Volume 19, Number 7
By John Roska
You've worked hard to get your client a nice accident settlement, and the client, who's on disability as a result of the accident, can't thank you enough. A few weeks later, though, she calls in a very different mood. That settlement money disappeared faster than she expected, she says-and not only that, it got her disability benefits cut off, along with the medical benefits that paid for her treatment. Now she's got nothing to live on and blames you and the settlement for it.
You can dismiss your client as simply being ungrateful, but better financial planning on your part might have kept her happy. If you'd known in advance that the settlement money would affect her benefits, you could have made arrangements to keep her eligible.
This is just one example of how the different and unexpected legal problems of low-income clients can be pitfalls for the unwary practitioner. Whether you're a private attorney handling a PI or a pro bono case for a low-income client or a staff attorney in a legal services office, it pays to be aware that what you're doing could affect your client's overall situation. The examples discussed here at least can help with the right questions to ask.
Can You Be Too Rich?
Too much money is a particular problem for people receiving low-income benefits. Eligibility rules limit what they can have. Big recoveries may make it unnecessary to worry about protecting someone's benefits, but modest ones that don't last long can be very disruptive.
o Always review benefit eligibility limits. A $5,000 settlement paid directly to someone getting $500 per month as an SSI benefit (supplemental security income, Social Security's disability program for those "uninsured" by their employer's contributions) could render the person ineligible for 10 months-even if the $5,000 is gone long before that. Instead of paying a lump sum directly to the client, use the settlement to repair things like the house or car or to buy big-ticket furniture and appliances; these avoid a cutoff of benefits. More than once, buying a much-needed washer and dryer, rather than handing the client a check, was all it took to avoid eligibility problems.
o Ask the experts. You don't need to become a government benefits specialist. A quick call to the experts at your local legal aid office can help guide you through your client's specific requirements.
o Check exemption laws. If your clients have outstanding debts, be sure to check the portion of a recovery that's protected by state exemption laws. Illinois law, for example, protects from creditors all of a wrongful death recovery but only $7,500 of a personal injury recovery. Lump sums from sources like Social Security and Workers' Comp are completely exempt.
Knowing the basics of your state's exemption law also will help you accurately advise people who owe money. Sometimes the biggest help you can give debtor clients is to reassure them that because of the exemption laws, they won't lose everything or go to jail. Even if you think all debts should be repaid without exception, you're not competently advising debtor clients if you fail to inform them about exemption rights.
o Review existing contracts. A correct understanding of an often-misunderstood consumer law nugget may help you save someone's home. Although the widespread belief that all contracts can be cancelled within three days is actually false, some contracts can be. For door-to-door sales and home equity loans, consumers do have a three-day cooling-off period, and agreements can be canceled for any reason during that time. Consumers must be told of this right and should have been given forms for cancellations. If they were not, they may be able to cancel after the three-day period.
o Know about statutes of limitations. An often-overlooked statute of limitations may apply to clients with sales contract cases. The UCC's four-year statute of limitations on those contracts might be a defense, although the longer statute of limitations on other written contracts would not. This could make all the difference in a collections case.
When dealing with statutes of limitations, remember that the clock for consumer debts starts running from the time of the consumer's default, which is usually their last payment. Be careful about advising someone to make payments on an old debt, which could give new life to a stale claim. Sometimes, in fact, creditors and collectors reappear just as the statute of limitations is expiring, hoping to coax a rejuvenating payment from the debtor.
o Select cases carefully. A permanent pitfall in practicing law for poor people, especially in a legal services office, is case selection. Everything that makes you want to help makes it hard to say no, and the "if I don't do it, nobody else will" refrain is too often true. But the fact is, you can't help everyone. A time-consuming and ultimately unsuccessful case for someone you had doubts about in the first place simply grinds you down and keeps you from helping others who need you just as much.
John Roska is senior staff attorney at Land of Lincoln Legal Assistance Foundation in Champaign, Illinois.