Before I can tell you why this is true, let me share with you what happened in the past in every wrongful death case. By showing you what went on in the past, you'll understand clearly why changes were made in the law.
IN THE PAST...
In the past, when all sides to a wrongful death lawsuit agreed to settle their case, they would have to get approval from the court in order to finalize the settlement. The court that is usually responsible to oversee these wrongful death settlements is known as the surrogate's court.
That is a court that is involved with handling the estates of people who have died. They would supervise the litigation to make sure that any money that is received by the surviving family members would be distributed appropriately and according to law. That makes sense.
This assures a system of checks and balances so that if there are unscrupulous family members who are greedy or unscrupulous attorneys, the court is there to supervise and make sure that the settlement is appropriate and the money is going to the right family members.
Here is where the problem arose.
From the time the settlement was agreed to, the lawyer for the family would then have to prepare an extensive set of documents in order for the judge of the surrogates court to review and approve. That process often took many months. Depending upon which court the case was being reviewed in, there may be a backlog that would delay matters even further before the settlement documents were approved.
Only after the court approved the settlement could we send the finalized court documents to the defense attorneys asking for payment.
Why was that a problem?
It was a problem since the defense and their insurance companies would be sitting on the settlement money for many many months, gaining interest, while the victim and the attorney did not see a dime until after the surrogates court had approved and finalized the settlement.
In a lawsuit, if a case goes to trial and the jury renders a verdict, the law permits the winning side to obtain interest on the jury verdict from the date of the verdict. That means that if the money is paid months later, the injured victim is entitled to receive interest on the award from the date of the actual verdict.
The thinking and rationale behind the change in the old antiquated way of doing things was, why should the defense and their insurance company be allowed to hold onto their money for and a longer than required, and why should they get the benefit of accrued interest if the case has been settled and we are simply waiting for the court to approve the settlement?
After many years and challenges, the New York legislature finally decided to change things.
They still require that we get court approval of the settlement.
However, the family's attorney can now immediately apply to the trial judge in state court who is supervising your case and ask to receive:
- Reimbursement of the attorney expenses, (also known as disbursements),
- The attorney's fee and
- To take the remaining amount of settlement money and to place it into an attorney trust account, known as an escrow account.
Doing that insures that the money will be sitting in the attorney's trust account gaining interest for the benefit of the family, rather than sitting in the insurance company's accounts.
Once the trial judge approves this request, the attorney takes that court order and forwards it to the defense lawyers together with the appropriate closing papers. The law requires that the defense make payment within three weeks from the date of receipt of the closing documents.
Once the client's money has been deposited into the lawyer trust account, we must submit papers to the surrogate's court asking for approval to distribute the money to the surviving family members. That process can take weeks or months depending on how quickly the paperwork can be completed and submitted to court. As soon as the surrogate's court approves the distribution of the money, checks are written to the surviving family members and that concludes the case.
That is why you will see an attorney immediately apply to the trial court for approval of his attorney fee, his attorney expenses and a request to place the client's money into the attorney trust account while waiting for final approval from the surrogate's court to distribute the client's money.
