It is often said that there are two main barriers to success in any kind of personal injury case: liability and damages. And it's true that you cannot succeed on a claim for personal injury unless you are able to prove liability (that the defendant was at fault for the underlying accident) and damages (the scope and extent of your losses in connection with the accident. But even after you've checked off those boxes, you will not ultimately prevail until you have actually recovered compensation from the responsible party or parties. So, there is also a third component to a good personal injury case: collectibility. Read on to learn more.
It's Risk Versus Reward for Your Personal Injury Attorney
When you're injured and you need help from a lawyer, it's easy to forget that legal representation is, for most attorneys anyway, a business.
Most personal injury attorneys work on a contingency fee basis, which means that their fee is based on a percentage of the amount recovered on behalf of the client. So, whether or not to take on a personal injury case becomes, at least in part, a business decision.
In assessing the viability of a potential case, an attorney will want to know something about the financial well-being of the responsible party or parties, because the only way they will receive a fee is if the damages award is recoverable. A responsible party who has the financial means to pay a damages award is said to have "deep pockets," and is the type of defendant that personal injury attorneys prefer to sue, because there is little risk that the award will not actually be paid.
Is There Insurance Coverage for the Underlying Incident?
In many personal injury cases, the responsible party has insurance, and the plaintiff's attorney looks principally to the insurance company as the one with "deep pockets" to pay a damages award.
For example, if John Doe causes a car accident that results in $50,000 in damages, and he has $100,000 in applicable insurance coverage, it will not matter to the plaintiff's attorney that Mr. Doe is unemployed and has no assets, because his insurer is the one with "deep pockets," and the carrier can readily pay the claim. However, if the damages are $250,000 and Mr. Doe only has $100,000 of insurance, there will be a shortfall of $150,000 that is not collectible from Mr. Doe or his insurer. In this case, let's say Mr. Doe was on a driving assignment from his employer ABC Company at the time of the accident. Then, the attorney will likely include ABC Company in the suit because of its "deep pockets" and its liability for the actions of its employee in the scope of his employment (Learn more: When are employers liable for personal injury?).
"Deep" is Relative
As you can see from the above examples, the term "deep pockets" is a relative one that depends on:
- the extent of the injured person's damages
- the amount of applicable insurance, and
- the financial well-being of the potentially responsible parties in relation to these other factors.
From the perspective of the personal injury attorney, the defendant's pockets do not have to be "deep" in an objective sense; rather, they only need to be deep enough to ensure that a damages award will be paid.
In cases where there is an insurance policy in place to pay for the damages, the attorney can readily determine the policy limits and easily assess the viability of the claim from a contingency fee perspective. However, where there is no insurance, the task of determining the collectibility of a damages award is more difficult unless the responsible party is a large corporation or an individual with significant assets.