QuestionHello,
I was in a head on collision with a drunk driver (he crossed the center line) and shattered my right wrist approx. 2.5 years ago. I am a guitarist by trade along with enjoying rock climbing. I have previous pay stubs from making income from playing guitar. I have an attorney and am looking for a formula as to how a settlement is calculated. I was given a 14% partial permanent disability rating and have had 2 reconstructive surgeries on my wrist. My car was totalled and the driver that hit me was a commmercial truck driver. My medical bills add up to about $27,000 and my attorney thinks I should request $160,000 in order to settle with around $120,000. Here is the breakdown she is advising:
$120,000
- $27,000 for medical/liens
- $40,000 for her 1/3 cut
= $53,000 left for me
any advice how I can make an educated decision regarding this matter?
Thank you for your expert opinion!
~Shane in Seattle
AnswerHi Shane,
Dr. Settlement knows personal injury insurance claims forward and backward, but I still cannot divine a value, given so little information. Besides, ‘da boss here does not like to risk malpractice giving out opinions on big claims like yours. Hence, I am sorry, but we are not allowed to second-guess opinions as to valuation of personal injury cases. This is not like a drive thru burger function since valuation takes a lot of experience, knowledge of the claim and reading doctor’s reports, and knowledge of the client. I have NONE of those, so it is not fair to you for me to even hazard any kind of guess as to what advice your attorney is giving you. This is especially true since I have no idea of how you and your witnesses and your doctors did in their depositions. That is a critical factor in what the attorney will decide regarding settling versus going ahead with the trial.
Having said all of that, do not give up on me as I am going to put in well over an hour to trying to help you since yours is a serious case, and there is a small possibility that your attorney fees might be out of line.
So let’s talk about a few things right off the bat, so you can get back to me with a follow-up on these eight points. Once you give me this information, I will provide additional information to help you to decide. This is a serious case, so take the time to answer each of these by number in order asked.
#1. What is your proven wage loss to date and in the future?
#2. What has your attorney done to date for the case?
#3. What are the policy limits for the tortfeasor and for your own UIM?
#4. Was he driving a company vehicle, or has your attorney taken any discovery action to determine if he had been at a company after work drinking fest? Did he say or demonstrate any socially undesirable behavior after the accident? How drunk was he?
#5. Did your attorney make provision for reduced fees in the event of a low policy limits?
#6. Who has paid your medical bills and in what proportions—i.e. $25K from PIP & $2K from your medical or what? The reason being: it will impact BOTH attorney fees and subrogation.
#7. What is your prognosis for all of your injuries? What is the impact of the partial disability on your income and on your enjoyment of life (rock climbing)?
#8. Did your attorney explain that she is taking the fees on the GROSS amount recovered instead of the NET? That is, she is including your medical bills in the recovery, whereas if your PIP paid the bills, they will automatically get repaid via the Intercompany Arbitration Agreement. Since Washington is an enlightened blue state that supports the rights of its citizens rather than the interests of the insurance industry, you have BOTH a good argument to waive some of the subrogation AND a right to an attorney’s fee discount in subrogation because of a case in your state Supreme Court entitled State Farm vs. Mahler.
I am going to make some comments about these topics so you can see why I need for you to write back to me. Here are a few thoughts as to why I want this information in order to help you.
#1. What is your proven wage loss to date and in the future?
COMMENT: This will help me to get a handle on damages since wage loss should boost up the amount. You will have to tell me how you will prove continued bookings for your work and how long you had been in business and what do your income tax returns show for income from your work the past two years prior to the accident?
#2. What has your attorney done to date for the case?
COMMENT: This will help me to figure out what kind of job she has done and if she is really pushing your claim to get full value or whether she is just now getting around to trying to settle it so she can get her money without having to go through much work.
#3. What are the policy limits for the tortfeasor and for your own UIM?
COMMENT: This will help me to know whether you even needed an attorney to begin with. What if the driver only has $50,000 in policy limits? Why do you need an attorney to get that? We teach our members at www.settlementcentral.com insurance claim settlement tips for claims like that all the time. Why would you pay one-third to do something a blind dog with a note in its mouth could do for free?
#4. Was he driving a company vehicle, or has your attorney taken any discovery action to determine if he had been at a company after work drinking fest? Did he say or demonstrate any socially undesirable behavior after the accident? How drunk was he?
COMMENT: One of the factors that increases the value of a personal injury insurance claim is socially undesirable behavior, such as being drunk and injuring someone for life. No, the insurance computer formulae do not have it in their calculations, but experienced adjusters and attorneys know full well that the jury will want to punish someone like this guy.
#5. Did your attorney make provision for reduced fees in the event of a low policy limits?
COMMENT: The Washington State Bar Association is your friend in this respect since a one-third fee would NOT BE EARNED on a low policy limits settlement. The Bar Association has rules, adopted by the Washington State Supreme Court, that govern how attorneys can charge for fees. These are referred to as Rules of Professional Conduct, and the one governing fees is RPC 1.5 (a). It provides in pertinent part that:
“The factors to be considered in determining the reasonableness of a fee include the following:
(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;
(4) the amount involved and the results obtained;
(9) the terms of the fee agreement between the lawyer and the client, including whether the fee agreement or confirming writing demonstrates that the client had received a reasonable and fair disclosure of material elements of the fee agreement and of the lawyer's billing practices.”
Hence, if your attorney tries to tell you that you have to pay her one-third to settle a claim with low policy limits, your Washington State Bar Association protects you since there was no real skill involved, no difficulty, and the results obtained were to be expected even without her efforts. You have a number of remedies available if that were to be the case, among these are both a fee arbitration and fee mediation forums provided through the Washington State Bar Association.
#6. Who has paid your medical bills and in what proportions—i.e. $25K from PIP & $2K from your medical or what? The reason being: it will impact BOTH attorney fees and subrogation.
COMMENT: This will give me information about both subrogation and your attorney’s calculation to take one-third on recovery of subrogated amounts. Here is an excellent primer on insurance subrogation: http://www.settlementcentral.com/page0459.htm personal injury claim insurance repayment. One thing to take from this topic is again to give thanks that you in Washington State have voted with the trial lawyers and against the insurance industry, so that you have true defenses to subrogation. And since subrogation claims are made by your own company, the state insurance commissioner Mike Kreidler has adopted rules detailing fair treatment by your own company. There is a wealth of good information on Mike Kreidler’s helpful website: http://www.insurance.wa.gov/
#7. What is your prognosis for all of your injuries? What is the impact of the partial disability on your income and on your enjoyment of life (rock climbing)?
COMMENT: This will tell me more for valuing the general damages. Your attorney has valued your general damages at around $80K, assuming you lost only $13K in provable wage loss: $120K, less $27K = $93K, less $13K = $80K.
But with two surgeries and a full 14% lifetime disability, is that all the claim is worth? Did you have to undergo general anesthesia for those two surgeries? What about your soft tissue injuries?
What about feeling a general ache or pain in your wrist when the weather changes? Actually it is a change in the barometric pressure that gets the blame here—but I have handled a lot of broken bone cases where the victim did not know why he ached until I told him to research it and keep track of it with the weather and tell his doctor. Many doctors pooh-pooh it, but with an Internet research, you could support that as a medical opinion.
What about the strength of your wrist? Rock climbing stopped? What about repetitive movements of the wrist or bending the wrist, as will be required in playing guitar?
#8. Did your attorney explain that she is taking the fees on the GROSS amount recovered instead of the NET? That is, she is including your medical bills in the recovery.
COMMENT: In most states, where you have an obvious liability case and undisputed medical costs, I would fight the attorney to avoid her taking any fees for recovering your medical costs. Two reasons for this. First, your auto insurance company will automatically get repaid via the Intercompany Arbitration Agreement. Second, you do not even get to keep the money, since it goes to your insurer. So she is taking $9,000 out of your pocket in most states.
But since Washington is an enlightened blue state that supports the rights of its citizens rather than the interests of the insurance industry, you have some special circumstances that may justify her to retain that $9,000 of your money. Just read the following for a general understanding at first. If you do decide to follow through with this attorney, I am going to suggest that you hire a second opinion. You may not have $500 to have another attorney read over your file, but he will take it on a lien against your insurance claim settlement. Is it worth it? Well, in just one area that you did not even think about here, we are talking about saving some part of the $9,000 she is trying to charge you. So, yes, think in terms of having a second opinion on what fees should be paid for what services.
One of the first things to consider is that in Washington State, if your PIP is going to be repaid, there is a likelihood that you get to deduct some of the “cost” of going after the PIP subrogation and recovering it for them. Your attorney will have a formula for the amount that you get to retain out of the subrogation, based upon a state Supreme Court entitled State Farm vs. Mahler. My guess is that it might be around 27% or so. Hence, if your PIP paid in your PIP limits of, say, $20K, then you get to retain 27% of that, or $5,400. Stay with me on this, Shane—just recall that you paid your attorney one-third, or $6,667 to recover that same $20K. Hence, you lose $1,267 on just that little deal.
Another wrinkle is that since the voters in Washington support legislators who protect consumers from the rapacious insurance industry, you also have some pretty good defenses to subrogation if this were to be a policy limits case. In that instance, your attorney could earn her one-third of the PIP if she were to stave off the subrogation efforts.
BUT, TAKE CARE TO NOTE THE LOW POLICY LIMITS CLAIM wherein you could write the letter yourself and a squirrel could deliver it and your company would waive its subrogation rights. In that case, you would have to think about denying any payment to your attorney on the recovery of the medical costs.
OK, Shane, if you have followed along, you can then also digest this defense to your attorney’s professional services agreement. Once again, I am making reference to your own Washington State Bar Association Rule RPC 1.5, which provides as follows regarding the requirement to explain in writing how contingency fees will be calculated:
“RPC 1.5 (c) (2) A contingent fee agreement shall state the method by which the fee is to be determined, including the percentage or percentages that shall accrue to the lawyer in the event of settlement, trial or appeal; litigation and other expenses to be deducted from the recovery; and whether such expenses are to be deducted before or after the contingent fee is calculated. The agreement must clearly notify the client of any expenses for which the client will be liable, whether or not the client is the prevailing party;”
That took a lot of time to put together for you, Shane, but it was worth if it you can learn how to save a lot of money. I trust that my efforts here have been of value to you, and hence I respectfully request that you find the FEEDBACK FORUM on this website and leave some feedback for me.
Best wishes,
Dr. Settlement, J.D. (Juris Doctor)
www.settlementcentral.com
