The result of most claims with insurance companies or lawsuits is a settlement. Sometimes, a case will be taken to trial and a jury will render a verdict. Regardless, at this time, a sum of money has been awarded to compensate you for your injuries and losses. Many clients wonder what happens next, and why this process can potentially be so time-consuming.
Once a settlement agreement has been reached and a release signed, a check will be issued to the law firm and the client. Attorneys in the state of Texas are required to have what is known as an IOLTA (Interest on Lawyers Trust Account). The monies received must be deposited into this account and, at this time, can’t be used by the attorney for anything unrelated to your settlement. Typically, it can take anywhere from a few days to a few weeks for these checks to be mailed out to your attorney, depending on how complicated the case is. Then, once received, the check must be deposited in the IOLTA and the check must clear the bank, which can also take a few days.
From there, it is up to your attorney to ensure that all of the proper parties are paid. Sometimes, this requires the insurance company to issue checks directly to other parties, such as hospitals with liens, insurance companies with subrogation rights, any monies Medicare or Medicaid may have paid, and/or the Attorney General’s office if there is an active child support lien. Typically, your attorney will also have case expenses and fees that are taken out of your settlement. These will need to be accounted for as well.
Once all of this has happened, your attorney should present to you a breakdown of where all of your settlement money is going. This should include the total settlement value, attorney’s fees, case expenses, and any medical providers, insurance companies, etc. that are being paid out of your settlement. The remainder of the settlement after these have been accounted for is what you, the client, will recover.
The breakdown will require your signature to acknowledge that you agree and understand where and how your settlement funds are being split up; after doing so, you should receive the funds from your attorney. In some instances, these funds may be required to be placed in the registry of the court, a structured settlement, or may all be taken up by outstanding liens. Each case is different and should be evaluated as such.
After agreeing to the terms of your settlement, then your attorney is free to transfer the funds from the IOLTA. At this time, your case is considered closed.
It can be quite a time-consuming process, but the end result is that you have the peace of mind of knowing that your settlement was handled the right way and that all loose ends have been handled.
The process of disbursing settlement funds in a legal case involves intricate steps to ensure all parties are compensated correctly:
- Settlement or Trial Verdict: Following a settlement or a jury verdict in a lawsuit, a sum of money is awarded to compensate for injuries and losses sustained.
- Issuing of Funds: Once a settlement agreement is reached and signed, a check is issued to the law firm and the client. Attorneys in Texas must deposit these funds into an IOLTA account, safeguarding them for settlement-related purposes only.
- Payment Distribution: The attorney is tasked with disbursing funds to various entities. This may involve issuing checks to hospitals with liens, insurance companies holding subrogation rights, Medicare or Medicaid for medical costs, or the Attorney General’s office for child support liens. Additionally, case expenses and attorney fees are deducted from the settlement amount.
- Comprehensive Breakdown: Your attorney should provide a detailed breakdown of how the settlement funds will be distributed. This breakdown typically outlines the total settlement value, attorney fees, case expenses, and payments to medical providers and insurance companies. The remaining balance after these deductions represents what the client will receive.
- Client Confirmation: To ensure transparency, clients are required to sign off on the breakdown, acknowledging their understanding and agreement with the fund distribution plan. In some cases, funds may need to be allocated to court registries, structured settlements, or to settle existing liens.
- Funds Disbursement: Once the client agrees to the distribution terms, the attorney can proceed to transfer the funds from the IOLTA account. This action signifies the closure of the case and the completion of financial transactions related to the settlement.
The process following a settlement in legal cases, whether through insurance claims or lawsuits, may appear lengthy and intricate to many individuals. However, this meticulous and time-consuming process is meticulously designed to ensure that the settlement is handled correctly, all financial responsibilities are fulfilled, and clients are fully informed about the distribution of their funds. By delving deeper into the various stages of this post-settlement procedure, we can understand the significance of each step in ensuring that the settlement process is managed appropriately and transparently.
Importance of the Post-Settlement Process:
- Accuracy and Ethics:
- The detailed post-settlement process is crucial in upholding the accuracy and ethical standards of the legal system. It ensures that all parties involved receive their rightful compensation and that the client’s interests are safeguarded.
- Financial Obligations:
- By following a structured approach after a settlement, all financial obligations, such as attorney fees, case expenses, medical bills, and liens, are meticulously accounted for and settled. This helps prevent any discrepancies or outstanding payments that could affect the client’s financial well-being.
- Client Awareness:
- Transparency is key in the post-settlement process. Providing clients with a breakdown of how their settlement funds are allocated enables them to understand the distribution of funds, including the total settlement value, deductions for fees and expenses, and payments to relevant parties. This empowers clients to make informed decisions and ensures they are aware of every aspect of the settlement.
Detailed Breakdown of the Post-Settlement Process:
- Settlement Agreement and Release:
- Once a settlement agreement is reached, a release is signed, and a check is issued to the law firm and the client. The funds are deposited into the attorney’s IOLTA account, ensuring they are held securely until disbursed appropriately.
- Payment Distribution:
- Attorneys are responsible for disbursing funds to various entities, such as hospitals with liens, insurance companies, Medicare/Medicaid, and other relevant parties. They also deduct their fees and case expenses from the settlement amount, ensuring all financial obligations are met.
- Client Notification and Approval:
- Clients are provided with a detailed breakdown of the settlement funds’ allocation. This breakdown includes the total settlement value, deductions for fees and expenses, and payments to other parties. Clients are required to acknowledge and approve this breakdown before receiving their share of the settlement.
- Remaining Funds and Outstanding Liens:
- In some cases, funds may need to be placed in the court’s registry, structured settlements may be arranged, or outstanding liens may need to be addressed. Each case is unique, and the attorney ensures that all loose ends are tied up before finalizing the settlement.
- Closure of the Case:
- Once the client agrees to the terms of the settlement and the necessary payments have been made, the attorney can transfer the funds from the IOLTA account. This marks the closure of the case, providing the client with the assurance that all aspects of the settlement have been appropriately handled.
Conclusion:
In conclusion, while the post-settlement process may appear time-consuming, it plays a vital role in ensuring that settlements are managed accurately, ethically, and transparently. Through meticulous disbursement of funds, addressing financial obligations, and keeping clients informed, this process offers peace of mind to clients, knowing that their settlement has been handled in the right manner. By adhering to these detailed procedures, all parties involved can trust that the settlement process is conducted with integrity and precision.
