Before lawyers settle or try a personal-injury case, both sides to a dispute should be sensitive to resolving statutory subrogation and lien interests. Otherwise, parties, counsel and insurance carriers can face ongoing liability exposure if such interests are not protected. The laws under which these lien and subrogation interests are created put the parties, their attorneys and liability insurance carriers on notice that these interests have to be paid back; if they are not, the parties, their attorneys and liability insurance carriers are liable for penalties, fines and interest. Avoiding a malpractice claim requires the ability to spot subrogation and lien issues throughout litigation.
A lien is a security interest that a creditor has in another’s property ensuring payment of a debt. A subrogation interest, on the other hand, is an insurance concept where an insurer pays a debt of the insured and owns the right to recover the debt.
