You resolve a case by settlement or judgment and the check is sent to your office. The check has been deposited in your trust account, has cleared the bank, and the proceeds are now ready for distribution. There are several health care providers who gave care to your client concerning the injuries she received in the wreck. Can you (as a lawyer) be held liable if you don’t pay their bills out of the settlement proceeds?
The Wisconsin Supreme Court recently answered that question, with a slight twist on the facts. In a 20-page opinion brought by a chiropractor against an attorney, the WSC held that "We determine that Dr. Yorgan may not hold Attorney Durkin liable for payment because Durkin did not sign the agreement or otherwise agree to be liable. Additionally, we determine that imposing liability on Durkin is not dictated by public policy. Finally, we determine that Yorgan is not entitled to an equitable lien enforceable against Attorney Durkin." (Paragraph 2).
Note the additional facts I left out of the hypothetical in the first paragraph: the attorney did not sign the agreement between the chiropractor and the patient providing that the patient was to direct her attorney to pay the chiropractor out of the settlement proceeds and purporting to give a lien against the recovery. However, the attorney received a copy of the document at the time he got medical records from the chiropractor. Moreover, the attorney had a conversation with the chiropractor after the claim was settled about reducing the bill.
One justice concurred, saying that the attorney should have the obligation to pay the provider when the attorney has actual notice of the agreement. (Paragraphs 43-52).
Two justices filed a nineteen-page dissent. The author concluded as follows: "Because the need for medical care arose out of the same accident as did the settlement proceeds and there is no evidence in the record that Hernandez provided Durkin any instructions about the disbursement of the settlement proceeds to Yorgan that were contrary to the assignment she executed in favor of Yorgan, I conclude that Hernandez validly assigned to Yorgan settlement proceeds from her personal injury claim, up to the amount of the charges for the chiropractic treatments Yorgan provided to Hernandez. I also conclude that Hernandez granted Yorgan a lien to secure payment of the debt for which the assignment was made, and that the lien can be enforced against the settlement proceeds because Yorgan’s lien existed before Durkin had any right to retain a portion of the proceeds and Durkin had knowledge of both the assignment and Yorgan’s lien. Accordingly, I would permit Yorgan to recover from Durkin to the extent of the settlement proceeds Durkin received or the amount due to Yorgan for the chiropractic care he provided to Hernandez, whichever is smaller." (Paragraph 90).
Read the opinion here. All three opinions are worth a read – they are thoughtful and do a great job of collecting law from across the country in support of their respective views.
One last point. I love the way the Wisconsin Supreme Court and several other courts in the country put paragraph numbers in their opinions. I guess the purpose of this is to make it easier to cite (and find) certain language later, and it works.