What is a Personal Injury Case

You have suffered a personal injury if you have medical expenses caused by the wrongful act of another. If the wrongful act caused the death of a loved one, a “wrongful death”, you would also have a claim categorized as a personal injury. If you witnessed the injury of a loved one, you might have an action for emotional distress. You might claim the defendant committed a “tort” or violated a statute.

Personal Injury Case

A tort occurs when someone commits a wrongful act which is not a breach of contract and not necessarily a crime. Everyone has a duty to use reasonable care in their daily dealings. When someone violates that duty of reasonable care, that is a tort.

Some laws assume the injured person is entitled to compensation even without proof of a wrongful act. Strict liability laws vary from state to state, but examples include laws governing dog bites, airplane crashes, and dram shops or social hosts (selling or giving alcohol to an intoxicated person who causes injury.)

Someone who brings a claim against another to collect money for a personal injury is a “claimant,” and, once a lawsuit is filed, is properly called a “plaintiff.” If the person or entity against whom the claim is brought is insured, that person or entity is the “insured.” Once a lawsuit is filed, the person or entity against whom the claim is brought is the “defendant.” Defendants can also sue each other and bring in additional persons or entities for reimbursement. Depending on the state, those persons or entities might be called cross-defendants, counter-defendants, or third-party defendants. Any of these parties can also file a claim against the plaintiff within the same lawsuit. In this book, we’ll call the person who has the original claim the “plaintiff” and anyone who might be called upon to pay will be called the “defendant.” The terms “claim” and “case” are used interchangeably.

Common categories of personal injury cases include:

  • Vehicle collision
  • Slip and fall, also called “trip and fall”
  • Dog bite
  • Medical malpractice
  • Product liability
  • Wrongful death of a close relative
  • Emotional distress of a bystander to a physical injury of a close relative
  • Failure to provide proper security or supervision in places such as schools, nursing homes, stadiums, taverns
  • Other types of negligence
  • Statutory violations

Working with an Attorney

It’s a good idea to talk to a personal injury attorney before deciding to represent yourself. Most personal injury attorneys offer a free initial consultation. At that interview, you can expect to learn whether your case is worth pursuing. You will probably also pick up some jargon that pertains to your case. Although no attorney likes to be “shopped,” interview a couple attorneys to get a feel for what it would be like to work with one of them.

Personal injury attorneys compete vigorously for high-value cases. One may have already contacted you if you were hospitalized or your accident was in the news. State bar associations have rules governing this kind of contact. Don’t sign any documents with one of these attorneys or their representatives until you have had time to think clearly and make a reasoned decision about who you want to represent you. The good news is that if they are chasing you, you can be pretty sure your case has value.


Personal injury attorneys are usually paid on contingency. Whether they receive any fee is contingent on whether they obtain a recovery. Your contract with the attorney, called a retainer agreement, spells out the percentage the attorney will earn under certain circumstances. For example, the agreement might specify that the attorney will earn one-third of the recovery up to trial. If the case is tried in court, the percentage increases to 40%, and if there is an appeal, the percentage increases to 50%. The figures reflect the additional time required. Some states have laws limiting the attorney’s share in cases involving minors’ claims or medical malpractice.

Costs and expenses are usually calculated separately from the attorney’s fees. “Costs” are those expenditures which can be recovered from the defendant in addition to the judgment entered against that defendant. A victorious defendant can also get a judgement for costs from a plaintiff. Examples include fees for filing, service of process, subpoenas and expert witnesses. Before a plaintiff abandons a case already in litigation, the plaintiff will usually try to negotiate a settlement agreement that each party shall bear their own costs.

“Expenses” are not recoverable from the other side and often involve expenditures recorded within the attorney’s office, such as for photocopies and electronic research. Experts who are used for investigation only are also in the expense category. While your case is pending, the attorney is advancing the money to pay for costs and expenses. If there is no recovery, not only has the attorney worked for free, but has also lost the money invested for case expenditures.

At the conclusion of a successful case, the defendant will write a check payable to you and your attorney. Your attorney will prepare a settlement statement showing the gross proceeds and listing the fees and expenditures deducted to arrive at your net recovery. After you both endorse the check, the attorney will deposit it in the firm’s trust account, a separate account for clients’ money. After the defendant’s check clears, you will receive a check for the net proceeds drawn on the trust account.

Some plaintiffs are surprised by the size of the expenditures required to finance a case, especially one that lasts for years. The time to clarify how the firm will calculate expenditures is before signing the retainer agreement.

If the attorney tells you the firm cannot accept your case, you know the case’s value is too low to produce a reasonable attorney fee for the anticipated work and reimbursement of the costs and expenses. If the attorney says the firm will only accept the case if you pay fees on an hourly basis, the attorney is sending you a signal the case has little value. Some attorneys will work on contingency but ask clients who have the financial means to pay for the costs and expenses. Some attorneys believe this makes sure plaintiffs “have skin in the game” which makes them take their participation seriously. Most personal injury attorneys do not ask for an advance. If you encounter this request, ask some questions about why the attorney is asking for the advance and how it reflects the attorney’s initial case evaluation.

Don’t sign a retainer agreement without an assurance that the attorney is prepared to work with you through conclusion. Some attorneys will write a demand letter to the insurer or even file the case in court without undertaking further litigation hoping to earn a significant fee in a short time, but are not prepared to take the case further. You may find this attorney will transfer your case to another attorney who has the ability to see the case through; the attorneys divide the fee you initially agreed on. If, however, your attorney terminates representation completely, you may find it hard to find a second attorney because the first attorney will be entitled to a share of the eventual recovery. If the first attorney filed court papers, court approval will be required for the termination of representation. That is usually granted unless trial is imminent.

When a case is too small for an attorney’s attention or it appears the fee would dwarf the recovery, it may still be worthwhile to represent yourself. Some plaintiffs discharge their attorneys partway through litigation and proceed on their own.…

Those who purchase structured settlements are the wannabes of the industry


Did you know that the National Structured Settlement Trade Association, more popularly referred to as NSSTA, does not have any companies or individuals working for it which will ever buy structured settlement payment rights? No one in its organization ever indulges in activities related to purchasing the settlement rights back from the clients and there is a reason why the situation is as it is. The members of NSSTA have come up with what you know as the structured settlement business and it is what it is today because of their efforts. Now, if they start buying the payment rights they sold, they would basically be destroying their own scheme. It is not difficult to appreciate them for excluding companies who want to destroy the salient scheme of structured settlements and for furthering their mission even more. Factoring companies, as they do not have any support from NSSTA, have their own trade association in the National Association of Settlement Purchasers which promotes buying and selling structured settlement rights under this protection act.

Even knowledge management guru Patrick Hindert applauds the Society of Settlement Planners on his blog “Beyond Structured Settlements” as they have included these factoring companies. Despite the fact that NSSTA is opposing their activities and intentions, the guru seems to have appreciation for the open mindedness of Society of Settlement Planners. This can be justified and when looked at in a different light, it seems like a liberal move but one should also consider how factoring companies actually make much more profit in the guise of a helping hand.

Some experts are absolutely against the involvement of factoring companies and consider them a disgrace because of their totally financial motivation and promotion of greed over thought. These experts feel that the addition of factoring companies is not open mindedness but a financial motivation. This has led to several arguments from time to time with the board members of the Society of Settlement Planners trying to justify the inclusion of factoring companies with statements such as “factoring has always been part of settlement planning and deserves its share of attention and popularity”.

Structured settlement brokers who question the inclusion are thought of as those who do not have any sense for openness and seen as close minded when in fact, they are just pointing out that the main purpose why factoring companies exist is that they want to make money off unsuspecting and not so knowledgeable clients. It might be true in some people’s eyes that factoring is part of settlement planning but according to many experts, it is just a financially motivated beast with no actually good intentions for its customers. It is a destroyer of the salient features of structured settlement schemes and should not be allowed.

The laws which have been poorly written and published finally did not let the Society of Settlement Planners to exclude factoring companies even when they tried to do so. Thus, the end result of all this was that the Society of Settlement Planners took the factoring company money. This happened a long time ago, by the way, and in the March 2005, there was an annual meeting of the Society of Settlement Planners in Washington DC. In the meeting, the attendees were confronted by factoring company representatives at virtually every turn who wanted their money back. It was noted that one of the representatives had allegedly asked the head of a major structured settlement brokerage to go through his files. Apparently, he wanted him to see which ones were candidates for a factoring company approach. Fortunately for the entire association, the head of the brokerage ignored him and did not allow his requests to proceed. The move was a good one as factoring companies resorted to offering out referrals and other incentives to some structured settlement brokers and settlement planners.

In the end, the only question which made the most sense was why give factoring companies a seal of approval when their terms have always been shady and never clear? Even those who regularly browse the internet have no idea what their actual policies are and these companies are good at only fooling their clients into doing things they should not. Factoring companies want to become a legitimate part of NSSTA and SSP to enhance their credibility, which otherwise is just not there.

It is the opinion of many that factoring companies have no legitimate place in the industry and they do not deserve anything at all. Their methods of working do not have any credibility and their line of work does not represent the real essence of structured settlements. They are part of the factoring industry and should remain in their place instead of trying to add more credibility to their business by becoming a part of NSSTA. They are vendors who provide a service which is in the simplest and the most straightforward terms, buying structured settlement payment rights in exchange for a discounted lump sum of cash, to those that are in desperate need of cash.



Your One-Stop Shops for Beta of All Kinds: Index Funds and ETFs

Alpha generation is a topic for another book, the remainder of this one will focus on efficient generation of beta returns. There are four ways that investors can purchase diversified portfolios focused on beta returns: active mutual funds, index mutual funds, portfolios of individual stocks, and ETFs.

ETFs Image

Mutual funds are entities that buy a diversified mix of stocks on behalf of their own shareholders. There have traditionally been many advantages to owning shares in a mutual fund versus owning a diversified portfolio of individual stocks. These include convenience, the ability to split transaction costs over multiple owners, and the benefits of professional management.

Mutual funds come in two varieties: “active” and “passive.”

  • Actively managed funds try to pick stocks that will do better than the overall market, while still owning diversified portfolios. Many fund companies hire hundreds of analysts and portfolio managers that meet with company management and do other extensive research on a company’s prospects, trying to determine whether the prevailing stock price is too high or low. These kinds of funds attempt to deliver alpha returns and beta returns at the same time. Although they will largely track the market (beta), they may do a percentage point better or worse depending on the skill or luck of the portfolio manager (alpha).
  • Passive funds, also called index funds, are a kind of mutual fund exclusively devoted to delivering betareturns. Instead of hiring analysts to research which companies to buy, index funds just buy every share in a broad market index such as the S&P 500. Although index funds will not be able to beat the market by definition, this strategy ensures that they will do at least as well as the market (before fees). Because they have no need to hire hundreds of analysts like actively managed funds, index funds are able to charge lower fees.


Exchange-traded funds (ETFs) are index funds that are traded on an exchange, like stocks. For investors focused on achieving beta returns, this offers several advantages:

  • Unlike mutual funds, ETFs can be purchased easily through a discount brokerage just like stocks.
  • Tax advantages. ETFs are less likely than mutual funds to generate taxable gains until you sell the shares.
  • Lower fees. ETFs often have marginally lower fees than index mutual funds.

ETFs also do have a couple disadvantages relative to mutual funds:

  • Because ETFs are purchased like stocks, you will usually have to pay a small commission to your discount broker every time you trade. However, many brokerages now offer a selection of commission-free ETFs (see below).
  • Mutual funds are required to redeem shares at their net asset value on a daily basis. With ETFs, there is no such requirement, you are dependent on there being someone else to buy your shares if you want to sell them. However, this is not really an issue except for some small ETFs that might be thinly traded.

Index funds may be a better vehicle for small investors who want to invest a small amount every pay-period or every week (called “dollar-cost averaging”) since mutual fund companies like T. Rowe Price or Vanguard do not charge a transaction fee to enter a fund. However, many discount brokerages have responded by eliminating commission charges on eligible ETFs. For instance, Vanguard ETFs can be traded commission-free at discount brokerage accounts set up at either Vanguard or at TD Ameritrade.

For those with greater than $50K or so in savings, ETFs may be the most effective way of achieving beta returns, as they combine extremely low fees with the ability to easily buy and sell shares. Those with smaller nest eggs or that expect to be making frequent transactions may want to look at index mutual funds, or at least ensure that they are getting commission-free trades on ETFs.…