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Case Highlights PI Attorney Settlement Planning Responsibility

By Harry S. Margolis

Elder law and special needs planning attorneys who work with individuals who win personal injury claims have long felt that trial lawyers should be more concerned about the issues that come up for clients after the case is resolved. These can include Medicare set aside rules, continuing eligibility for public benefits and appropriate financial management and budgeting of the settlement funds.

To date, trial attorneys have not been held legally responsible for these issues other than those involving health insurance liens, and Medicare rules, which most plaintiffs’ attorneys do address. An Illinois case, however, goes a (very) small way towards holding trial attorneys responsible for what happened to settlement proceeds. It’s a limited holding because it merely states that a trial attorney representing the estate in a wrongful death action owes a duty to the estate’s beneficiaries, but doesn’t comment on the nature of that duty.

In this case, In re Estate of Perry C. Powell, Mr. Powell died due to surgical complications and his wife, Leona, successfully sued for wrongful death. Part of the proceeds, $123,000, were allocated to their son, also named Perry, who has significant disabilities. The trial attorney advised Leona that managing this amount through the probate court would be too complicated and Leona deposited the funds into a joint account that she managed.

Some years later, Leona was removed as Perry’s guardian and the new guardian, discovering $97,000 missing from the account, sued both Leona and the personal injury attorneys. The trial court dismissed the case against the attorneys, holding that they did not owe a duty to Perry. On appeal, the Illinois Appeals Court reversed and in this decision the Illinois Supreme Court affirms the Appeals Court decision, holding that:

an attorney who brings a wrongful death action owes a legal duty to the decedent’s beneficiaries at the distribution of funds phase of the action . . .  Clearly, the underlying purpose of a wrongful death action is to compensate those beneficiaries named in the action rather than the decedent’s estate. Therefore, the primary purpose and intent of an attorney-client relationship between the personal representative of the deceased and the attorney who brings a wrongful death action is to benefit the decedent’s beneficiaries . . .  Since the beneficiaries named in a wrongful death action are intended beneficiaries of the action rather than merely incidental beneficiaries . . . the attorney’s duty extends to them. The assertion that an attorney’s duty only extends to the personal representative is at odds with the very purpose of the [wrongful death] Act.

In short, this decision says that personal injury attorneys, at least in Illinois, have a duty to beneficiaries of estates that bring wrongful death actions on their behalf. It doesn’t lay out the extent of that duty, whether it includes responsibility for the disposition of settlement funds. It would be interesting to learn how the case ultimately turns out.

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