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October 23, 2019 | Gary Burger

Illinois Lien Statute - It's Complicated

Liens are a huge part of any personal injury case, whether you are on the defense or plaintiff’s side of the “v.” Cases where liens are not at issue are rare.

As a service to clients, I try to reduce liens as much as possible. This obviously puts more money in the client’s pocket. It’s important not only to only to maximize the settlement amount on the front end, but also to minimize any liens on the back end.

Lien resolution also gives finality to the outstanding medical bills for the injured party. And it’s worth noting that both the defendant and the plaintiff want the liens completely resolved.

Managing and resolving liens is an important part of our legal service to clients. Yet, it can be overlooked, an afterthought or dreaded. I have as article on lien reduction which can be found on our Lawyer to lawyer page of our website, or by clicking this link.

Missouri and Illinois have lien statutes, which are typically used when the liens are large and it would be too hard to get the lienholders to take large deductions.

I will do an article about the Missouri Lien Statute in my next email. In Illinois, liens are governed by 770 ILCS 23/1. It is not as strong as Missouri’s law – mostly because in Illinois the lienholder can still pursue the client for the balance after the liens are reduced under that statute.

So, the smart lawyer will try to negotiate the liens down – but the statute guides us as to what a court would do and what is a fair reduction - but it is complicated.

Under the Illinois Lien Statute:

  • Total liens cannot be more than 40% of the total settlement
  • No single provider/professional can get more than 33% of the settlement
  • If the total liens meet or exceed 40% of settlement, then: All liens of the professionals cannot exceed 20%; and all liens of the providers cannot exceed 20%
  • But, you have to reallocate the unused 40%, but it still holds true that no single provider can get more than 1/3
  • If the liens exceed 40%, the attorney fee cannot exceed 30% of the total settlement

Let me do an Illustration with a $50,000 offer in a case with $29,051.60 in liens. Under this example:

  • Total liens cannot be more than ($50k x 40%) = $20,000
  • No single provider can get more than ($50k x 33.33%) = $16,666
  • If the total liens are more than $20,000, then: All liens of the professionals cannot exceed more than ($50,000 x 20%) = $10,000; All liens of the providers cannot exceed more than ($50,000 x 20%) = $10,000
  • Attorney fee AND costs cannot exceed ($50k x 30%) = $15,000

Now, applying these rules to the liens:

  1. Total liens before reduction = $29,051.60 (more than $20k and 40%)
  2. Total Professional Liens = $8,569.58 (this is under $10k, so ok)
  3. Total Provider Liens = $20,482.02 (this must be reduced to $10k) $10,000
  4. Total liens after reduction: $18,569.58 ($8,569.58 + 10,000)
  5. Now, reallocate the unused 40% -(20,000 -18,569.58 = $1,430.42
  6. The $1,430.42 goes to satisfy the health providers
  7. End Result:

Professionals get $8,569.58
Providers get $11,430.42
Total Liens: $20,000

Now applying this to the net settlement for the client:

50,000 - $15,000 (Atty fee + costs of 406.29) - $20,000 (liens) = $15,000

The client could still be on the hook for $9,051.60 in unsatisfied charges

Call or email me if you have any questions about the Illinois Lien statute.