Attorneys' Fees and Costs in Third-Party Actions
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| When an injured employee initiates a third-party action based on the injury he received in the course of his employment, most states require the employer or its workers' compensation insurance carrier to pay part of the attorneys' fees incurred in bringing the action. They are to pay the fees out of their share of the recovery. Though the majority calls for the employee and employer to share the burden of attorneys' fees, there is still variation among the states as to who is obligated to pay the fees and in what amount.
Some states provide that each party's share of the attorneys' fees is to be calculated based on the amount of compensation that is paid by the employer in relation to the total amount of damages received in the third-party action. In order to fairly apportion the amount of fees and costs to be paid, it has been held that the employer's future compensation liability should be factored in -- not just what the employer paid in the past. Notably, though, the share of fees to be paid must account for those judgments that are, though substantial on paper, basically uncollectable or uncollectable to the extent rendered. In such instances, the employer's share is to be based on what can be reasonably be collected. Some jurisdictions mandate that the attorneys' fees and costs incurred in the third-party action are to be deducted first from any recovery. Thereafter, the employer would be paid with the excess going to the employee. Other states make no statutory reference to the recovery of attorneys' fees and costs. Those jurisdictions tend to follow the proportionate-share approach. Copyright 2010 LexisNexis, a division of Reed Elsevier Inc. |