How Much of My Settlement Will I Get? What Comes Out First

How much of my settlement will I get? It is one of the first questions people ask after an injury claim resolves, and the honest answer is that the headline number is not your number. Several things come out first, in a set order: the attorney fee, the case costs, and any medical liens or reimbursement claims. What reaches you is whatever remains.

This guide follows the money in the order it usually moves. It uses percentages and parts of a whole rather than dollar amounts, because every case differs. The goal is simple. By the end, you should be able to read a settlement statement line by line and know which questions to ask.

How much of my settlement will I get? Start with the gross

The gross settlement is the full amount the other side agrees to pay, and it is the starting point for every deduction, not the amount you take home. Think of it as 100 parts.

Many people hear the gross figure and plan around it. That is natural, but it often leads to disappointment. Instead, treat the gross as the top line of a short subtraction problem.

Three main groups of settlement deductions usually come off that top line:

1. The attorney fee, usually a percentage set in the contingency agreement.
2. Case costs, the expenses of building the claim.
3. Liens and reimbursement claims, from providers or insurers who paid for your care and want repayment.

Of these, the order of the first two matters more than most people expect. We will come back to it with a worked example.

Where the money goes first: the trust account

Settlement money usually does not go straight to you; it goes into your lawyer’s client trust account, which the ethics rules keep separate from the firm’s own money. As a result, that account is where the deductions happen.

ABA Model Rule 1.15 sets the core duties. When a lawyer receives funds in which a client or a third person has an interest, the lawyer must:

• notify them promptly;
• deliver what they are entitled to promptly; and
• give a full accounting if asked.

Most states base their ethics rules on the ABA Model Rules, though each state adopts its own version. For a state-level look at how this works, see our guide to the attorney trust account for settlement funds in Arizona.

Step 1: the attorney fee

In most injury cases, the attorney fee is a contingency percentage written into a signed agreement, and it is usually the largest single deduction. The agreement, not a general rule, controls the percentage.

Under ABA Model Rule 1.5(c), a contingency agreement must be in writing and signed by the client. It must state the percentage that applies if the case settles, goes to trial or goes on appeal. So, first, check which stage your case reached. After all, some agreements charge a higher percentage once a lawsuit starts.

For how the fee itself works, our guide on how contingency fees work covers the basics. Here, the key point is narrower: the fee percentage applies to some base, and that base depends on how the agreement treats costs.

Step 2: case costs deducted from the settlement

Case costs are the out-of-pocket expenses of pursuing the claim, and they usually come out of the settlement separately from the fee. For example, typical costs include filing fees, medical record charges, expert reviews and deposition transcripts.

In practice, many lawyers pay these costs as the case goes along. The ethics rules allow a lawyer to advance court costs and litigation expenses, with repayment depending on the outcome. Then, at settlement, the firm reimburses itself from the trust account.

Rule 1.5(c) requires the contingency agreement to state three things about expenses:

1. which litigation and other expenses come out of any recovery;
2. whether the lawyer deducts those expenses before or after calculating the fee; and
3. any expenses the client must pay whether or not the client wins.

Why the before-or-after question matters

Of these, the second item changes your share, even with the same fee percentage and the same costs. Say the gross is 100 parts, the fee is one-third, and costs come to 10 parts.

Line	Fee on the gross (costs after)	Fee on the net (costs first)
Gross settlement	100	100
Costs	10 (taken after the fee)	10 (taken first)
Base for the fee	100	90
One-third fee	33.3	30
Left before liens	56.7	60

Thus, in this example, calculating the fee on the net leaves the client about 3.3 more parts out of 100. Moreover, the gap grows as costs grow. Michigan, for one, requires fees in injury cases to be calculated on the net recovery after disbursements. Elsewhere, by contrast, the agreement decides.

Do I owe costs if there is no settlement?

Not necessarily — it depends on the agreement, not on a general rule. Rule 1.5(c) requires the agreement to clearly tell the client about any expenses the client must pay whether or not the client wins. So if your agreement says nothing about owing costs after a loss, ask the lawyer to confirm it in writing. Some lawyers absorb costs on a losing case, while others expect repayment.

Step 3: medical liens on a settlement and subrogation

After the fee and costs, the next deductions usually go to whoever paid for your medical care and has a right to be repaid from the settlement. These claims come in two main forms.

• Medical liens. For example, a hospital or provider that treated you may claim part of the recovery for unpaid bills.
• Subrogation and reimbursement claims. Similarly, a health plan or other payer that covered your treatment may claim repayment from what you recover.

However, rules on both differ by state and by the type of plan, so the details depend on where you live and who paid. Our guides to medical liens in Arizona and subrogation in injury claims in Arizona show how one state handles them.

What happens if someone disputes a lien?

In that case, Rule 1.15(e) applies. When two or more people claim the same funds, the lawyer must hold the disputed portion separately until the dispute ends. Meanwhile, the lawyer must promptly distribute the portion nobody disputes. So a disputed lien can delay part of your share, but it should not hold up all of it.

The settlement disbursement order, start to finish

The settlement disbursement order is the sequence in which money leaves the trust account, and it typically follows the steps above. Here is the usual flow, although your agreement and state law control the details.

1. The settlement funds arrive in the lawyer’s trust account.
2. The lawyer notifies you, and anyone else with an interest, that the funds have arrived.
3. Costs come out first or after the fee, depending on the agreement.
4. The attorney fee comes out at the agreed percentage.
5. The lawyer pays undisputed liens and reimbursement claims.
6. The lawyer holds any disputed amount separately until the dispute ends.
7. You receive the remainder.

Finally, to continue the example, suppose liens total 20 parts and nobody disputes them. Under the fee-on-gross approach, you would receive about 36.7 parts. Under the fee-on-net approach, you would receive 40 parts. Those numbers are illustrations only; the point is how the order shapes the result.

Reading the settlement statement

At the end of a contingency matter, the lawyer must give you a written statement showing the outcome and, if there is a recovery, how much you receive and how they calculated it. Rule 1.5(c) requires this closing statement.

Typically, a clear settlement statement lists each line separately. Check it against this list:

• the gross settlement amount;
• the fee percentage and the base it applies to;
• each case cost, itemised;
• each lien or reimbursement payment, with the payee named;
• any amount held back for a disputed claim; and
• the net amount you receive.

Next, compare it to the signed agreement. For instance, does the percentage match the stage the case reached? Do costs come off in the order the agreement describes? If something looks off, ask the lawyer to walk through it. Under Rule 1.15(d), you can request a full accounting.

Can deductions be reduced?

Sometimes, yes — some settlement deductions are fixed by the agreement, while others may be open to discussion before the money goes out. For that reason, it helps to know which is which.

Accordingly, some people ask the lawyer about each of these:

• Liens. Some lawyers ask lienholders to accept less than the full claim, particularly where the recovery is limited.
• Costs. Ask for an itemised list and question anything unclear.
• The fee. The percentage is set by contract, but some lawyers will discuss it, especially when the case resolves with little work or when liens eat much of the recovery.

Of course, nothing here guarantees a result, and outcomes depend on the facts. Still, asking before the funds go out is far easier than asking after.

What if you changed lawyers along the way?

If more than one lawyer worked on the case, the fee may be divided, but in most situations that should not raise your total fee. Instead, the lawyers sort out their shares from the agreed fee.

For instance, in many states a fired contingency lawyer is generally limited to the reasonable value of the work done before the discharge. Courts call this quantum meruit. Likewise, when lawyers from different firms split a fee, ABA Model Rule 1.5(e) requires the client to agree in writing, and the total fee must stay reasonable. Ask any new lawyer how an earlier lawyer’s claim would be handled before you sign.

Questions to ask before you sign the agreement

The best time to understand how much of your settlement you will get is before the case starts, while the terms are still open. Many people bring these questions to the first meeting:

1. What percentage applies at each stage of the case?
2. Do costs come out before or after you calculate the fee?
3. Will I owe costs if there is no recovery?
4. Who handles medical liens and reimbursement claims?
5. Will I get an itemised settlement statement?

Separately, whether any of the settlement is taxable is a different question. Generally, it depends on what the payment covers, so many people raise it with a tax professional.

The bottom line

How much of my settlement will I get? Start with the gross, then subtract the fee, the costs and any liens, in the order your agreement sets. Whether costs come out before or after the fee can shift your share noticeably. The lawyer must hold the money in trust, notify you promptly, keep any disputed amount separate, and give you a written closing statement. Read that statement line by line against your agreement, and ask about anything you do not understand.

Keep reading: Why Do Lawyers Take 33 Percent? · Who Pays Attorney Fees? · Can You Negotiate Attorney Fees?

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This article is for general informational purposes only and does not constitute legal advice. Fee terms, cost handling and lien rules vary by state and by the terms of each agreement. Nothing here predicts the outcome of any case.

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