When pursuing a personal injury or other civil claim, clients often wonder, “Can my lawyer cash my settlement check?” The answer involves understanding how settlement funds are handled, the role of attorney liens and fees, and the safeguards designed to protect clients’ interests. This article explains how settlement checks are processed, what banking practices are typical, and how clients can verify that funds are properly managed and disbursed.
Settlement checks typically come from the opposing party or their insurer and may be made out to both the client and the law firm or solely to the client with a separate funding arrangement. The two common scenarios are:
- The check is payable to both the client and the attorney, usually with instructions directing the attorney to hold funds in trust until fees and costs are calculated.
- The check is payable to the client, who then endorses it over to the attorney or transfers funds into a trust account for fee deduction.
Regardless of the form, money handling follows state rules for attorney trust accounts (often called IOLTA accounts). Funds should be deposited promptly into a proper account, and any disbursement should reflect the agreed-upon fee and cost arrangement.
Understanding the financial structure helps answer the question, “Can my lawyer cash my settlement check?” Key elements include the attorney’s fees, reimbursable costs, and any lien or subrogation rights. Important points:
- Many personal injury agreements are based on a contingency fee, commonly a percentage of the net settlement after costs. Fees may require court approval in certain cases or may be governed by state bar ethics rules.
- Costs such as expert reports, medical records, depositions, and filing fees are often advanced by the attorney and deducted from the settlement.
- Health insurers, Medicare/Medicaid, or other entities may have liens or subrogation rights that must be paid from the settlement before the client receives funds.
If a joint or client-only check exists, the attorney may endorse and deposit it into a trust account, then issue a settlement disbursement that covers fees, costs, and liens before the client receives the remainder. This process protects both client interests and legal obligations.
Trust accounts are designed to keep client funds separate from the attorney’s operating funds. Typical steps include:
- The settlement funds are deposited into a separate attorney trust account or IOLTA account.
- Clients receive an itemized settlement statement listing fees, costs, and any liens.
- After deductions, the remaining funds are disbursed to the client or as directed by a court or agreement.
Endorsement rules vary by jurisdiction, but generally, clients have the right to review and approve the final settlement statement before funds are fully disbursed. The attorney cannot cash the client’s portion unless the client authorizes it or it is covered by the agreed fee arrangement.
To clarify how this process plays out in practice, consider these common scenarios:
- A case settles for $100,000, and the check is payable to the client and attorney. The attorney deposits the funds into a trust account, deducts a 33% contingency fee and $5,000 in costs, and the client receives the remainder after any lien payments.
- A check is payable to the client. The client endorses it to the attorney, who deposits into a trust account and then disburses funds per the settlement statement.
- A client’s medical provider has a lien. After the client’s share is calculated, the provider’s lien is paid from the settlement ahead of the client’s net amount.
Clients should be aware of potential risks and the protections in place to mitigate them. Key considerations:
- Miscommunication about fees or undisclosed liens can delay funds or reduce the client’s net settlement.
- Request a detailed, written settlement statement and ask for a copy of the trust account records. Ensure transparency on all deductions.
- Confirm whether the attorney uses a separate trust account and obtain a clear timeline for disbursement.
To ensure proper handling of settlement funds, clients can follow these steps:
- Request a written settlement agreement, itemized fee and cost breakdown, and lien information.
- Confirm how the check will be endorsed and who will hold or disburse funds.
- Review the final settlement statement before any funds are released to you.
- If anything seems unclear, consult a different attorney or the state bar association for guidance on trust account compliance.
Q: Can a lawyer cash a settlement check that is payable only to the client? A: Typically no. A lawyer may not cash a client-only check without explicit authorization or a lawful fee arrangement that allows it. Funds are usually deposited into a trust account for proper disbursement.
Q: What if a lien is involved? A: Liens must be paid from the settlement before net disbursement to the client. The attorney should provide documentation showing how the lien was satisfied.
Q: How long does disbursement take? A: It varies by case and jurisdiction, but a transparent process with a clear timeline helps set expectations for both the client and attorney.