It is common knowledge that a case can bring in many different types of fees – attorney fees being a significant part of those. Typically, attorney fees account for one-third of the settlement amount. In most states, including Georgia, there is a law called the common fund doctrine for personal injury cases.
The common fund doctrine protects victims from facing the full force of those attorney fees without the help of their insurance company. It assigns a party’s attorney, usually on the injured party’s part, to recover a “common fund” from which both the lawyer and the insurer can collect their fees.
How Does the Common Fund Doctrine Help Protect Me?
Also known as the equitable-fund doctrine, this law was put in place to help prevent the injured party from paying the insurance company when they did nothing to help the victim out in their Case. The insurer cannot submit a subrogation claim unless they help to cover some of the costs of the attorney fees.
The attorney is the one that puts in the effort to win the case, which essentially is what brings in the benefits to the insurance company; therefore, the insurance company must also help pay for some of the fees. Attorney fees are costly; the victim should not have to bear the full cost of these while also paying the insurance company.
The lawyer’s priority is ensuring that their clients and interests are protected, so this is achieved by having insurers pay under this doctrine. This doctrine is also beneficial to the injured party’s attorney. They can think of it as another incentive to put up a good fight and win the case. In doing so, they can have the peace of mind that they will be paid their fair share without putting their client in a difficult situation.
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What Does Subrogation Have to Do with the Common Fund Doctrine?
Subrogation is the right of the victim’s insurance company to stand in for them and recover the money for the damages that occurred in the accident. Suppose the liable party has already paid or will pay the injured party their part of the settlement. In that case, the insurance company can intervene to retrieve those funds to cover the victim’s medical bills.
Say an accident occurred due to negligence, and the victim brings a lawsuit. They end up winning $10,000 to cover their medical bills. Because of subrogation, their insurance company now wants to collect the entire $10,000 from them, but they did absolutely nothing to help the victim out in their case, nor did they use their attorney in the settlement.
The common fund doctrine requires the insurance company to help pay some of the attorney fees to collect their subrogation portion.
What if the Insurance Company Did Participate in the Case?
The common fund doctrine typically applies when the insurance company and its lawyer did not provide any help towards the case at all. So, when the opposite occurs, and the insurer is active in the trial, this doctrine may not apply.
Having said this, it could go a couple of ways. As an example, assume an individual was in an accident and sustained an injury. That person’s insurance company and their attorney went straight to work on the case to try and help resolve it quickly.
Alongside the individual’s attorney, they both put in a lot of effort and conducted equal work in the litigation. This, in turn, leads to further costs for both sides. In this situation where the insurance company played a very active role, the common fund doctrine will not go against them.
What if They Didn’t?
However, the insurance company isn’t always fully active in winning the injured party’s case. Let’s say another individual gets injured in an accident, and their insurance company hires an attorney to assist. The injured party’s attorney is the one that does the majority of the work, and the insurer’s attorney shows up to a few hearings, but that’s about it.
That insurer later argued that they did participate in the trial and should not have to pay any attorney fees. The court may then decide that the common fund doctrine applies but may cancel out some of the costs from the insurer’s subrogation compensation.
When Does the Common Fund Doctrine Apply?
Certain requirements must be met for the common fund doctrine to apply. First, there need to be mutual rights and interests in the situation. In other words, to recover from the common fund doctrine, the plaintiff and defendant parties must be situated with reciprocal interests.
The doctrine will not go through in a few instances:
- The injured party did not win the Case
- The same lawyers in the same litigation represent other interested parties
- The injured winning party did not sustain any cost for the attorney’s fees in winning the Case
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Who Decides When the Common Fund Doctrine Is Applied?
In the end, the judge decides whether the common fund doctrine applies to the case. They have the ultimate knowledge and experience regarding this, so they will know what the best Case for that trial is. They can also decide how much will be awarded because of the doctrine.
When Can the Common Fund Doctrine Be Overruled?
Depending on the trial, a common fund doctrine rule can sometimes be overruled. In 1998, a chiropractic doctor had enough of the court constantly reducing her lien for a truck accident case. The injured party’s attorney kept filing for motions to reduce the medical liens, and the judges continued approving them. This doctor recruited three other doctors to help appeal this unfair decision.
She spent thousands of dollars hiring an excellent attorney to represent her and the other doctors. The Court of Appeals agreed with the doctors and claimed that the judge could be reasonable but that they had no right, in this case, to continue reducing the medical liens. The amount of the lien could not be affected by apportioning attorney fees.
Silver Dollar Financial Is Here to Help After an Accident
At Silver Dollar Financial, we work with Georgia residents to obtain the funds they need to continue their daily lives while their settlement is being resolved. We know there are a lot of tricky words in the legal field, but we will help you every step of the way. You can call our office or fill out our contact form.