Judgment Definition

The "Legal-Ease" Glossary
Judgment

This refers to a formal decision made about a court case at the end of a lawsuit. When it comes to lawsuits, there are three major ways a civil case can play out:

  • It can be dismissed by the judge. Usually, this only happens when there isn’t the legal groundwork for the case to move forward. This is the fate of most frivolous lawsuits that plague the justice system.
  • It can be settled out of court. Even when a case moves to trial, it can be settled out of court at any point before a verdict is reached. Settlements often cost less than going through with a trial.
  • It can be decided by a verdict. In civil cases, this ends with a judgment, which typically involves the defendant paying the plaintiff to compensate for their loss.

You can learn more about settlements and judgments in the blog post “Settlements vs. Judgments in Malpractice Lawsuits: What’s the Difference?

Let’s say your business is targeted in a professional negligence lawsuit. The case goes to trial and your business is found liable. The judge decides you owe the plaintiff $1 million in damages. But where does that money come from if you don’t have Professional Liability Insurance to cover the judgment?

There are several ways the plaintiff can collect what they’re owed. For example, they can collect on…

  • Personal income or assets. Your bank account and real estate can be levied.
  • Future income or assets. Even if you’re broke at the present, the plaintiff can collect on assets you may acquire in the future. Judgments can be collected for many years, so long as the paperwork is renewed, and they accrue interest until they are paid off.
  • Business income or assets. The plaintiff can order that you sell valuable equipment or machinery to pay off your judgment.
  • Licenses. If you are licensed professional, the plaintiff can file the judgment with your state licensing board (depending on where you live). If you don’t pay the judgment or post a bond, you could lose your license.

With good legal counsel and diligence, a winning party can exhaust countless ways to collect on your debts. That’s why it’s always a good idea to have liability insurance and keep your policies active throughout the life of your business.

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