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Doing the Right Thing: An Easy Call, Sort Of

Here is a test for lawyers: A medical malpractice case is one of clear liability. Before filing suit, you get a decent offer to settle, although it is likely well below what you would get if the case were litigated. There is also a huge medical bill lien, but the lien holder is willing to strike a very favorable compromise if the case can be resolved now. With the very favorable lien resolution, if you settle now, the net to the clients is likely to be about the same as if you settled after filing suit. The reason for this is that the lien holder is unlikely to give the sort of discount it is offering once the case is litigated. However, if you filed suit and settled later for a larger amount, you will get a much larger fee, almost double. Even with the bigger lien, the clients would likely be no worse off - one could argue they might even be somewhat better off - although it would take an extra six to nine months for them to see the money. Is it okay to recommend to the client that they decline the settlement and file suit?

The answer should be clear, at least technically. A lawyer should always do what is right by the client. If, in fact, the net recovery for the clients now is likely to be roughly in the range of one later, then there is probably no reason to incur the added delay, as well as the risk that the situation could change unfavorably down the road. But, as is so often the case, the details can make the situation murkier.

Of course, this hypothetical arises from an actual situation. We have a case where the VA missed a cancer diagnosis and the veteran died. The widow had a significant income loss from her husband’s premature death. The non-economic losses were capped so the amount the children could receive was limited. The VA made an offer of $500,000. While we felt it was a bit low, we had incurred almost no costs and with only a 20% fee, the clients were probably as well off as they would have been if we’d settled the case for 30-50% more in litigation. However, at the last minute we found there was a medical lien that was close to $800,000. While we knew there was likely to be a small lien, we were shocked by the actual amount. Unless the lien holder was willing to waive the lien almost entirely or the VA would raise its offer substantially, it looked like we would have no realistic option except to file suit.

The prospect of litigation was not an entirely unappealing one for us. If we filed suit, it was entirely probable that the U.S. Attorney’s Office handling the case would offer us something close to their office authority ($1,000,000) early in the case. Assuming we could get a reasonable resolution of the lien – albeit for more than was on the table now - the clients’ net recovery would likely be just as good or better than what we had thought it would be, even after accounting for the higher fee (25%) and increased costs that would be involved. An even better consequence of having to file suit was that we would likely get a fee that was double what we were expecting. Instead of a $100,000 fee, we would probably get something closer to $250,000.

Then we got two surprises – both positive ones. The VA was willing to raise its offer to $600,000 and the lien holder agree to accept less than 10% of the total lien. Suddenly, the equation was much different. We could settle the case quite favorably right now. The clients would be better off than if we’d done the deal we originally anticipated. But our fee would probably be half of what we were expecting from litigation.

I would be dishonest if I said that I was not tempted to advise filing suit. I could have justified doing so with a straight face. It is a lawyer judgment call, like hundreds of others I have made over the years. There were pluses and minuses on both ends of the decision. It was certainly possible that the lien holder might have remained very reasonable even after suit was filed. If that happened, the client could potentially be better off. But it was also possible that the lien holder could take a harder line. There was also the issue of delay. And as any lawyer knows, the litigation process often has surprises - and not all of them are good ones. In the end, I had to be honest with myself: I just didn’t have high enough confidence to tell these clients’ that their net recoveries were likely to be significantly larger if we filed suit. While it was something of a close call, my judgment was that the delay and risk were simply not justified. We advised the clients to take the offer.

We try to do the right thing. However, sometimes it is not entirely clear cut what that is. Still, we have to constantly remind ourselves that our interests are secondary to the interests of the client. In making that analysis, I try to put myself in the shoes of the client. What would I want my lawyer to do if he or she were representing me? It is a principle no lawyer should ever forget.


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