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Erin Andrews – When $55 Million Really Means $6 Million

While Erin Andrews and her team of lawyers received an incredible verdict in her peephole lawsuit, the actual award of $55 million is a lot of smoke and mirrors. First, of the $55 million awards, she will never see a penny from the actual perpetrator, Michael Barrett. However, Michael Barret is supposed to pay her $28 million. Unfortunately, “He can’t afford $100, let alone $28 million,” Michael’s father, Francis, said at his Portland, Ore., home Tuesday. “If he could, he wouldn’t be living in my basement.” Michael already spent 2 ½ years in prison for stalking Andrews and was released from federal prison in 2012. He filed for bankruptcy the same year, listing a mere $3,000.00 in assets and $159,891.00 in debt.

So, it remains to be seen how much Andrews will be able to collect from the Nashville Marriott, which is responsible for the remaining $27 million of the award. Marriott will almost certainly appeal the verdict. With an appeal, that’s more costs for Andrews to pay for her lawyers. Also, an appeals court very well might overturn the verdict on the grounds that the verdict is excessive considering there’s no physical injury and only emotional distress.

That leaves Andrews in the position of seeking a settlement. That settlement will, presumably, be less than $27 million and more in the area of $20 million. Of that $20 million, lawyers typically get around 40% of the recoverable judgment where the case goes to trial. The lawyers, therefore, pocket $8 million, leaving Andrews with $12 million. The costs for preparing the case are estimated to be in the area of one million, whittling that $12 million down to $11 million.

Now, enter the IRS. In cases where someone wins an award for emotional distress without any physical injuries, the award is taxable. So the $11 million becomes more like $6 million after taxes. Who really wins? Well, I’m sure the lawyers are not complaining.