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Gerald, Esq
Gerald, Esq, Lawyer
Category: Legal
Satisfied Customers: 4194
Experience:  30 years of experience
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I settled a lawsuit against a hospital termination and

Customer Question

I settled a lawsuit against a hospital for wrongful termination and settled at mediation for 375,000. They stated in the settlement agreement that they would be sending me a 1099. My attorney however told me I would not be paying taxes in that personal injury settlement however I got a 1099 and will owe 66,000. Had my attorney told me that I definitely would not have settled. Secondly the settlement agreement states that they were issuing my attorney a check for $160,000 " to cover attorney's fees and expenses incurred by employee in seeking legal advice". Then why did my attorney charge me an additional $25,000 in retainer and fees? Seems like he got paid twice. How can I resolve this and can I sue my attorney?
Submitted: 1 year ago.
Category: Legal
Expert:  Gerald, Esq replied 1 year ago.


Thank you for using Just Answer. I want to provide you the best service I can. Please feel free to ask any follow up questions you have.

I am an attorney with 30 years of experience; I hope to provide you information that will help you in resolving your question.

The fact that you were issued a 1099 does NOT determine whether you have to pay income taxes on the settlement. You stated two things in your post that have me a little confused. Perhaps you can help me a little:

1) You state the settlement was for "Wrongful Termination" and

2) You state that it was for a "Personal injury."

Compensation for physical and related psychological injuries (that is psychological trauma connected to the physical injury) are not taxable, even if you received a 1099. You will need to exclude that amount from income and demonstrate it was compensation for personal injury.

Compensation for lost wages, back pay, future pay are economic damages and are taxable. If the underlying cause of action was contractual in nature you must pay taxes.

See this article for more detail:

As for suing your attorney, in regard to fee disputes, Florida has a Fee Arbitration program that is faster, simpler, and less expensive (in fact the client often pays nothing for the arbitration process). Participation by the attorney is mandatory and binding. So you may wish to consider that process. Here is information on it:$FILE/FeeArb-App&Instructions.pdf?OpenElement

If you wish to pursue damages for negligence in regard to the attorney's failure to advise you regarding the tax consequences, or negligently advising you, those are allegations to support a lawsuit. Of course there are the expenses in time, energy and resources to consider. The litigation process is more complicated, expensive, and time consuming than is the arbitration process.

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Good luck.

Please note: Information is educational and not given as legal advice. Only your local attorney can give legal advice. I can't establish or accept an attorney-client relationship with you. All posts are available for public viewing.

Kind regards,