How Settlement Funds Are Processed and Distributed

If you have settled a personal injury claim recently, you may be wondering why your lawyer has yet to call you to say, “Your check is ready.” There are so many processes in the settlement.

So how long can a lawyer hold your settlement check? The answer depends on several moving parts that happen behind the scenes once your case concludes. Every single stage of the procedure has a reason that defines its course, although it may seem like a waiting game. Let us look at what takes place after your settlement is approved and how the money ultimately reaches your bank account.

Step 1: Finalizing Settlement Agreement

After your lawyer and the insurance company agree on a settlement amount, they will finalize a settlement agreement. This is a written agreement that you, the injured party, will not take legal action for the amount that has been agreed.

Though it may seem like mere formality, the order holds significance under the law. Furthermore, acknowledgement to the supplier can lead to such a delay in payment. Before anything shifts, an agreement must be reviewed and signed (and sometimes notarized) by both parties.

Step 2: The Insurance Company Sends the Claimant a Check

Once the parties sign the deal, the insurer will write a check. This could take anywhere from a few days to a few weeks depending on the internal processes of the company. Big insurance companies usually have in-house approval channels that slow things down, especially if your payout is large. The check made out to you and your attorney’s law firm will be deposited to ensure it is safe and used for its intended purpose.

Step 3: Funds Go into the Attorney’s Trust Account

When your attorney gets the check, they do not just deposit it into their business account. The money is only deposited into a client trust account (sometimes called an IOLTA account). It is important because attorneys cannot intermix client money with their own money. “Clear” is when the bank confirms that the check is valid and that there is money in your account. Depending on the bank, this can take several business days.

Step 4: Clearing liens and deductions

Several deductions are done before you can get your share. Your attorney will take a look at any unfulfilled obligations related to your matter. Most lawyers specializing in personal injury lawsuits work on a contingency fee basis. This means that they will take a percentage of your settlement.

The next thing the attorney will discuss with you is court costs. These include things like filing fees, fees for expert witnesses, and charges for medical records.

If you have a lien or have bills you have not paid yet, your lawyer will pay the providers with a part of the settlement.

Step 5: You Get Your Share

Once all costs are paid, your attorney writes a check to you for your net recovery.  Within a few days after the check clears, all the bills are paid. Most of the time, clients receive their money two to six weeks after signing the settlement agreement. In some cases, it can take longer. The complexity of the case matters. Also, any liens that exist play a role in this timeline.

Why the Process Takes Time

It is totally normal to feel impatient at this stage, especially if you are depending on the settlement to cover medical costs or expenses of daily living. However, before releasing funds, the lawyers must comply with verification procedures.

These procedures protect you and the attorney, so every dollar is accounted for and the settlement is managed with proper transparency. Feel free to ask your attorney if the delay seems too long. They can often determine what is holding the deal up.

Conclusion 

• Getting the settlement is the final step of a long process, and while the waiting period may stress you out, the waiting is designed to ensure every party is paid properly and fairly.
  
• Knowing how the process works helps manage expectations and gives you peace of mind.
  
• The next time you find yourself wondering how long a lawyer can hold your settlement check, remember that it is not just bureaucracy.
  
• The process is very strict, so you receive what you deserve, and the right way.