make sure it gets distributed properly.
And because it is the only effective way to “make change”.
When the insurance company settles your lawsuit, they almost always do it by writing one check to both you and your lawyer.
Why? Two reasons: (1) the other driver’s insurance company is afraid your lawyer will sue it for his fee if the check is made out to you alone and (2)The insurance company is afraid your health insurance company will sue it for any money you owe them out of the settlement. (This is called subrogation.)
And there is another reason. It is how the lawyer can “make change”, and distribute the money from the settlement all at once.
When a lawyer settles a lawsuit for an injured person ,the other side’s insurance company issues a check for the settlement amount – say, $10,000.00 – payable to both the lawyer and client, and mailed to the lawyer.
Typically, there are a number of debts, or “liens” that have to be paid out of this money. The lawyer gets a check for his fees and his costs.
Any health or auto insurance company that has paid money to you – or to your doctor – for your medical care has a right to be paid back. If your Anthem policy – or your employer’s health insurance company, or Medicare or Caresource – paid $3,000 for your medical treatment, they have a right to be paid back.
The health insurance company may or may not have a right to get paid out of the settlement funds directly, but it sure has a right to sue the injured person if it does not. Some government based insurance – like Medicare or Caresource – may have the right to sue the lawyer if they don’t get paid.
Similarly, some hospitals and doctors – especially chiropractors – provide treatment before they are paid. They also have the right to sue you if they are not compensated out of the settlement.
So everyone gets paid. In the example above, I would have my clients come in to sign checks, along with a document that shows how the money is getting distributed. A typical distribution in the above case might be:
Chiropractor (after negotiating a reduction on a $2,000 bill)………………..$1,000.00
Hospitals and doctors (after negotiating reduction of $3,000 in bills)………..$1,800.00
My client………………………………………………………………$3,616.67
My fee(1/3)…………………………………………………………….$3,333.33
My forwarded expenses (Photocopying and getting medical records)………………$250.00
Total Distribution………………………………………………….$10,000.00
After my client comes in and signs off on the distribution, and endorses the check, I deposit the check in a “trust” or IOLTA account. (IOLTA stands for “Interest on Lawyer’s Trust Account. “ It’s set up so that the interest on the funds does not go to the lawyer, in accordance with Ohio Supreme Court guidelines.)
One to two weeks later when the funds have cleared, I distribute the money as indicated on the settlement statement.
And – almost always – everyone is happy. At least to the point where I don’t hear complaints about it.
If you want to know more about how this works, call me, Bill Strubbe, a Cincinnati Personal Injury Attorney. My phone is 513-621-4775. There is no charge for talking to me.
Other lawyers refer their clients to me. And if you decide you‘d rather hire someone else, that’s OK.
Because all situations are different, and because there may be other facts pertaining to your case that I don’t know about, you should not rely on this answer for legal advice. I am not your attorney, and no lawyer client relationship has been formed. All discussions are limited to Ohio law unless otherwise indicated. And past performance cannot be used to predict future results.
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