Academy of Chiropractic’s

Lawyers PI Program


 From the Desk of:


"Anatomy of Negotiating a Lien Settlement with a Lawyer"

How not to get screwed with your pants on!

We have discussed long ago and recently the business policies required for settling cases with lawyers. What we have not discussed is the tactics the lawyers will use and the pressures they will create for you in order to take less money and how to navigate through the process without destroying relationships.

Regarding liens, the following is a good explanation and some legal guidelines:


Does Your Lien Protect You?

By far, the number one topic that comes up in conversation between our office and doctors offices is that of the lien payment concept. Naturally, as this is the primary method of payment on personal injury cases, most doctors want to make sure that they are adequately protected. Add to that the fact that many attorneys refuse to honor the liens of the doctors, or find a way to dispute the validity, and a real cause for concern exists. Currently, there is a lot of discussion among attorneys as to how to avoid paying liens, as the hospitals and HMOs have abused the process to the extent that many people seriously injured via personal injury accidents have become indebted as opposed to receiving a net settlement recovery. The most egregious example is where a hospital receives payment from a HMO under a contract they voluntarily entered into. Upon settlement of a third party personal injury case, they then ask for the difference between 100% of an inflated "market" rate and what they contracted to accept. Many attorneys have faced the prospect of a bankrupt defendant, a $100,000.00 liability policy and $500,000.00 in medical bills. The hospital lien by statute is more than the settlement, despite agreeing to accept much less pursuant to the contract they signed. The hospital is "gracious" enough in most cases to accept the entire settlement without going after the client personally for the total difference amount. In this case there are no attorneys fees, and the client receives no recovery.

In response to this abuse, many new lien laws are being created, along with a lot of resentment among attorneys regarding the signing of liens. Based on this current climate, it is now more important than ever to work with a firm that will respect and honor the terms of your lien.

Below are some suggestions for creating the strongest possible lien rights.

Explain to the patient that your lien is a legally binding contract, and that regardless of eventual settlement of their case, or not, they are responsible for the balance owed.

 Inform the patient that the purpose of the lien is simply to defer the time of payment from when service is rendered to the point that their case is completed.

 Have the patient initial, in writing, that they have been advised of the above.

 Make sure to gather the names, addresses and telephone numbers of all insurers, attorneys, and personal representatives of the patient, and make your lien known to all.

 Have the patient sign two copies of the lien. Save one for your files in case the other becomes lost, and forward the second to his/her attorney for signature and return to your office.

 Avoid accepting faxed liens, unless your lien contains language to the effect that, "a photo-copy of this document shall be as legally binding as though original."

 Even though you may assume the attorney has a copy of the lien he/she signed, send a copy return receipt requested to the adjusters on the file and to the attorney, to document the file that they had notice of the lien.

 In litigated cases, obtain the court and case number of the action and file a NOTICE OF LIEN, after serving the document on all parties attorneys involved in the action, and completing the proof of service.

The first thing you have to understand is that a lien is a contract and a lawyer cannot disburse the funds without settling the lien/contract with you. This gives you legal leverage over the funds.


What Does a Doctor's or Insurance Company's Lien Do to Your Ability to Disburse a Settlement Check?

July 06, 2011

When someone suffers bodily injury due to an accident, health insurance companies may choose to offer a settlement check to avoid going to court. While waiting for a settlement offer to come through, medical services provided by doctors and other health providers may go unpaid until the injured party receives the actual settlement award. As a result, doctors and insurance companies may have first dibs on collecting payment for services rendered.

1. Personal Injury Settlements

Personal injury settlements consist of lump-sum payments made by insurance companies to accident victims to cover any costs associated with an injury claim. In cases where bodily injury plays a role in an accident claim, the effects and potential effects of the injury can influence the amount of a settlement offer. The likelihood of needing ongoing medical treatment, time off from work and other factors all contribute to the overall costs involved. In order to ensure payment on services rendered by doctors or claims paid on by insurance companies, doctors and insurers can legally place liens against a forthcoming settlement award to ensure reimbursement for services rendered or claims paid.

Doctors' Liens

A doctor's ability to place a lien against an upcoming settlement award varies based on the laws of each state. Some states allow doctors to draw up contracts with patients that authorize payment from an upcoming settlement. Other states automatically grant doctors lien rights that allow them to receive payment for services rendered once a settlement goes through. The amount of a lien may include the costs for services provided as well as interest costs and attorney fees. Some states place percentage limits on the amount a doctor can take from a settlement check, such as no more than 20 or 30 percent of the total lump-sum amount. In cases where multiple liens exist, percentage amounts may lessen depending on the number of liens and the laws of the state.

In most states, it is an unethical and an actionable offense for a lawyer to disburse the fees from a settlement or verdict without satisfying all of the lines in their files. That means that a lawyer's license can be negatively impacted and you have grounds to sue him/her to recover the fees. In both instances, as long as your lien is valid and meets the legal criteria of your state, then you should prevail at both ends.


Here is an example of how the negotiation usually goes: The lien amount is $8600 and you treated the patient for the better part of 2 years. The care ended 2 years ago and the case was about to be settled. You have been waiting for almost 4 years to get paid. This is typical.


FIRST: In our complaince review, I would have gotten you the correct documentation so use. If you have not done one, call me ASAP to set that up. It is costing you and poosibly leaving you exposed to fraud issues.  

If the lawyer has not acknowledged your lien, you have NOTHING and you deserve to get nothing because he/she is better at business than you are. You do not have to like that statement and I really do not care. At the end of the day, you probably will end up with nothing and you will have no one to blame but yourself, although you will attempt to blame everyone else...Too bad!

Fax a copy of the lien to the lawyer and print out a fax receipt. Concurrently, send a certified, return receipt copy of an executed lien from your patient to his/her lawyer and save that signed return receipt. IF the lawyer will not sign for the certified letter, then release the patient because his/her lawyer is setting you up to get screwed with your clothes on because he/she knows how to and you are giving him/her permission to do so.

Every state has differnt rules, and they are always evoloving. Therefore check with a local lawyer for clarification., They can help you (July 2021)

Once you have accomplished the basics of ensuring a valid executed lien with confirmation from the lawyer, be prepared to be "low balled" in an offer from the lawyer once the case has settled. In our sample case, the lawyer would offer you around $3,000 as that has been the ratio in the past and has been reported by doctors currently from coast to coast. Your answer should be that you will gladly lower your fee to no more than 1/3 of the settlement as that is your office policy. You should have explained that to the lawyer well in advance to prevent these conversations and confrontations. The lawyer will come back to you and say, "You have to understand that I have hospitals and other doctors involved and everyone wants a piece and that is all that is left." Your answer should be, "I understand and I am willing to take 1/3 of the settlement or less, but the first step is to let me see the settlement papers and tell me who is getting how much including yourself, the lawyer." At this point in time the lawyer will tell you he/she is not able to reveal the settlement amounts as that is confidential information. Your response will be that if he/she wants you to lower your fee, then he/she has to get permission to show you the documentation.

The lawyer will threaten that if you do not accept his/her offer, you stand a very good chance of getting nothing. That is the stick in the game of "carrots and sticks." Please know that line is "bullcrap" because if he/she does not resolve your lien, he/she cannot get paid and the he/she wants to get paid ASAP.

Politely tell the lawyer that you are firm with your 1/3 policy and if he/she wants you to reduce your fee to 1/3, then he/she has to show you the settlement sheet. If he/she wants you to lower your fee below the 1/3 because of the number of liens on file, then you will gladly lower your fee the same percentage the lawyer lowers his/her fee to make the settlement work. This will not make the lawyer happy at this point in time, the lawyer will realize that you "get it" and have been educated on the law. He/she will probably get inflammatory at this juncture and might threaten not to refer more cases or again threaten that you will get nothing. My stock answer is the following, "I have treated this patient for years and my cost to treat this patient was rather significant. I have already waited years to get to his point and I am prepared to wait a few more years until you can resolve all of these issues. Quickly end the conversation by telling the lawyer to think about it. DO NOT DRAG OUT THE CONVERSATION; lawyers are expert at arguing cases and will try another tactic to convince or confuse you.

You have to be prepared to walk away from the money and the lawyer must realize that. The last 3 lien negotiations I have either done personally or have guided doctors through each took 3-4 days to go through, each involving all of these arguing points. In every case, we got the amount offered to double and in each case we accepted the offer without mandating that we be shown the settlement sheet. The reason, we went from less than 30-50% to recouping approximately 75%.

Could we have fought for the last 25%? Yes, but at that point in time, you will have done nothing for the lawyer and he/she will hold it against you. I was very happy in each instance to give just a little to maintain the relationship.

The last case we did was an $8,200 lien. The lawyer offered $3,200 with all the bullcrap described above and all of the threats, etc. 4 days later, the agreed amount was $6,000. Everyone was happy and the lawyer respected the doctor more. I have asked the doctor to detail it from his perspective and should have that posted shortly for you to read. Follow the rules and win financially!