4 Signs Your Lien is At Risk

December 19, 2018
7min read

Once your lien is confirmed with the plaintiff's attorney, you should be able to rest assured that you will get paid and not have to think about it again -- unless one or more of these four things occur:

1. Non-responsive attorney
2. Change of representation
3. Client passes away
4. Client files for bankruptcy

1. Non-responsive Attorney

If you've followed a routine check-in procedure, called or emailed periodically, and have not heard back from the law firm after a few routine check-ins, your lien should be considered "at-risk." To try to save your lien, here are three things you can do:

a) Send 3 Follow-Up Emails

You don’t need to write an elaborate email. In fact, the simpler the better. After all, do you really need the intimate details of the case or do you just care that it’s still open and you haven’t been forgotten? If the latter, just ask this:

Hi, Kim, I am just confirming this case is still in litigation. A simple “yes” is all I need to know to not bother you again on this for a few more months. Thanks.

Remember to include both the attorney and paralegal or case manager so that you have two points of contact.

b) Make a Call

In most cases, you don’t need to speak with the attorney directly; speaking to the paralegal or case manager should suffice. Regardless, make sure to record the email address of whomever you spoke to.

If the call goes well (i.e. you get the information you need), be sure to email the person you talked to confirm the substance of the call:

Hi Paralegal Jane, thanks for taking the time to connect today on the phone and informing me that Plaintiff Joe is still receiving treatment and that the demand has not yet been filed. Can you confirm yes/no that this information is accurate?  

c) Send a certified letter by mail
This is your last-ditch attempt. In your mailer, be sure to include copies of the agreements signed by the plaintiff and the attorney, as well as a letter asking for an immediate phone call regarding the status of the case.  

2. Change of Representation

While this can take three different forms, each one is indicative of a problematic lien:
• Plaintiff switches attorneys: Make sure that you're on file with the new attorney as well, otherwise your lien won't follow through. Follow up with the client until new counsel is retained.
• Plaintiff decides to self-represent or is dropped by their attorney: Try to get your lien on file with the defendant's insurance. Once a settlement has been reached, the chances of getting money from the plaintiff is little to none, so be sure to alert the insurer that you need to be paid first.
• Plaintiff drops the case outright: Cut your losses, write it off, and ensure no more time is spent trying to follow-up with the plaintiff or attorney.

3. Plaintiff Passes Away

In the unfortunate event that the plaintiff has passed away, the trustee of the plaintiff's estate has the option to keep the attorney on the case and continue pursuing the claim.

The best bet in this situation is to try to get in touch with your contact at the law firm to determine whether or not the claim is continuing.  If it is, you’re in luck but there’s work left to do.

Sometimes, the plaintiff’s estate will challenge liens on the case, arguing they should be discharged. They may also insist that all of the lawsuit proceeds go to the estate and the estate will take on the role of escrow agent and distribute the proceeds.

To be safe, some lienholders file a notice with the estate court (rules vary by jurisdiction, so get a local lawyer) so that their liens have to be dealt with before the estate can officially close and distribute its proceeds. This can be a time consuming and expensive process, so it’s usually only advisable for lienholders with materially sized liens.

4. Plaintiff files for Bankruptcy

If the plaintiff files for bankruptcy after you obtained a lien from a personal injury case, your lien is technically protected since it occurred “pre-bankruptcy” and thus should exist outside of a bankruptcy estate.  

In reality, though, bankruptcy judges have wide latitude and often find it easier to include the lawsuit as part of the case and treat lienholders are creditors.

Lienholders can contact the trustee,  plaintiff's personal injury counsel, and/or bankruptcy counsel to try and work out a resolution.

If no agreement can be reached, you could become a secured creditor and work to collect on bankruptcy proceeds like everyone else. It’s relatively inexpensive to simply file a Proof of Claim.

For high-value cases, a lienholder can retain an attorney to go before the bankruptcy court, argue that its lien should not be considered as part of the bankruptcy estate and should be paid out of the settlement proceeds of the personal injury case. Not only is this a good argument for lienholders personally, it makes for good case law for the whole industry.

Photo by Wokandapix via pixabay

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The Mighty Team

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