In many types of cases, such as personal injury, workers’ compensation, family law mediation, and bankruptcy, third-party lien claims inside of settlements are common. A lienholder is an individual or organization to which the client legally owes part of the settlement. A law firm may receive bills that are to be paid on behalf of a client when a settlement is received. Part of the settlement will be designated specifically for these expenses.
Challenges of Lien Claims
Lien claims are not the law firm’s financial obligation, but as settlement agent, the law firm is responsible for proper distribution of funds among parties. Managing third party lien claims as the responsible lawyer for the case is not a simple task. Challenges include:
Accurately tracking expenses & producing a settlement statement
Negotiating the appropriate value in the settlement
Keeping vendors informed of payment schedules
Appropriating funds when expense amounts are less than bill totals
Keeping the client informed of their expenses & after-settlement obligations
Accounts Payable Software Requirements
Effective management of third-party lien claims requires having legal-specific accounts payable software in place. Your accounts payable system needs to easily track your client expenses and create the reports that your firm needs to communicate balances & obligations to all parties involved in the legal settlement.
The Big Picture
It’s absolutely essential to have the full picture of ALL client obligations as you negotiate the settlement — to minimize your liabilities to third parties. CosmoLex gives you that “total view”. A single click gives you a comprehensive cost statement itemizing every charge (your charges, 3rd-party claims, even charges which are paid by other parties such as insurance companies). You always know your case’s total debt.
A Total Solution for Third-Party Claims
CosmoLex gives you one seamless system to make managing third party bills simple. You easily enter bills as they come in, record all related notes on the bill itself, and even track original and negotiated amounts for each bill. Post-settlement, you’ll wrap up your work by making payments on obligations from the matter’s trust funds. It’s all done directly within the matter’s folder in CosmoLex. Simple!