The Common Fund Doctrine is a law that protects injured victims from being responsible for paying all of their attorney fees without assistance from the insurance company. The doctrine is specifically used to help individuals who have won their cases to ensure they’re entitled to their settlement without allowing the insurance company to claim a large portion of it.
Do I Owe the Insurance Company if They Contributed to My Case?
The Common Fund Doctrine is applied when the insurance company and their lawyer do not provide any help towards the case. The doctrine protects you from having to pay them anything if they did not provide any work on your case. However, if the insurance company and their lawyer do contribute to the case, then they are entitled to compensation and the Common Fund Doctrine does not apply.
For example, if a person gets injured in an accident and their insurance company and attorney go right to work on the case. They’re entitled to a percentage of the settlement as the Common Funds Doctrine does not prevent them from being compensated. In order for the Common Fund Doctrine to apply, a case must show the following:
- The case occurred as a result of the attorney’s services
- The case arose from an attorney bringing the case
- The insurer claiming an interest in the common fund did little or nothing to create it
- The insurance company stands to benefit from the creation of the fund
What is the Purpose of the Common Fund Doctrine?
The Common Fund Doctrine is not a part of any state’s statute. This law was created and confirmed by the United States court system to recognize common law power in equity. The Common Fund Doctrine permits a trustee of the fund or property to recover costs from the fund. This doctrine is used to uphold the:
- Fairness to the successful party so they’re not overwhelmed with expenses
- Prevent insurance companies from benefiting from a settlement when they did not share any burden of expense
- Pushes insurance companies to become more active in cases
Example of Common Funds
In San Francisco, the defendant (Sweet) was injured when struck by a vehicle driven by Robin Jones. Sweet was taken to the hospital and received immediate treatment. His medical bills amounted to $35,454.60. Sweet was unable to pay this amount. After being turned down by several attorneys, Sweet finally found a law firm to represent him and he reached a successful settlement of $175,000.
Sweet’s attorney set aside $22,000 to satisfy the costs imposed upon the county for assisting with the case. Instead, the county initiated action against Sweet and his lawyer to recover what they believed was the full amount of their costs, much higher than $22,000. This dispute went to trial and the court concluded that the “common fund” doctrine was applicable to this case and awarded the county an additional $159.12, along with the $22,000 for their work done in Sweet’s case.
How a California Personal Injury Attorney Can Help
Insurance can be relentless when it comes to reimbursement, but a personal injury attorney can protect your right to compensation and keep the insurance company from taking what belongs to you. For questions about the Common Fund Doctrine or any other matters concerning your personal injury claim, contact Maison Law today for a free consultation and case evaluation.
