Hands down the most frequently asked question I get from my clients once we settle their personal injury claim is how much of the settlement will they get. To answer this question, I must fully outline the personal injury settlement breakdown. Below is an example of a hypothetical settlement in the amount of $25,000.00. Please note that the distribution of an actual case is decided by the contract that is made between client and lawyer. The following example is meant to provide a clearer understanding of the process of distribution on an actual settlement.
Costs of Bringing a Claim
- Attorney’s Fees
The attorney’s is the first charge to be taken from the settlement amount. The fee that the attorney makes on settlements is the way they are compensated for their legal expertise, front money for other cases and pay members of their staff. If a claim is settled prior to filing a lawsuit, you can expect to pay 33 1/3 percent in attorney’s fees. If a lawsuit has to be filed, however, the fee is usually set at 40 percent. As the fee can vary, it is important to refer to your contract because this is the agreement set out in the beginning of representation and will govern the relationship.
In our hypothetical settlement, assuming the claim was settled prior to filing a lawsuit, the attorney’s fee is $8,333.33. At this point there is $16,666.67 of the $25,000.00 remaining.
- Case Costs
In order for your claim to be prosecuted effectively, there are certain expenses that must be incurred. A few examples of case costs include cost for medical records, copy charges, and postage for pre-suit cases, but the costs escalate when filing suit. In some situations it can wind up costing several thousands of dollars to cover the expenses of a case that is in litigation.
For this example we’ll say the expenses are $500.00. This leaves us $16,166.67 of the $25,000.00 remaining.
The Client’s Portion of the Settlement
- Liens and Medical Expenses
The final charges to be deducted from the settlement amount are any outstanding medical liens and medical expenses. This can take the form of a health insurance lien, Medicaid or Medicare lien, Medical Payments lien with your own automobile insurance carrier for treatment sought resulting from the accident and medical bills from treatment related to the accident. It is allowed by the federal government and most states for doctors, government agencies and hospitals to recover from personal injury settlements any amount they are owed for treatment rendered. We refer to this concept as a right of subrogation, which will be discussed more at length in another blog at another time.
For our hypothetical settlement, we will assume the following facts. The client went to the hospital by EMS from the scene of the accident. While at the hospital, she was treated in the emergency room and x-rays were taken of her cervical and lumbar spine. After weeks of continued pain, she followed up with a chiropractor who wrote a prescription for a cervical MRI to be completed, then referred her to a specialist for further treatment based on those results. Several bills will result from this course of treatment. There will be a bill for the initial EMS treatment. The hospital visit will result in three bills: facility, Emergency Room physicians, and radiology. Then, the chiropractor will have to be paid, along with the MRI facility and the specialist.
This standard treatment course has produced seven bills, each getting paid from the settlement. Let’s assume that the total charges incurred were $15,000.00. This would leave $1,166.67 for the client.
- Pain and Suffering and/or Wage Loss
There is only $1,166.67 left over from the initial amount of the $25,000.00 settlement for any pain and suffering or loss of income damages if we pay all of the providers dollar for dollar what they billed. In order to put money in our client’s pocket, we must engage in negotiations with the medical providers to reduce the total of the bills. This can be a pretty lengthy process depending on the provider, but definitely in the best interest of the client. While I cannot ethically guarantee a client that we will be able to reduce their bills to a certain amount, I can guarantee that we will do everything in our power to put the most money in their pocket that we can.
To complete our analysis, let’s assume that each provider reduced their bill by one-third. That would give our client an extra $5,000.00, putting a total of $6,166.67 out of $25,000.00 in her pocket.
If you or someone you love is injured in an accident, it is important to speak with experienced attorneys who will fight to put every dollar they can in your pocket. For more information on what to do if you have been in an accident, call the Brooks Law Group at 1-888-We-Mean-It.