That is, private invididuals that file lawsuits for “pain and suffering” type things. For instance, people who win multimillion dollar settlements against tobacco companies, people who win against McDonalds for spilling coffee on themselves, people who sue for asbestos inhalation, etc.
I’m sure that a portion (even a substantial portion) goes to paying medical costs other lifestyle changes, but especially with the amount of what appear to be frivilous asbestos caes (for example), I get the impression that compensation for “pain and suffering” means a new boat (or increasing their cigarette habit).
Are there any statistics on this? Are people generally spending their settlements on “selfish” things or are they setting up trust funds for their kids, donating to charity, creating foundations to prevent things that happened to them from happening again?
Certainly, it’s their money to do with as they please, but I’m just curious.
First, they will pay medical bills, delinquent bills (many of them have lost work because of their injuries), and lawyer bills (depending on the jurisdiction this is 1/3-1/2 of their recovery after court costs and costs advanced by the lawyers).
Second, if it is a settlement, and it is big, it is probably a structured settlement. A structured settlement is usually an annuity that is purchased from an insurance company. Which makes it more difficult to make the luxury purchases (though I’m sure you have heard the advertisements from companyies that buy structured settlements from people who want to buy boats or houses).
Third, I don’t know of any statistics on this topic. I know that some of my clients bought better houses, cars, and the like, but I don’t recall any of them making serious luxury purchases.
In my case, paying back debts and buying stuff we had gone without for years due to my wife not earning any income - luxuries like a car built the same decade and a TV bigger than a lunchbox.
If you don’t mind me asking, how much did you have left after you court costs and lawyer fees? You can give a percentage or rough numbers if you’d rather.
I had a friend who had a steel girder fall on his back. The settlement was variously noted at $900,000 or $950,000. Here’s the breakdown.
His lawyer got 25% ($220,000)
His ex-wife (they were married at the time of the accident) got a lump sum, apparently about $200,000.
That left roughly a half-million dollars. One thing to understand is that money has to pay for injury-related medical care for the rest of his life. (He’s in his 40s now) He’s on chronic pain therapy, one of the operations he underwent to fuse his spine left him with a permanent staph infection, and while he can walk upright for short distances, he can’t sit at a desk for any length of time, nor lift more than 20 pounds.
They moved to Florida where the weather is warm, which helps him do his therapy, and they are hardly living in luxury.
I worked at in a personal injury lawyer’s office a few years ago. Some claims we pursued were of questionable merit (to put it nicely), and some were legit. One of the legit ones belonged to a guy who had been severely injured in an auto accident with a negligent trucking company. We got him a big, lump-sum payoff. He was also a genuinely nice guy, and during the course of the litigation, he became a favorite around the office. The man had been a laborer all of his life and had no concept of what to do with a large amount of money. He wanted to go to the Superbowl. The lawyer told the guy “If you play your cards right, you won’t have to work for the rest of your life,” (which was good because he had been messed up pretty bad in the accident and his health, while currently acceptable, was fragile) and prepared a bundle of documents on various investments, annuities, etc. This was a highly unusual step for the lawyer, who was often noted for his cynicism (to put it nicely). The case was wrapped up, the checks disbursed, medical bills payed, and client sent away with information and a shitload of money. A couple of days later, the lawyer went to lunch at a local bar/restaurant. He found parts of the bundle of investment documents soaked in pee on the floor by the toilet.
On TV it always seems like the lawyer gets a separate check for fees from the defendant at the time of settlement, presumably so that the lawyer doesn’t then have to go after the client for it. Is TV telling the truth?
If it is a lump sum settlement, the check is usually made out to both of them. the lawyer then has the client sign the check, deposits the check, and writes a the client a check for the client’s share of the settlement.
If the settlement is structured, the lawyer might well get a separate check. If not, most structured settlements include a lump sum, up front portion. That check will be made out to both, and most of it will go to the lawyer because the fees will be based on the total settlement.
Ugh. I appreciate the link, but that was clear as mud. As it happens, I’m needing to figure this out fairly soon. About two years ago, my wife was rear-ended by a drunk driver with no insurance. Our insurance company covered the medical bills and lost wages, but was reluctant to offer any kind of compensation above and beyond. We filed suit, and recently settled for a fairly modest amount, which is fine. I wasn’t looking to get rich here. I just need to figure out whether it’s taxable or not. Oddly, our attorney doesn’t seem to know.
I had my ankle broken – 2 surgeries, metal plate, etc. – by a company several years ago. Offered to not sue if they took care of me, they agreed by offering me $1,000 because I couldn’t party that weekend. That’s when I told them to **** off and I got a lawyer.
Lawyer took a big chunk of settlement (but got me MUCH more than I would on my own). I only missed a week of work, so that portion was taxable, but as my lawyer said, I needed to work that out with my accountant. I had health insurance, but had to pay back part of the expenses from the rest of the settlement. With the remainder, I splurged a tiny bit (got a great guitar I had wanted for years), paid off bills with some, and used the vast majority for a down payment for a house.
It certainly made a big difference in my life financially, but I’d go back and avoid the injury in a heartbeat if I could do that instead. There are easier ways to make money.
Friend of mine won a settlement against a surgeon who left a sponge inside her during surgery. The surgeon also hushed up a nurse who tried to tell him she was a sponge short (in front of the patient’s husband and me! How dumb could he be?) and ignored my friend’s extreme discomfort and abdominal abcess for 5 weeks - so I think it was legitimate malpractice, and I’m NOT a malpractice lawsuit fan. Anyway.
She was in her last year of nursing school at the time of the accident, so had to pay to take the year over, as she couldn’t attend finals or classes. There were oodles of medical bills beyond what her insurance covered. So the settlement went to pay the lawyers, medical bills and student loans first, then a chunk was put in an educational savings account for her son, and the rest used as a down payment on a house. They have a tiny nest egg left over, but not much. She and her husband both still need to work. (She’s a RN now, thank goodness, and great at her job!)
I don’t know if this was clear in my OP, but I didn’t mean to imply that all people who were involved in these sorts of suits were grabbing money not due them and running off to Mexico.
Are these “winnings” (poor choice of words, I know) limited in how they can be spent? I figure that the costs are well documented, but in some of the more obviuously frivolous cases…
There are two ways to collect in this case. 1) Settle out of court. 2) Sue in court.
When settling, your lawyer and the insurance company go back and forth. Lawyer lists expenses and comes up with a figure to cover that, lawyer’s cost, and pain and suffering. Insurance company offers a low ball figure. Over time, the figure is haggled over til both parties agree.
In my case, they sent my lawyer a check. He took out his expenses, sent me an invoice, and mailed me a certified check for the rest.
If you can’t come to an agreement, then you can take it to court in which case a judge or jury will give you the final cash amount.
Once it’s done, it’s your cash. How can anyone tell you what to spend it on? If you don’t pay your medical costs, they may sue you, but they can’t FORCE you to write them a check. Like your employer can’t tell you how to spend your paycheck. Same thing.
Probably 90% which was mostly for lost income. At that time Australian lawyers could not work on contingency so in everyone’s interest costs were kept down. We would not have persued tha case if the prospective costs were too high and we kept a close eye on what we were being charged. We settled out of court which saved us a huge amount of money.