Posts Tagged ‘apportionment’

Child’s Personal Injury Settlement Includes Claim by Parents

DECEMBER 30, 2013 VOLUME 20 NUMBER 49

Helene Jackson (not her real name) was a minor when she underwent heart surgery, and the outcome was not positive. She was seriously injured, and her parents Stephen and Jacqueline (also not their real names) ended up suing the doctors and the manufacturers of medical devices used in the surgery. The parents alleged that the devices failed, and that Helene’s injury was a result of that failure.

Stephen and Jacqueline also alleged that they were injured — they lost the right of “consortium.” That common-law concept recognizes that profound injuries to a family member can affect not only the person directly injured, but also the spouse, children and parents, who lose not only companionship and filial relationships but also the ability to rely on financial support from the injured person. In the case of parents that financial component can be both speculative and delayed, but nonetheless many states (including Louisiana, where Helene and her family lived) recognize that the “loss of consortium” claim has some value, as well.

Eventually the manufacturers of the device offered a settlement, and the plaintiffs agreed that the total amount was acceptable. That meant that there would be $8.25 million to pay past medical providers, attorneys fees, and legal costs. After that, the relative values of Helene’s, Stephen’s and Jacqueline’s claims would have to be determined. By this time Stephen and Jacqueline had gotten divorced, and they had separate attorneys representing them (individually and, in each case, in their roles as parent of Helene).

As the outlines of the settlement became clearer to Jacqueline, she apparently had problems with two things. First, she insisted that no one had told her that someone outside the family would have to be appointed to handle Helene’s money — and that there would be administrative costs associated with that arrangement. Second, she did not agree with the trial judge’s allocation of $65,000 of the total settlement to her as her recovery for the loss of consortium claim. She refused to sign the settlement documents, and final resolution of the dispute was delayed for almost eight months — during which time the settlement funds had to be held in a non-interest-bearing account.

Eventually the settlement was approved and the funds distributed. Jacqueline then sued the two law firms that had represented her and her daughter’s interests. She alleged that because no one had told her about the need for a conservatorship or trust arrangement for her daughter, and because no calculation of her share of the settlement had been made, she and her daughter lost interest on the settlement money and incurred substantial additional legal fees to resolve their concerns.

The law firms both moved for summary judgment — that is, for a determination that Jacqueline’s claim had no merit. Hearing on that motion was held before the judge managing the civil proceeding, and he agreed with the lawyers. After Jacqueline’s lawsuit was dismissed, she appealed the ruling. By this time a separate person had been named to represent Helene’s interest in the settlement and apportionment issues, and he joined in Jacqueline’s appeal.

Before the Louisiana Court of Appeal, Jacqueline raised several other issues. By not telling her about the need for a professional manager of Helene’s settlement, she argued, the law firms had violated lawyers’ ethical rules (the Rules of Professional Conduct, which in Louisiana are very similar to those adopted in almost every state). One law firm had consistently told her that she would be entitled to recover her lost wages (she had to quit work to take care of Helene), and the trial judge had ruled that she should not be allowed to recover that amount. The trial judge had applied an unacceptable method of apportioning her share of the damages, she argued. And, not least importantly, she pointed to the testimony of her expert witness — a law professor at Loyola University New Orleans College of Law — who had opined that her lawyers’ actions fell below the standard of care in the community.

After considering all of that information and Jacqueline’s arguments, the Court of Appeals agreed. They reversed the dismissal of the legal malpractice actions, and sent the entire case back to the trial judge for further consideration. They also sent back the allocation calculation, directing the trial judge to consider Jacqueline’s claims for lost wages and medical expenses incurred (in addition to her loss of consortium claim). Jones v. ABC Insurance Co., December 12, 2013.

At first glance it might seem that this appellate case offers little insight that would be useful in other large personal injury/malpractice/products liability settlements. But it does offer an opportunity to make a few observations about the process, with an eye toward helping plaintiffs (and family members) understand the process AND helping their lawyers think about how to handle litigation.

First, it is important to remember that the lawyers representing Helene, Jacqueline and Stephen had an inherent conflict of interest. Yes, all three plaintiffs shared the common goal of maximizing the settlement amount. But once a lump-sum settlement has been proposed, and the parties agree that it is in an acceptable range, the conflict becomes clear: every dollar assigned to Jacqueline, or Stephen, would be subtracted from Helene’s share. Because Helene is a child, the people usually authorized to consider her interests would be (you saw this coming) Jacqueline and/or Stephen. Parents involved in litigation on behalf of their children need to understand this delicacy from the earliest possible moment, and lawyers should take care to avoid making the conflict any worse.

Second (and perhaps more importantly), clients need to understand that it is very seldom possible for family members to manage the proceeds from a personal injury claim on behalf of their injured minor child — or, for that matter, claims on behalf of their incapacitated parents, spouses or other relatives. The courts will be involved in oversight, and there will be strict accounting requirements, and there will usually be professional management. In some cases that cost can be avoided by putting sharp restrictions on the kinds of investments and the access to funds, but that kind of arrangement is simply not going to work on a multi-million dollar settlement.

It is tempting for personal injury lawyers to tell their clients that everything will be alright when the settlement is completed, and that they will be able to buy a new house, a new vehicle, a therapy pool, or whatever they want. At a time when it is important to keep the client focused on the negotiation process, it can be difficult to introduce an unwelcome concern. But it ultimately does a disservice to the client — and to the lawyer-client relationship — to gloss over the realities concerning management of settlement funds.

If nothing else, perhaps we can accomplish this much here: if parents involved in litigation search for “settlement of child’s personal injury claim” or similar terms, maybe they will reach this page. Then they can ask their lawyers for more clarification about how the settlement funds will be managed, and how their respective claims will be apportioned. It is important information that clients should have, even (perhaps especially) if it makes them unhappy.

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