I devote a not-so-small portion of my practice to serving as a guardian ad litem in cases involving minor settlements. I scratched my head a number of times last year at anecdotes I heard and things I witnessed myself when it came to dealing with minor settlements.

And that got me thinking; maybe we should all think a bit more about how to most effectively and efficiently approach settlements offered to minors.

I am hopeful that anyone reading this article knows that a “minor cannot be bound by an extrajudicial settlement.”¹

And since I always find it good practice to defer to those wiser than myself, I’ll borrow the Anderson court’s own warning: “a calculated risk is taken in striking a bargain without the benefit of judicial approval.”²

So if you find yourself facing a minor settlement, and generally agree that seeking court approval is a best practice, then what?

Select a Guardian ad Litem

I have thoughts on this (naturally, as you’re reading my article about those thoughts).

In terms of my personal injury practice, I am primarily a plaintiffs’ attorney. And I feel strongly that the GAL appointed to make a recommendation to the court to approve a minor settlement should not be the minor’s personal attorney. There are a few exceptions I will note shortly.

This is food for thought only, and although I can’t point you to case law, Eau Claire County seems to be in agreement, as it has enacted Circuit Court Rule 304, which reads:

In a personal injury action involving a minor, neither the minor’s attorney nor a member of the attorney’s firm may be appointed guardian ad litem for the minor.

When an attorney serves as personal counsel for a minor, that attorney has a financial interest and incentive to settle or resolve the claim. Even the very best attorneys would have a hard time setting aside their own interest to speak only to the best interests of the minor.

A GAL should be a true neutral, who has one singular objective: representing the best interests of the minor.

This is not a statement of criticism, but I have been appointed in more than one case where the minor had counsel, and the minor’s attorney missed a lien. It was my job, in protecting the best interests of the minor, to identify that and address it. And anyone who has done this work, serving as a GAL, has likely had to have a difficult conversation with personal counsel about the reasonableness of their incurred costs or attorneys’ fees.

Court Approval Is Best

While I still do not love serving as GAL when I am also representing a minor as their personal counsel, if local rules do not prohibit it, I stomach it when asked, if the settlement involves a limits tender. This is because I rationalize that there is no better result that could be achieved for the minor, and the presentation to the court is more in the details (have we appropriately identified and negotiated the liens, have we identified possible sources of other coverage and addressed those additional claims, and are we making sound decisions about how to invest or protect the minor’s settlement proceeds).

While I also feel strongly that court approval is almost always more beneficial to the insurance company than to the minor, if I am representing a minor there are reasons why I would also want a court order approving the settlement.

Most often, it’s because I cannot place funds into a bank account and restrict that bank account in any way without a court order.

This brings me to my next exception: when the minor’s settlement is nominal or low-dollar, I have found it not uncommon for the insurance company to be uninterested in seeking court approval. Often in these very small settlement cases, I have already chosen to cut (or waive) my fee on behalf of the minor client, which means I do not have the means by which to pay another attorney to do the work of a GAL. And it’s not the easiest task to find someone willing to work for free.

So in those cases, I can volunteer my own time, and will often serve as the GAL so I can obtain a court order approving the settlement.

Use a GAL with Personal Injury Experience

My final thought on selecting a GAL: I really think we should all be focused on working with attorneys who understand personal injury cases when looking to appoint a GAL. It is confounding to me how many family law attorneys get appointed to serve as GALs in minor personal injury settlement matters.

When we practice law, in whatever capacity that is, we are required by the rules of professional conduct to do so competently, pursuant to SCR 20:4.5 and SCR 20:1.1. I will raise my hand and admit that even though I know my way around a personal injury case and feel competent to serve as a GAL when it comes to reviewing, investigating, and ultimately recommending a minor settlement, I would be very unqualified to serve as a GAL in a placement dispute.

Does a family law attorney understand the difference between ERISA health plans, health plans subject to state law, and Medicaid plans? I am confident they do not, as they have no reason to have that knowledge base.

You can see where I am going with this. But it goes beyond the nitty-gritty of managing the details of a personal injury settlement.

How do you evaluate a settlement for reasonableness of value when you have never handled, settled, or tried a personal injury case? I am sure by now you know where I land in response to that question, and it’s why I feel very strongly that to be most effective on behalf of minors, you have to understand the ins and outs of a personal injury case.

Be Efficient

Until a minor’s settlement is approved, nothing can happen with their potential settlement funds. So a GAL, in my opinion, should be motivated to work as efficiently as possible to be thorough, to address all of the necessary issues touching on the settlement, but also to move the case to hearing (or approval on paper) as soon as possible.

While a minor settlement matter is pending, the GAL should communicate regularly with the minor’s parents or guardians, and provide status updates to the insurance company so everyone knows what’s going on.

Be Thorough

An experienced GAL must be thorough, and sometimes this requires a backbone. It can be very uncomfortable to have to question an itemization of costs or to inform the insurer that you are not comfortable recommending a settlement.

If you are hired by an insurance company to serve as GAL (which is perfectly acceptable – more on that in a minute), the insurance company is not your client. Keep in mind what your responsibilities and duties are as a GAL. I have been approached by more than one insurer who indicated something along the lines of “because the minor isn’t represented, we’ll just cover the liens and pay them X,” when those numbers may not add up to the actual specials.

Folks can have different opinions, but I am unaware of any law in Wisconsin that says, “if a minor is unrepresented, you do not have to consider the amount of the medical bills as billed” when evaluating the value of the claim presented.

I make it clear in those cases that I am happy to serve, but unless there are grounds to argue that the medical bills as billed were unreasonable or there are significant arguments about contributory negligence or a liability question, I do not agree with an evaluation that looks at just payments made by a health insurer.

GALs Hired by Insurance Companies: It’s Not a Conflict

And now to my comment on whether it’s a conflict for a GAL to be hired by an insurance company. It is not.

I do think there may be judges in Wisconsin who think GALs should work for free. I know it sounds odd, but just trust me when ​I say this belief exists.

Do I have something other than my own thoughts to support this? I think so. SCR 20:1.8(f) permits lawyers to receive third party payment of fees, and GALs fees are paid almost exclusively in this manner.

The fact that a third party is paying the GAL’s fees does not by itself create a conflict in SCR 20:1.7 – see, for instance, ABA Formal Op. 02-428.

Still not buying this? Consider the fact that public defenders are paid by the State, and the State is the party opposing their client in every case. Just food for thought.

Know Your Venue

If you have ever handled a minor settlement hearing, you will understand how different the process is from county to county. Venue. Matters.

If you are the one considering appointing a GAL and you do not know what that attorney’s experience level is, ask! Make sure you know what you’re getting into by filing in one county versus another.

There can be major headaches faced if you file in a county where the county’s practice is, hypothetically, to require that a probate action be opened so a guardianship of the estate can be established.

This is not “the” process, but in the counties where I do the most work, when I am asked to serve, I draft all of the initial paperwork (this includes the Petition for Appointment, Consent to Serve, and Order Appointing) and provide that to the attorney representing the insurer (who typically hired me) and that attorney does the filing. I am then provided an authenticated copy of the Order Appointing so I can opt in to the efiling system. Voila- we’re off to the races.

However, this may sound crazy to folks who traditionally file in Milwaukee County, as an example, as the process there is very different (not bad, or wrong, just different).

All of this is to get to the point of just knowing what the expectations are when you decide to move ahead and select a GAL.

A Valuable Process

I have many more thoughts – but I am well-past the recommended word count I was given – so let me leave on this note. I think the minor settlement process is an incredibly valuable process, for both the insurance company and for the minor, if it is handled well.

So, what do you say we all collectively aim for a 2025 filled with only smooth sailing minor settlement matters? Cheers.

This article was originally published on the State Bar of Wisconsin’s Litigation Section Blog. Visit the State Bar sections or the Litigation Section webpages to learn more about the benefits of section membership.

Endnotes

¹In re Andresen, 17 Wis. 2d 380, 382, 117 N.W.2d 360 (1962).

2 ​In re Andresen.​