Social Security Frequently Asked Questions

Most cases are contingency fees. That means we take a percentage of what we recover for you. If we don't recover any money, we don't get a fee.

Contingency fees are a risk-sharing device. We take the risk that we will do a lot more work to settle your case than the fee will justify; you take the risk that the case will settle easily. Sometimes you do well and sometimes not. We may put a lot of work into cases that, for some reason, don't turn out great. Sometimes we make what seems like a windfall. But you have to remember: if you could not get a contingent fee, then you would if you couldn't afford that, you couldn't get a lawyer.

Our fees are a percentage of the amount of the settlement. That isn't as simple as it sounds, however.

First, there is the issue of how far along we are with the case. The first phase of the case is where we gather information and try to settle the case. We charge 33-1/3% in that phase. The second phase is where we file suit, make a discovery, and prepare for arbitration or trial. We charge 36% at that point. If we start the trial, we charge 40%. Appeals may be more, and we negotiate that fee when it comes up.

The other issue is what the settlement is. Typically, we will have someone come to the office who got some medical bills paid by insurance and maybe got a small settlement offer. We charge our percentage on the gross amount of the settlement, which includes the amount of the earlier payments that have to be repaid (in part). We can argue about whether this is fair or not: but that is what we charge, and you agree to it by signing the fee agreement.

Fees are never written in stone. For really good reasons, we may be willing to change our fee agreement upfront. And if it becomes unreasonable for us to charge a fee (a term that is defined in law and governed by ethical rules), then we may have to reduce our fees. We hope we can talk about these issues without them becoming contentious.

We don't give tax advice! But here is the information we have been able to find: if you need a more certain answer, we can refer you to a tax lawyer.

Generally, personal injury proceeds are considered compensation for injuries and losses, not a "gain" or "windfall" under the tax codes, so it is not taxable. If personal injury damage awards are to compensate for personal physical injuries or sickness, then it's not taxable. An emotional injury that is the result of physical injury may not be taxable, but an emotional injury that is the result of nonphysical injury is taxable. Lost wages that are the result of physical injury may not be taxable.

If somebody else pays your medical bills, and later you recover money for those same bills from the responsible driver's insurance, you have to pay it back; you don't get to recover twice for the same item of damage. This is called "subrogation."

On the other hand, usually, the repayment is reduced by the same percentage of fees and costs as you pay on the overall settlement. We can argue which bills are related to the accident and which are not. Sometimes we get repayment waived entirely.

Like everything else, exceptions and complications are depending on who paid the bills.

Congress has passed new laws: we must get your Social Security Number, we must tell SSA if you get a settlement and we must give them a chance to tell us how much money they claim to be due. We cannot, by law, give that money to you. If we disagree with Medicare, we have to hold the money in trust while we go through their appeal process.

However, be aware that Medicare has taken the legal position that they can claim reimbursement for medical bills that are only vaguely related to an accident, or even are unrelated if the bill is incurred around the time of the accident, and the Courts have upheld that position. Medicare is not obnoxious about its rights, but it is incredibly bureaucratic and slow (months are not uncommon).

Medicaid or DSHS is easier to work with (less bureaucracy) and is required to limit its reimbursement to items that were caused by accident. We generally negotiate about that since it is often the central issue in most cases, anyway.

This can be a minefield. If Health Insurance is provided as an employee benefit, some insurance companies take advantage of the ERISA law and assert that they are entitled to 100% reimbursement regardless of the effect on the insured person.

On the other hand, private insurers have provisions in their contracts requiring reimbursement but are subject to law that says you don't have to reimburse them unless you are 'fully compensated,' which is a pretty debatable concept. Sometimes private insurers get nothing back, but our policy is to negotiate a reasonable reimbursement whenever possible.

You may have Personal Injury Protection (PIP or Med Pay) coverage (you should get it if you don't), or the other party may have it. The rules are a little different. If you have PIP insurance (called 'First Party PIP'), then you will have to repay those benefits, less fees and costs, from any third-party settlement. However, PIP (being your insurance) is usually more liberal in paying for treatment that may not pass muster with a 'third party' insurer as being reasonable and necessary or related to the accident. Sometimes we have been successful in getting PIP carriers to waive subrogation on that basis.

There is also the 'shared fault' issue. In any accident, there may be 'comparative fault,' meaning that each party bears some part of the blame. So, for instance, it might be 80/20 or 70/30. If the other side is only 70% at fault, they only pay 70% of your damages. PIP insurance, however, is no fault: you get it even if you are 100% at fault. In discussing reimbursement, however, we sometimes argue that because a settlement was reached for shared fault, the PIP carrier is not entitled to be reimbursed for your percentage of the fault. For example, you get $5000 in PIP payments. We settle on the basis that you were 40% at fault. We then argue to the PIP carrier that 40% of the PIP payments were not recovered from the third party, there was no double recovery, and you should only pay back 60% of the PIP - less fees and costs.

None of this is written in stone, and litigation is quite rare. Be advised that we have to hold the money in most cases until we resolve these issues, which we do by negotiation.

What if the other driver has PIP (called 'Third Party PIP')? They may pay your bills, but they will get credit for what they pay against your eventual total recovery.

One final thing: there is a very complicated rule in Washington known as the Mahler rule, named after a significant court case, that requires the insurer to 'participate' in fees and costs. That means the same percentage reduces their repayment as the client pays on the total recovery. Sometimes insurance companies resolve subrogation by intercompany arbitration which can result in a payment going to the client. If this pops up, we'll try to explain it to you - if we can figure it out ourselves.

What is a lien? Legally it is an ownership right that is granted to a third party against money being held by the attorney, much like a mortgage or a bank security interest in a car you're buying. Liens are created by statute, and they create a real problem for lawyers because of our legal obligations to our clients and third parties.

When a lawyer recovers money for a client, and the sum of money we recover belongs in part to the client and in part to someone else (such as a lien or to us for fees) we must place the money in our Trust Account initially; then determine who the money belongs to, and then pay it out. The rules state that any money we hold that belongs to a client, we must give it to the client upon demand. However, the rule also states that where there is a dispute as to the ownership of the funds in our trust account, we may not give the money to anybody until we resolve that dispute, either by negotiating or in rare cases, by paying the money into the Court and letting the Court decide.

Like most things legal, liens are rarely written in concrete. The validity of a lien and, more importantly, the amount of the lien is often in dispute. We will often hold in our trust account, the maximum amount of a lien claim, while we try to resolve it: if it ends up being less than the maximum, we pay the remainder back to the client.

Q: What Kinds of Liens Are There?

Attorney fees are subject to a lien under RCW 60.40.010, and this lien by law "is superior to all other liens." That means we get them regardless. This sounds like a self-serving provision put in by the lawyers' lobby to protect us, and to some extent it is, but it is also necessary because without it, every time there is a lien dispute we would face a conflict of interest and would have withdrawn from the case. Chaos would ensue!

Medical providers may create a lien under RCW 60.44.010. They have to record a written document with the County Auditor, and the total of all such liens may not exceed 25% of the gross recovery.

Medicare, Medicaid, DSHS, Workers' Compensation, VA, and others may have a lien by statute, often Federal Statute and these liens are generally very enforceable and very concrete.

Doctors, settlement loan companies, and others may have clients sign documents that create an assignment of proceeds and call it a loan. Our position is that if we do not agree to be bound by such agreements, they are not effective, and our fee agreement provides for that.