Here’s a common situation in the personal injury context: Plaintiff’s attorney negotiates settlement with the defendant’s insurance company. The parties strike a deal, but only on the condition that the plaintiff’s attorney guarantee to pay all liens and subrogation interests out of the settlement proceeds. No problem, especially since the attorney would pay the liens and subrogation interests anyway, right?
An Ethics Opinion that was issued in July 2006 says that Illinois attorneys may NOT guarantee that liens/subros will be paid back out of settlement proceeds.
So what do you do instead? Typically I will tell insurance adjusters that I can’t personally guarantee payment, but that my policy always has been and always will be to pay liens and subrogation interests out of settlement proceeds. So far, I haven’t had a problem… but I know I’ll have one of those cases someday where the insurance company ends up sending a bunch of checks for each lienholder – which is a pain.
How do other attorneys deal with this? Comments would be appreciated.