The process of obtaining payment for a personal injury can feel like it drags on forever, especially when you have bills to pay and financial losses to cover. But compared to the timeline for settling a claim, the wait to receive a payment is pretty short. From the moment your claim settles, you can often expect to receive settlement money within a few weeks.
Here’s what you need to know about getting paid after a personal injury settlement, and what a personal injury lawyer can do to make sure you receive all the money you need to cover your expenses and plan for the future.
Quick Review of Settlements
A settlement is an agreement to resolve a legal claim out of court. In the context of personal injury cases, the parties to a settlement are usually the injured claimant, an insurance company that has an obligation to pay the claimant’s losses, and (when applicable) an individual or corporate entity that has liability for the claimant’s damages.
Most personal injury claims settle. The typical personal injury settlement consists of an agreement for the claimant to receive an amount of money in exchange for releasing the parties from liability and terminating any pending legal action against them.
Lawyers usually negotiate settlements on behalf of the parties to the settlement agreement. But the decision whether to settle a claim rests with the parties themselves. No lawyer can agree to a settlement on your behalf without your permission.
Settlements are generally final. You usually can’t reopen them, even if it turns out later that you didn’t get enough money to cover your personal injury losses. Settle a claim only when it offers the most favorable outcome you can realistically achieve.
Steps Involved in Receiving Settlement Money
Getting settlement money involves completing a series of relatively standard steps. On average, you can expect these steps to take anywhere from two to six weeks to complete.
Executing a Written Settlement Agreement
The obligation to pay settlement money usually arises only once a formal, written settlement agreement has been signed, sealed, and delivered. In other words, your case doesn’t officially settle when your attorney and the other side agree to the terms of a settlement in a phone call by email. Instead, in most cases, the settlement only becomes final when it’s put into writing and signed by the parties or their representatives.
Sending the Money by Check or Wire Transfer
The settlement agreement may set terms for the timing of payment. For instance, it can require the insurance company or at-fault party to pay the settlement amount immediately, or it might give them a window of time to pay after the settlement agreement has been executed. Whatever the time period agreed, you can expect the payor to wait as long as possible. Payers, particularly insurance companies, prefer to hold on to their money as long as possible.
The settlement agreement may also spell out how they send the payment. Wire transfers are preferable for personal injury claimants, because they’re nearly instantaneous. But payers tend to prefer payment by the much slower means of a paper check, which takes a few days to arrive by mail and up to a week or so to clear (depending on the amount).
Placing the Funds in an Attorney Trust Account
When an attorney represents you in a settlement, the settlement money generally goes to the attorney’s trust account. That’s a bank account the attorney maintains separate from the attorney’s business or personal accounts to hold client funds.
Paying Liens
Once the money has arrived in the trust account, the attorney typically uses it to pay any existing liens on your settlement. A lien is a formal claim against specific property. In personal injury cases, it’s common for the injured person’s creditors to have filed liens against settlement funds, often after having agreed with the injured person’s attorney to forebear from (delay) collecting debts until the settlement funds arrived.
Creditors who may place a lien on your settlement might include:
- Medical providers who treated your personal injuries and have yet to be paid for their services.
- Your own insurance company, if it agreed to pay your accident-related expenses in exchange for your agreement to reimburse those payments out of any settlement.
- Child support and other priority obligations that state law requires you to pay out of any settlement amount.
Before agreeing to a settlement, be sure to tell your lawyer about any accident-related debts you owe or other liens you may have against your assets, so that the lawyer can address them in your settlement agreement and when handling settlement funds. Failing to advise your lawyer about pending liens can land you in legal hot water with creditors, government authorities, or the courts.
Deducting the Lawyer’s Contingent Fee and Case Expenses
Personal injury lawyers routinely work on a contingent fee basis, meaning the fee for their services consists of an agreed percentage of the settlement amount. Your lawyer may also have agreed to pay the costs of pursuing your case, subject to reimbursement from any settlement. Before disbursing the funds to you, the lawyer will deduct these amounts.
Paying the Remaining Settlement Funds to You
Having completed the steps above, your lawyer typically sends you the remaining settlement funds in the manner you request either by wire or check. It’s usually up to you to decide where the lawyer sends the funds and the type of account to deposit them in.
Structured Settlements vs. Lump Sums
The payment process above describes what happens when you receive a lump sum settlement. All of the settlement funds arrive at once in a single payment from the at-fault party or insurer to the injured party.
But not all settlements are paid in lump sums. In many cases, the parties may instead agree to a structured settlement. Instead of a single payment, the at-fault party or insurer pays the funds over time in specified amounts or based on agreed disbursement conditions or milestones.
Possible Reasons for Agreeing to a Structured Settlement
Structured settlements can make good sense in some personal injury cases when:
- The injured person prefers to receive a steady, predictable stream of payments to support them over the long-term, rather than managing a lump sum
- The injured person wants to ensure they can pay specific future medical or other expenses
- The injured person is a minor and settlement funds will be allocated to future expenses like education or paid into a trust that matures in adulthood
- Receiving funds over time has tax advantages for the injured person
- The at-fault party lacks the current financial resources to pay the full settlement amount immediately
- The at-fault party offers a higher settlement amount under a particular payment structure
- Statutes or insurance policy provisions give the liable party the option to pay damages over time
These are just a few scenarios where a structured settlement might make sense. Every personal injury case differs. Experienced personal injury lawyers know how to advise their clients on the pros and cons of structured settlements as compared to lump sums.
Factors That Can Delay Receiving Your Settlement Money
Ideally, you would like to get your hands on the funds from your settlement as soon as possible (subject to any restrictions of a structured settlement). That’s your lawyer’s goal, too. But some factors can delay the final disbursement to you. Here are some examples.
Settlement Agreement Negotiations
Sometimes, even after agreeing on the amount of a settlement, it takes extra time to finalize the agreement in writing. For example, the lawyers may still need to negotiate the scope of the release you give in exchange for the settlement payment, or whether and to what extent you must keep the settlement confidential.
Your lawyer must balance your desire to receive funds quickly against protecting your legal interests. You can expect your lawyer to keep you informed about any issues that may delay putting the settlement in writing.
Court Approval
Some settlements require court approval. For example, it’s common for courts to review settlements made on behalf of minor children who have suffered a personal injury, to ensure the settlement terms serve the child’s interests. Courts typically must also review settlements in class action lawsuits, or when a party to the settlement is a debtor in an ongoing bankruptcy proceeding. Adding the extra step of court approval to the process can delay receipt of your funds.
Bank Delays
Depending on the size or source of your settlement payment, it can take time for banks to clear funds as they move from one bank account to the next. Sending money by wire can alleviate some of these delays, but banks must follow precise clearance and fund settlement procedures and everyone including the parties and their lawyers—has to live with them, even if they slow things down.
Lien Disputes
Disagreements about whether or how much you owe to a creditor who has filed a lien on your settlement proceeds can delay you receiving your money. This can happen in a variety of contexts.
For example:
- You dispute that you have to pay certain medical bills out of pocket, and believe your PIP or health insurance company should pay them instead
- A creditor never rescinded a lien on a debt that you’ve already paid
- You disagree with a creditor about the size of a debt you may owe
- You and a creditor disagree about whether certain settlement funds are exempt from a lien (for example, whether they’re subject to a tax lien)
Your lawyer may need to take steps to resolve a lien dispute before disbursing money to you. This can delay receipt of your settlement money.
Payor Bad Faith or Breach of Settlement Agreement
Though it happens only rarely, delays can arise when the party owing settlement payments acts in bad faith or breaches the settlement agreement. In these circumstances, your lawyer may need to take additional legal action against a party to force them to fulfill their payment obligations to you. You may have the right to seek additional damages for a party’s bad faith conduct or breach of the settlement agreement.
Can You Do Anything to Speed up Payment?
You might feel frustrated by even a short wait to receive your settlement funds. After all, settlements sometimes happen only after months or even years of litigation. And you might wonder if there’s anything you can do to speed the process.
Practically speaking, most of the potential sources of delay in receiving your settlement payment, discussed above, are out of your hands. That said, you can ensure that nothing you do slows the process down.
For example:
- Give your attorney your current contact information and tell them the best way to get ahold of you.
- Respond promptly to any requests from your attorney for information or permission to take action on your behalf.
- Provide your attorney with all information you have about accident-related debts and potential liens on your settlement funds arising from other obligations (such as child support or tax liabilities).
- Follow your doctor’s orders and lawyer’s advice while your legal action is pending, to minimize the number of disputes that might arise over who has liability or the potential size or terms of your settlement.
The legal process almost never moves as fast as you wish it would. But by taking these measures you might avoid inadvertently causing delays of your own.
Contact an Experienced Personal Injury Attorney Today
An experienced personal injury attorney can handle the entire process of building and settling a claim on your behalf. Hiring a skilled lawyer gives you the greatest chance of achieving the maximum settlement available in your case, and of getting your settlement money as fast as possible.
For a free consultation about the prospects for and timing of a settlement in your case, contact an experienced personal injury attorney today.
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Mr. Finkelstein is the Managing Partner of Finkelstein & Partners, LLP. He has become a noted consumer activist through his representation of injured individuals against corporate wrongdoers and irresponsible parties.
An accomplished litigator, Mr. Finkelstein has represented Plaintiffs in wrongful death and catastrophic personal injury cases. He has successfully handled dozens of multi-million dollar cases.