Lawsuit Settlements: When and How You'll Get Paid

When you’ve been injured in an accident caused by someone else’s negligence, you may be entitled to compensation that can be used to cover medical bills, lost wages from missed work, and other expenses. 

Working with Morgan & Morgan can help you fight to maximize that compensation, so you can get what you need and deserve to move forward with your life.

Personal injury claims are often settled out of court, but accepting a settlement isn’t necessarily the last step of a claim—there’s more to know about the process.

While settlements can bring financial relief, many people are unfamiliar with how the process works, including how they receive their payment, how long it takes, and how to handle their settlement funds. This comprehensive guide will walk you through everything you need to know about lawsuit settlements and what to expect once your case is resolved.

What Is a Lawsuit Settlement?

A lawsuit settlement is an agreement between the parties in a legal dispute to resolve the case without going to trial. Settlements can occur at any stage of the litigation process and are often negotiated between attorneys representing both sides. These agreements can result in lump-sum payments or structured settlements, which distribute funds over time.

Settlements are common in personal injury cases, including car accidents, medical malpractice, workplace injuries, and product liability claims. The purpose of a settlement is to provide fair compensation to the injured party while allowing the defendant to avoid the uncertainty and costs of a trial.

What Factors Determine a Personal Injury Settlement Amount?

• Of course, no personal injury lawyer payout happens if you don't receive a settlement or a jury award. Courts evaluate many different factors in personal injury cases to decide what will be awarded to the injured party or the surviving family members of someone who was killed. This can include factors, such as the severity of the injuries, the impact of the injuries on the victim's work life, such as lost wages, the extent of the medical expenses that have already been incurred and are expected to be incurred in the future and many more such as pain and suffering and loss of consortium. 
• The specifics of your individual case and your state's laws will help you determine what factors will get you to this ultimate settlement out of which your personal injury lawyer payout will be made. If you are thinking about how to move on with your life after a devastating accident, you need the support of a dedicated and experienced personal injury lawyer. Handling this on your own adds too much stress and ignores the complexity of these injuries; a law firm can play a critical role in removing that stress. 
• Your future is at stake and finding an attorney who can help explain your personal injury lawyer payout to you at the outset of your case will give you clarity over the settlement amounts presented to you and how much this would allow you to move on with your life as well as to how your attorney will be paid for your services.   
• When you or a loved one is in need of legal representation, discuss the specific type of accident with an attorney directly. The settlement value of your claim certainly won't make you whole or return you to the lifestyle you had before the accident, it can help you determine what your new future looks like and give you the support to get there. 
  
   

How Do Victims Get Paid?

Once a settlement is reached, the payment process begins. Here’s how it works:

• Finalizing the Agreement – After negotiations, both parties sign a settlement agreement that outlines the terms, including the amount and payment structure.
• Court Approval (If Required) – In some cases, such as class action settlements or cases involving minors, a court must approve the settlement before payment is made.
• Processing the Payment – The defendant’s insurance company or legal representatives issue the settlement payment to the victim’s attorney.
• Deducting Legal Fees and Costs – Attorneys typically deduct their contingency fees, court costs, medical liens, and other expenses before distributing the remaining funds to the plaintiff.
• Receiving the Settlement Check – Once all deductions are made, the victim receives their portion of the settlement funds via check or direct deposit.

How Long Does It Take to Get Paid a Settlement?

The timeline for receiving a settlement payment varies depending on several factors, including:

• Settlement Agreement Finalization – Once both parties agree, it can take a few weeks to process paperwork.
• Insurance Company Processing Time – Some insurers process payments quickly, while others may take 30 to 60 days or longer.
• Court Approval (If Needed) – If a judge must approve the settlement, the process can take additional weeks or months.
• Medical Liens and Other Deductions – If you have outstanding medical bills or liens, these must be settled before you receive your funds.

In general, most victims receive their settlement payments within 4 to 8 weeks after reaching an agreement. However, delays can occur if the insurance company disputes payments or if there are outstanding legal or financial obligations.

An experienced personal injury lawyer can keep you informed throughout the process with more accurate estimates.

How to Cash a Settlement Check

Once you receive your settlement check, you’ll need to cash or deposit it. Here’s what you should do:

• Verify the Check – Ensure the check is valid and matches the agreed settlement amount.
• Endorse the Check – Sign the back of the check before depositing it.
• Deposit or Cash It – You can deposit the check into your bank account, cash it at a bank, or use a check-cashing service. If the check is large, the bank may place a hold on the funds before they are fully available.
• Consider Financial Advice – Large settlements may require careful financial planning, so consulting a financial advisor can help you manage your funds wisely.

What Should You Use Your Settlement Check For?

While your settlement is yours to use as you see fit, it’s essential to prioritize financial stability and future security. Here are some smart ways to use your settlement money:

• Medical Expenses – Pay off any outstanding medical bills related to your injury.
• Lost Wages and Living Expenses – Cover daily expenses if your injury has affected your ability to work.
• Debt Repayment – Paying off debts can help relieve financial stress and improve your credit score.
• Investments and Savings – Consider putting some of your settlement into a savings account or investment to secure your financial future.
• Home or Vehicle Modifications – If your injury requires accessibility modifications, use your settlement funds to make necessary adjustments.
• Legal and Tax Advice – Consulting a financial or tax professional can help you manage large sums wisely and avoid unnecessary tax burdens.

How Much Is a Personal Injury Lawyer Payout?

At Morgan & Morgan, our lawyers work on a contingency fee basis, meaning we charge no upfront fees. The Fee Is Free®, and our clients only pay if we get them a settlement. If we don’t win, clients don’t pay.

• During your initial consultation, you will discuss with your attorney the personal injury lawyer payouts associated with your case. They will hear the basic facts about the circumstances of your accident and injury and give you a contract to sign if they believe that you have grounds for your case.
• Your attorney's personal injury lawyer payout will usually be a percentage of the total amount of the settled case. It is important to keep that in mind when deciding if a settlement offer would be sufficient to pay for your damages and other expenses.

You and your attorney will discuss and agree upon that percentage before moving forward. Other legal expenses, such as expert witnesses or thorough investigations, may also be factored into that share.

Are Settlements Taxable?

One common concern for settlement recipients is whether their compensation is subject to taxes. The IRS generally does not tax settlements for personal physical injuries or illnesses. However, certain portions of a settlement may be taxable:

• Compensation for Lost Wages – Subject to income tax since it replaces taxable earnings.
• Punitive Damages – Taxable in most cases.
• Emotional Distress (Non-Physical Injuries) – May be taxable unless related to a physical injury.
• Interest Earned on Settlements – If you invest your settlement and earn interest, that interest may be taxable.

Consulting a tax professional can help you understand your specific tax obligations and avoid potential issues with the IRS.

What Happens If the Defendant Doesn’t Pay?

In rare cases, a defendant may fail to pay the agreed-upon settlement. When this happens, the victim’s attorney may need to take further legal action, such as:

• Filing a Motion to Enforce the Settlement – This legal action compels the defendant to honor the agreement.
• Garnishing Wages or Seizing Assets – Courts may allow wage garnishment or asset seizure to satisfy unpaid settlements.
• Pursuing Additional Legal Claims – If the defendant intentionally avoids payment, additional legal claims may arise.

Structured Settlements vs. Lump-Sum Payments

Some plaintiffs receive their settlements as structured payments rather than lump sums. Here’s how the two differ:

• Lump-Sum Payments – You receive the full settlement amount at once, providing immediate access to funds.
• Structured Settlements – Payments are distributed over time, providing long-term financial stability.

Structured settlements are often used in cases involving minors, catastrophic injuries, or wrongful death claims to ensure long-term financial security.

Need to Know More About a Settlement? Contact Morgan & Morgan for Free 

Receiving a lawsuit settlement can be life-changing, providing financial relief and stability after an injury or legal dispute, and knowing the details of how to recover your payment is an important step of the process.

If you have any questions about the settlement process or need legal assistance, Morgan & Morgan is here to help. Our experienced attorneys are dedicated to fighting for the compensation you deserve, ensuring that justice is served and your financial future is protected. Contact us today for a free case evaluation.