When your personal injury case eventually settles, you will likely want to know how long your attorney can hold your settlement check.
Once your lawyer receives your settlement check, though, there are still some steps before you receive the final balance of your settlement after all deductions.
How Long Can a Lawyer Hold a Settlement Check?
It could take a few weeks to a few weeks for you to receive a settlement check, depending on your settlement agreement and the details of your case. Your attorney will first pay your settlement check into the escrow or trust account of the law firm. This typically takes five to seven days.
Before we outline what causes further delays in your settlement check arriving at the doorstep, what is a legal settlement?
Legal Settlement 101
According to data from the BJS (the Bureau of Justice Statistics), only 4% of personal injury cases reach trial. Most personal injury cases are settled outside a courtroom with the parties working out an agreement through their legal representatives.
A settlement is a legal agreement that ends a dispute and sees the case dismissed from the civil court system.
Settlements happen before the plaintiff files a lawsuit, but they most commonly occur after the plaintiff files paperwork initiating a civil trial. The time and expense of going to trial means it is usually in the interests of both parties to settle the matter out of court.
While the settlement process is straightforward, there are some common reasons for delays in settlement checks being issued.
What Causes Delays with Settlement Checks?
There is no fixed timeline for the delivery of a settlement check due to the complexities of each unique case. Some settlements finalize in six weeks or so, while others can take months to resolve.
The better your understanding of the process, the less frustrating you will find it. These are some of the most common reasons for delays in the settlement check process:
- Release forms
- Delays in processing
- Check clearance
- Payment of liens and bills
The first form you need to sign to kickstart the settlement check process is a release form. When you sign this form, you are agreeing to the settlement offer, and you are also stating that you relinquish the right to pursue future legal action against the defendant for the case in question.
You should ask your attorney to review the release form before you sign the document. Depending on the number of parties involved in the case, you may need to sign multiple release forms.
In some rare cases, one party may disagree with some provisions of the release form. This typically requires that the release form is redrafted, delaying proceedings.
Delays in processing
All states have different laws relating to the amount of time given to a defendant to issue settlement payment once the release form is signed.
Unfortunately, some insurers take the full time given by the law to process checks. Expect a wait of up to 30 days at this phase of proceedings.
Your attorney pays your settlement check into the trust account or escrow account of their law firm. It takes from five to seven days to clear with the issuing bank.
Once the check clears, your lawyer then needs to make further deductions before remitting the balance of your settlement, either by mail or by wire transfer.
Payment of liens and bills
If you have any outstanding medical bills or medical liens related to your personal injury case, your attorney will pay these bills from the settlement.
In most cases, settling liens is straightforward. Complications can arise if the government places a lien against your settlement. Resolving liens from government-funded programs like Medicaid or Medicare can take months.
Your lawyer will also use the settlement check to resolve all outstanding bills related to your case.
After deducting the pre-agreed legal fees – a percentage of your settlement – as well as any legal costs like expert witness testimony or private investigations, your lawyer will send you the balance of your settlement.
Speeding Up Delivery of Your Settlement Check
Proper preparation can streamline the settlement check process. The first thing you can do is to prepare a draft release form ahead of time. When you reach a settlement agreement, you will then just need to tweak the release form, sign it, and return it to your attorney.
Consult with your lawyer in advance of the settlement check arriving to calculate outstanding medical liens and bills. This will expedite the process once funds arrive.
Always respond in a timely manner to all requests from your attorney so you do not trigger any delays yourself.
What can you do if you need cash while waiting for a settlement check to arrive?
Consider Pre-Settlement Funding
Pre-settlement funding goes by many names, including legal funding and lawsuit loans.
With this form of non-recourse financing, you receive a cash advance against your anticipated settlement award. Neither your credit score nor your employment status is a qualifying factor for legal funding. All that counts is the strength of your case.
If you win your case, you repay the principal in addition to interest and a funding fee. If you lose your case, you repay nothing.
This type of financing is not the right solution for everyone. Interest is typically compounded monthly, meaning costs can spiral if your case takes a long time to settle. That said, in some cases, pre-settlement funding is the most practical route to staying above water financially while you wait for a settlement check to arrive.