Understanding Personal Injury Settlements

5 April 2016
 Categories: , Articles


If you are like most people, you have probably read about personal injury case settlements in the news and secretly thought the person was awarded a lot of money for a simple injury. So it may surprise you to learn that people who win a personal injury settlement don't really receive the large settlement reported in the papers. If you or someone you know is involved in a personal injury claim, expect the final award to you to be much lower than the reported settlement.

Why don't people get all the money from a personal injury settlement?

The amount of a personal injury settlement is subject to some required deductions once the case is settled. That means any expenses related to the case must be paid before the settlement amount is awarded to the injured party. Here are some common expenses that are deducted from the settlement before a check it is issued to the injured party.

  • Legal Fees: Most personal injury lawyers work on a contingency fee, which means they don't get paid unless you win the case. But that doesn't mean the lawyer is working for free. It only means he is willing to wait until the case is settled to get paid. Personal injury lawyers typically charge between 33% and 40% of the settlement. The amount an attorney can charge depends on the regulations in the state where the injury occurs. Attorney fees are calculated after other required fees are deducted.
  • Medical Bills:  You assume that if your medical insurance has covered medical bills related to the injury that you are free and clear of any obligation for payment. In the case of personal injury cases, this isn't true. Because another party has been found responsible for the injury, the insurance company has the right to recoup any and all money they have paid on your behalf.  Because medical costs were part of the formula for determining your personal injury award, you are responsible for paying those bills. Your lawyer can negotiate the repayment of the medical costs, which may substantially reduce the amount you need to repay the insurance company; however, he may charge an additional fee for doing so.
  • Police Reports: Any fees related to acquiring police reports will also be deducted from the settlement.
  • Expert Witnesses: If your lawyer took advantage of expert witnesses to prove your case, you are responsible for any fees paid to them.
  • Misc. Costs: This includes phone calls, postage, filing fees, copying fees, research fees, fees to acquire medical records and any other service needed to prepare or try your case.

How would the court know if you paid the fees?

When your case is settled, the awarded amount is sent to your lawyer. He is responsible for seeing that all the required expenses are paid. He will not write a check to you until everything is tallied and subtracted from the total settlement.

How much does the injured party actually receive?

It is not unusual for the injured party to receive much less than the total settlement amount. An award of $50,000 can quickly dwindle to less than $25,000. Assuming you have $10,000 in medical costs and another $2000 in other required costs, this brings the total down to $38,000. If your lawyer then subtracts his fee at a rate of 40%, it will leave you with a total of $24,800.

If you or someone you know is considering filing a personal injury claim, talk to an attorney, such as those at Lawyer, Lawyer, Dutton & Drake LLP, about the amount you can reasonably expect to recover. While the purpose of the case is typically to recover any costs you incurred due to someone else's negligence, it is easy to assume that you will be awarded the amount stated in the settlement. Your attorney can help you avoid misunderstandings and develop clear expectations.