Protect Your Investments with Lien Confirmation

The Mighty Team

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The Mighty Team

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October 3, 2023

Published On

October 3, 2023

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Originally Published July 1, 2016

When you fund a plaintiff and put a lien on a case, you've set in motion one of the most important functions of your legal funding company: case tracking. Through this process, which is sometimes called servicing or collections, a funding company keeps tabs on their investments between the time of funding and collecting (whether a return, partial loss, or full loss). The goal of case tracking is to ensure that your investments are honored fully and in a timely manner.

In this post, you will learn why confirming your liens is the first, and potentially most crucial, step in protecting your investments and maximizing your returns, as well as actionable tips on how to do it effectively.

Why You Need to Confirm Your Liens

  1. Personal injury attorneys tend to be unorganized: Many attorneys still rely on paper filing, outdated computer systems, or, most harrowing of all, their memory. An attorney once told me that he became so aggravated during a negotiation with an insurance company, he flung his client's physical file across the room and "couldn't tell you what fell out!" Yikes. In addition, many firms are overworked and buried in physical and digital paperwork, demanding clients, and hundreds of shifting priorities. It's easy for a grain of sand to slip through the cracks.
  2. Many plaintiffs get contracts from multiple funding companies and lienholders: Some attorneys claim that despite signing the funding agreement, they didn't know the particular transaction in question actually went through to completion. Because they didn't receive a fully executed version of the funding contract, they can plausibly claim that the client may have changed their mind or decided to go with a different company. It's an easy out for an attorney to say: "Well, how was I supposed to know the funding actually went through?"

Now that you understand why you should take precautions to confirm your lien, here's how to do it.

Require your Attorneys to Sign Off

For a number of reasons, a properly drafted contract will require that attorneys sign and acknowledge the plaintiff financing agreement. Many state statutes, such as the Indiana Code, mandate that legal funding contracts include language covering these concepts (and often many others), and you should include it regardless. This acknowledgement will explicitly state that the attorney:

  1. Is aware of the lien
  2. Will pay you the proceeds you're due before the plaintiff is paid

Here's a template:

I, the undersigned [Plaintiff's attorney], will provide prompt written notice to [Funding Company] of receipt of any money recovery and I will not disburse any money whatsoever to [Plaintiff] without first paying [Funding Company] in full.

Get your Lien Confirmed

You might assume that having your attorneys sign an acknowledgement is good enough to protect your interests, but there is no reason to take the risk- regardless of the strength of your relationship with the attorney, 

After an attorney signs your funding agreement, you should still confirm your lien. The goal is to help your attorneys organize themselves and create a foolproof process to ensure that no lien gets left behind.

Here are three easy ways to confirm your lien, which should be completed within a few days or weeks of the funding.

Confirm by Phone

Make sure to note who you spoke with at the firm for your records. 

Here is a template your servicing team can use:

Can you please confirm that you have this lien on [Plaintiff's] file? Great, thank you. One last thing, may I get your name?

Once you get a confirmation by phone, make sure to create a paper trail by following up with a quick email that lays out who you spoke and what was said.

Confirm by Email

Send the appropriate case manager, paralegal, or attorney a digital version of the fully-executed agreement and ask them to acknowledge both receipt and that the agreement is, or will be, properly filed with the client's documents.

Please reply to this email confirming that you have our lien on file

Your response can be as simple as, "Confirming that we have [Your Funding Company's] lien for [Plaintiff Name] on file."

Confirm by Certified Mail

Sending the fully-executed agreement to the law firm via certified mail provides you with a receipt to prove your mailing, and upon request, electronic verification that the mailing was delivered. Make sure to include instructions for the law firm to file the fully-executed agreement appropriately and to confirm receipt via email.

The benefit of sending the entire contract by certified mail is that the attorney or firm can easily slip the contract in the client's file without printing documents or exerting much effort. This method is savvy for larger funding amounts since the administrative and postal costs of sending the documents far outweigh the costs of potential collection issues. 

Extra Credit

To truly master lien confirmation, try to make it impossible for your law firms to miss a lien by sending them 

You could also send the contract to administrative staff or paralegals to ensure proper filing. Attorneys are busy, their attention is scattered, and they often rely on their support staff to keep track of these "minor details." 

Become a Protector of the Lien

Confirming that your lien is on file with your law firms takes minimal effort and provides you a huge advantage in recovering your investments. If mitigating your losses is important to you (and it should be!), then be sure to utilize these tips to combat the disorganized tendencies of the standard personal injury law practice.

Do you have any other methods or best practices you use to protect your funding liens? Let us know in the comments.

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