Do Personal Injury Attorneys Really 'Take' Claimants' Settlement Money?

According to data from the Bureau of Justice, more than 96 percent of personal injury cases are settled out of court. Typically, the insurer of the individual or entity that caused your injuries agrees to cover the damages. 

And if you agree to the settlement offer, you give up the right to sue. However, unbeknownst to most people, the funds can take a while to hit your bank account. 

Here is what happens: the insurer sends a settlement check to your lawyer or the law firm representing you to cash. 

Understandably, this might cause you to wonder, "Has my attorney taken my money?" 

Fortunately, that's not what happens. Your lawyer must follow procedures before you get the settlement money. Read on for more information. 

What Happens to the Settlement Money?

After agreeing with the defendant's insurance company, the underwriter will direct the settlement check to your attorney or firm. 

While you may rightfully feel on edge thinking that your legal representative will take your money, something else is at play here. Once the firm cashes the check, it goes straight into a trust or escrow account, not their business or personal accounts.

There is a reason lawyers do this: The law mandates that the money be put in such special accounts until specific steps are completed. Here is a rundown of what happens next:

• Parties with a claim to the funds are compensated- This is the first thing that happens. If your health insurer covered your medical care, they may have a claim for the money. Your attorney will start by compensating them first. 

• Your lawyer collects legal fees and expenses- Most attorneys work on a contingency fee basis, which means their compensation is contingent on the case's outcome. Thus, they will deduct an amount equal to your agreed-upon percentage and any other case expenses. 

• You receive the remainder of the money- Once every bill and expense is sorted out, your attorney will send you the remainder. 

With that being said, how long will it take before I receive my money? That depends. 

Personal injury attorney Rich Godshall of Ostroff Godshall Injury and Accident Lawyers says, "It can take a few weeks to several months for the plaintiff to receive the settlement, depending on whether there are any roadblocks along the way."

Here are some of the factors that can delay the settlement:

• Improperly signed release forms 

• Banks delaying to clear the checks 

• When a minor or an estate is a party to the settlement 

• When negotiations between your attorney and lienholders hit a brick wall because of incorrect or unjustifiable debt amounts

If everything goes smoothly, it may take a few weeks for your attorney to clear all the debts and deposit the money into your account. 

Can Your Lawyer Really Take Your Settlement Money?

You should know that the money is legally yours once all the debts and payments have been settled. If your attorney misuses the funds even slightly, the consequences can be severe as this violates the law.  Therefore, your lawyer cannot take or borrow your settlement. What they can do is collect legal fees and expenses that you had agreed to pay upfront.