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Why should an Attorney hold trust funds for client by Nares Law Group

Posted by Kaitlin Nares | Jan 24, 2025 | 0 Comments

An attorney may choose to hold back some settlement funds in a personal injury case before closing the case to address potential additional liens or anticipated expenses. This precautionary measure is taken to protect the client's interests and ensure that all outstanding obligations are properly addressed. Here are some reasons why an attorney may hold back a portion of the settlement funds: 

  1. Unresolved Liens: During the settlement process, there might be certain liens or claims against the settlement proceeds that have not been fully resolved or confirmed. These could include outstanding medical liens, health insurance liens, or government liens (e.g., Medicare, Medicaid). By holding back a portion of the funds, the attorney ensures that there is enough money available to satisfy any remaining liens or claims that might emerge after the settlement.
  2. Anticipated Medical Expenses: In some cases, the full extent of the client's injuries and medical needs might not be entirely known at the time of settlement. There could be ongoing medical treatments, surgeries, or therapy that the client requires in the future. Holding back funds allows the attorney to set aside money to cover these anticipated medical expenses, ensuring the client's ongoing medical needs are adequately met. 
  3. Miscellaneous Costs and Fees: There may be additional costs associated with the case that were not initially anticipated, such as court filing fees, expert witness fees, or other legal expenses. Holding back a portion of the settlement funds allows the attorney to cover these miscellaneous costs without putting a financial burden on the client.
  4. Protection against Future Claims: In some situations, third parties may file claims or seek compensation against the settlement amount after the case is closed. By holding back funds, the attorney can safeguard against such claims and ensure that the client's share of the settlement is not compromised.
  5. Contingency Fee Payment: In many personal injury cases, attorneys work on a contingency fee basis, meaning they are paid a percentage of the settlement amount as their fee. By holding back a portion of the funds, the attorney can ensure that their contingency fee is accurately calculated based on the final settlement amount.
  6. Negotiation Leverage: Holding back funds can also provide the attorney with negotiation leverage in resolving outstanding liens or expenses. It gives the attorney the ability to negotiate with lienholders or medical providers from a stronger financial position.
  7. Client's Best Interests: Ultimately, holding back settlement funds is done in the client's best interests. It helps protect the client from unexpected financial burdens and ensures that all financial obligations related to the case are adequately addressed, providing the client with a fair and comprehensive resolution.

It's essential for the attorney to communicate transparently with the client about the reasons for holding back settlement funds and to keep the client informed throughout the entire process. This transparency builds trust and ensures that the client fully understands the rationale behind the decision.

CONTACT A PERSONAL INJURY ATTORNEY IN COLORADO TODAY If you or a loved one have been injured in an accident and are considering whether to pursue a claim, you should contact Nares Law Group to schedule a Free Consultation. Call 720-637-7786 or fill out our contact form at www.NaresLawGroup.com to get started on your road to recovery.

About the Author

Kaitlin Nares

Kaitlin Nares is a partner and founder of Hagen Nares PLLC. Kaitlin is known for her compassion, professionalism, and clear communication. Kaitlin co-founded Hagen Nares PLLC as the culmination of her passion for the law and her desire to help families that have been severely injured at no fault ...

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