You are owed money. You hire an attorney, file a lawsuit, go through the pleading stage, discovery phase and then possibly enter into settlement negotiations. Negotiations fail and then it is trial time. (All the while you are incurring attorneys fees and court costs). You win at trial. A jury or judge enters a verdict in your favor. Fifty Thousand ($50,000.00) Dollars for Plaintiff! Yeah! 30 days pass and no appeal is taken. Judgment is entered in your favor. You do the victory dance. Fifty Thousand ($50,000.00) Dollars all for you!! Now....could come the hard part.

If dealing with an insured defendant and the insurance company is providing coverage, you are in good shape. You should receive a nice check from the insurance company after the appeal period has expired, no appeal is taken and judgment is entered. But what about when you sue your average Joe? Take for instance a lawsuit against a contractor or a small business person, both without liability coverage. The first question is: Will they pay? The second question is: If they won’t pay, can we collect the money?

Assume the defendant in your lawsuit is Joe Blow Contracting. That is the name on the caption. That is the person you contracted with and as such, is the proper party to sue. Now after everything is said and done and judgment is entered and Joe Blow Contracting is not paying, what do you do? You then may turn to an asset check. After the asset check, you unfortunately discover that Joe Blow Contracting owns nothing. No real estate, no vehicles, no equipment, etc. If the company does own real estate, the judgment will act as lien and the property cannot be sold without satisfaction of the lien. If there is equipment, you can file papers to execute on the judgment. You must locate the equipment and schedule a sheriff sale. This is sometimes beneficial to the plaintiff in the same line of work as the defendant. Take for instance the subcontractor suing the contractor; they may certainly need some of the contractor’s equipment used in their industry. (I for one, have no use for a backhoe.) But, if Joe Blow Contracting owns nothing or the assets are in the name of a spouse or other individual, Joe Blow Contracting is, in effect, judgment proof. This is the “paper judgment” that you hear about. While you have won a judgment on paper, you cannot get the cash to make you whole.

So what is the lesson of this story? When you are suing an insured party, confirm coverage in writing. If they are only covering certain aspects of your lawsuit, you should know about that before charging full steam ahead. If your lawsuit involves individuals or entities who do not have insurance coverage to cover a verdict, know this in advance. Do an asset check first. Hire an investigator before starting the lawsuit. KNOW YOUR DEFENDANT! It is better to know prior to incurring significant attorneys fees and spending a year of your life chasing down your “win.”                                                                    

So....happy hunting and happy holiday! (A true lawyer’s holiday greeting!)