Personal injury cases are complicated on a variety of different levels, and this includes how they are paid out. Having a better understanding of how this works can help you better understand the legal process and the path forward.
If you’ve suffered an injury in an accident that was caused by someone else’s negligence, don’t wait to consult with an experienced Charleston, South Carolina personal injury attorney like Trey Harrell.
How Do Personal Injury Settlements Work?
Personal injury claims often take a considerable amount of time to finally reach the settlement stage, and when this time comes, it’s only natural to experience relief. If you don’t understand how the settlement process works, however, you can be in for some unpleasant surprises.
Once you’ve reached a settlement, there is still work to be done, and it breaks down into several basic steps.
Signing the settlement agreement
To begin, the settlement agreement will be drawn up, and this agreement will establish that you are accepting the amount of compensation offered by the insurance company.
In doing so, you give up the right to seek additional compensation in the future. This means that even if you later recognize that you’ve suffered additional losses in relation to the accident in question, you’ll have no means of seeking compensation.
Issuing the check to your attorney
At this point, the insurance company will likely issue the agreed-upon settlement check to you and your attorney, which will go to your attorney’s office.
How is the Personal Injury Settlement Check Distributed?
Whatever is owed to other parties will come out of your settlement check before you will receive your compensation. For example, your attorney will need to be paid.
Paying your attorney
Most personal injury attorneys work on contingency fees, which means they receive a percentage of the settlement after the claim is successfully resolved, and the percentage your attorney is owed will come out of your settlement check. Some attorneys negotiate a flat percentage of the settlement, but others structure their pay a bit differently.
This often means charging a smaller percentage upfront but including fees for additional services, such as if your claim ultimately goes to court – rather than being resolved more efficiently through the settlement process. This makes understanding your attorney’s fee structure critical, and trusted personal injury attorneys make clearly informing their clients a priority.
Paying any liens
If the injuries you suffered were especially serious and required considerable medical expenses, you may be facing medical liens. Medical liens typically apply when the medical bills you experience are more than your health insurance and your own finances can handle prior to settling your claim.
In these instances, a medical provider can issue a lien against the future settlement, and this establishes their right to be paid for the medical care provided by your settlement. There are, however, legal limitations regarding medical liens, which cap the percentage of settlements that can be sought.
Further, your attorney may endeavor to negotiate lower costs for the medical care covered by the lien.
Paying the insurance company
In some situations, your own insurance company can have a claim to part of your settlement. For example, your health insurance provider may seek repayment for the medical care it covers from your settlement amount, which is called subrogation.
After these matters are resolved, the remaining settlement amount is yours, and you can count on your dedicated personal injury attorney to skillfully attend to keeping as much of your settlement for you as possible.
Lump Sum vs. Structured Payment Options
Sometimes, accident victims are afforded two options when it comes to their personal injury settlements, including:
- The one-time, lump-sum option
- The structured payment option, which is divided over a scheduled payment plan
Both of these options deliver tax-free payments, but any interest you make by investing your settlement is taxable. Whether the lump sum or structured payment option is the better choice for you depends upon your unique situation and your priorities.
For example, claimants who choose structured payments, which can incorporate considerable flexibility, often do so for reasons like the following:
- Ensuring the payments align with their ongoing budgetary needs
- Ensuring the payments align with their money management goals
- Increasing the total compensation by engaging in an investment plan that earns steady interest
Your financial planner or an investment professional can help you address your financial needs and goals and choose the payment plan that works best for you.
An Experienced South Carolina Personal Injury Attorney Is Standing by to Help
Trey Harrell Auto Accident and Personal Injury Attorney in Charleston, SC is an experienced lawyer who recognizes how challenging the legal process can be for his valued clients and makes it his mission to pave a smoother path forward. This includes dedicating the time necessary to make sure you understand how personal injury settlements are paid out.
Our legal team is here to help. Don’t wait to reach out and contact us online or call us at 843-701-8029 for more information about what we can do for you today.
Personal Injury Settlement FAQs
How is settlement money divided?
The settlement money you receive will be divided in exact accordance with the payment arrangements you made with your attorney and any third-party claims that apply. There are, however, laws that carefully guide the proceedings.
How much will my attorney receive?
When you work with a reputable personal injury attorney, you will have a clear understanding of the settlement amount they’re owed. Most personal injury attorneys work on contingency, which means they don’t get paid unless their clients’ claims prevail.