Under the common fund doctrine, a party recovering from a fund created by another's efforts must contribute proportionally to the attorney fees and costs of creating it. Applied to liens, it reduces the lienholder's recovery.
Application to ERISA plans is limited.
Alternative Names:
Common Fund Rule, Fund Doctrine
Why it Matters?
The doctrine reduces every lien by the proportional share of fees and costs, which is a meaningful reduction where contingency fees are involved. Lienholders frequently assert their full claim without applying the reduction, and raising it is straightforward where the doctrine applies. ERISA self-funded plans with explicit disclaiming language have generally avoided it, which is the significant exception.
Frequently Confused with
Related terms
Frequently asked questions
What does the doctrine accomplish?
What is the significant exception?
