This is part 2 in our series on settlements regarding injuries to minor children.
In part 1, we explained the ethical duties lawyers have to children. We continue in this article with how Courts supervise these cases, even if claims are settled without litigation.
As explained in the previous article, minors (those under age 18) cannot enter into contracts, and therefore cannot consent to settlement agreements.
If a child is injured and the parent negotiates a settlement in lieu of having to file a lawsuit, that settlement must still be approved by a judge. Since the settlement is agreed before the lawsuit is filed, the parties will have to actually file a suit just for purposes of having the settlement approved.
Parties Must file a Friendly Suit in order to have child’s settlement approved in Oklahoma
A friendly suit is when the parties have settled the case out of court, but now are seeking court approval of the settlement. Normally, such a formal process is not required when representing an adult.
While representing an adult, the lawyer and adult client can agree with the defendant or insurance company about what is a reasonable settlement, sign the necessary paperwork (settlement agreements, release of claims) and exchange payment. The adult client is free to make these decisions on his/her own, and can agree in writing to waive any future right to sue in exchange fore payment.
A child, however, does not have this capacity. Therefore, Courts must approve settlements that are reached on behalf of minors.
The procedure for settling a case on behalf of a minor child is that all parties involved jointly file a “friendly suit,” in the district court of the county where the child resides or where the case takes place. A friendly suit is a lawsuit where everyone is already in agreement but are jointly seeking court approval.
Either the lawyers for the plaintiff or the defendant may file the suit, stating the facts of the settlement.
The court will then set the matter for a hearing.
In Oklahoma, Courts require the parties to appear and testify about the Settlement for the child
At the hearing, the court will take record of who the parties are, who the representative attorneys, and the age of the child. The court will hear testimony of the parent or guardian regarding free, voluntary agreement and acceptance of the settlement.
The court will note the amount of the settlement, and out of that total settlement amount what additional amounts are to be deducted for attorney fees, costs, and any outstanding medical liens.
The court will also want to inform the parent/guardian that the remaining funds belong to the real party in interest, the minor child, and not to the parent.
The judge will then order the funds to be held in a federally insured bank account until the child reaches the age of majority (age 18).
Next: Holding the Funds in Trust
In the next article, we will explain how settlement funds are paid to the child and held in trust until the child reaches age 18.