Expenses should be deducted from the gross and attorney's fees based on the net recovery. As to subrogation, the concept is that the lawyer gets the money for you, and that's what the fee is based on, and then the subrogation lien is deducted as money that you owe, because this was money expended for your benefit. Sometimes, the subro insurer will reduce the amount of its lien to account for the attorney fees, other times they get a free ride (free for them anyway, you pay for it). The lawyer's duty is to the client and not the lien holder, but you are right, the incentive for reducing the lien is less if the lawyer is getting paid the same regardless. There is still some incentive, in that if the lawyer does a good job, he/she has a satisfied client. As for the victim's consent, no, as mentioned above the victim is also a beneficiary and has had money expended on his/her behalf. Then again, the client has the final say on the settlement as a whole. There are other problems with this system as well.
Answered on Nov 15th, 2013 at 9:29 PM