Are Law Settlements Taxable?

Are law settlements taxable? I’ve seen several articles written about this question. It’s important to understand the answer. There are actually many situations where the answer may be ‘yes’. For example, consider a personal injury case.


Personal injury cases, contract law, civil law resources, tort law, are all law suits, and law settlements taxable, which mean that they are taxable to the party that brought it. In a car collision example, one of the parties (the one who got hurt) might be able to recover their expenses from the driver of the other vehicle. That party’s expenses are ‘taxable’ to them, that is, they are entitled to recoverable damages. However, if the driver was not insured, or did not have enough coverage to pay their expenses, the plaintiff (the person who got hurt) may not recover anything at all. It could even be argued that they brought the accident upon themselves, and their attorney is simply trying to collect what they can; but if a lawyer does their job right, they may actually achieve that.


Some of the things I discuss in my practice with clients regarding what is not a lawsuit are also true in situations where an injury is sustained. For example, many people ask, “What if the car accident attorney is not doing his job, and the settlement doesn’t cover all of the bills?” Some say that the car accident settlement is a tort, not a lawsuit, but I disagree. The tort is what prevents a plaintiff from collecting from the person who caused the injury.


I believe that the lawyer’s obligation is to his client, and that is a responsibility that should never be negated. However, this does not mean that a personal injury lawyer is a slave to his paycheck. There are a number of ways that a lawyer can ensure a successful case outcome, and some are beyond the scope of this article. However, some of the issues I will mention are within the range of what an ethical lawyer can do on his own, as well as what an ethical lawyer can do as part of a team.


Let’s begin with the issue of negligence. In most cases, a car accident attorney will not only attempt to recover money for the victim, but will also work on the defense of the client. This is what I call “crisis management.” There are many ethical lawyers who try to aggressively pursue settlement cases based on the possibility of future negligence claims against them. This is not unethical, but it is part of good professional practice.


Then we have “adversary recovery.” In order to understand this issue, you must understand the concept of “adversary recovery.” The law dictionary defines adversary as “a person or persons having or claiming some right.” We use the same definition in our everyday life, when someone says something bad about someone else, or something good about themselves.


In most cases, when someone is harmed, the injured party will ask the court to find that the other person caused the injury. Most law courts have interpreted this language so that if there is evidence that the person who committed the act caused the injury, then that person can be held personally liable for the action. This is referred to as “lawsuit recovery,” and it is extremely common in car accidents. Even when the accident itself did not injure the person who was the victim, the person who caused the accident may be responsible for being the “insurance” and paying damages to another party. Thus, you should take many law courses before becoming a personal injury lawyer in order to learn how the various statutes and case laws may affect your ability to file suit in a given situation.


The final topic that we will discuss is “law of diminishing.” You probably already know what this means, but if not, let me explain. There are basically two different concepts involved here. The first one is that any law is “law.” The second concept is that a law is “legal” if it authorizes some action or regulation of conduct, whether unlawful or not.