Third Party Lien Claims for Attorneys

Trust Accounting

In many situations, part of being an attorney is being the fiduciary for your clients. This means you are responsible for making sure that all financial activity concerning the case being worked on is handled appropriately.

In personal injury cases, workers compensation cases, family law, and bankruptcy cases, among others, it is common to have 3rd party lien claims. In cases such as personal injury and workers compensation, there may be 3rd party lien claims inside a settlement. This means that your client may owe part of their settlement to other parties. In bankruptcy cases, the settlement determines how the 3rd party lien holders are paid. Lienholder will fall into categories such as:

  • Healthcare Providers
  • Medicaid or Medicare
  • The Veterans Administration
  • Worker’s Compensation Insurers
  • Health Insurance Companies
  • Auto Insurance Companies
  • Creditors

3rd Party Lien Claim Tracking for Attorneys

As the fiduciary for your clients, you become responsible for making sure that all bills or lien claims are appropriately paid for, usually as a settlement is reached. For that reason, it is important to itemize and include the full amount your client is in debt to each lien holder, as well as what the eventual disbursement to the lien holder will be once a settlement is reached.

As a case progresses you and your clients may accumulate more lien claims. In some instances, 3rd party lien claims may be negotiated down to a lesser value. In these situations, the law firm should show both the original amount of the claim and the negotiated amount on the statement. This is an important part of maintaining a “total view”. Your firm should maintain this “total view” throughout the entire case to simplify the process of creating a well-organized settlement or disbursement statement. This will ensure that both the firm and client understand what portions of the settlement are due to the client and the lien holders.

Gain A Better Understanding of 3rd Party Lien Claim Management

Managing 3rd party lien claims can be complicated at times, but that doesn’t mean it isn’t necessary. Having a strong understanding of how these claims need to be tracked, managed, and handled could keep your firm safe from harsh penalties. Join us, for our webinar, Navigating Your Accounts Payable: Bills & Beyond to learn about 3rd party lien claims and other aspects of managing your firm’s accounts payable.


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