What to expect when a settlement check is issued under California law

This article explains how settlement funds typically reach an injured person after an insurance company issues payment in California. It walks through who the check is usually made payable to, what attorneys must do with settlement checks, common holds (liens and fees), and practical steps you can take to get your money promptly and safely. This is educational information only and not legal advice.

Overview — who receives and endorses the check

When an insurer issues payment for a settlement, the check is commonly made payable in one of a few ways:

To you (the claimant) alone — you can generally deposit it to your personal account after you sign any release required by the settlement.
To you and your attorney (a joint-payee or “pay-to-the-order-of” check) — common when an attorney handled the claim under a contingency-fee agreement.
To several payees (for example, you, your attorney, and a medical provider), when the insurer is aware of liens and names lienholders on the check.

What happens if your attorney is on the check

If the check names your lawyer or law firm, ethical and statutory rules in California require the lawyer to handle the funds properly. Attorneys typically deposit settlement checks into a client trust account (often an IOLTA or similar escrow account) and hold the funds until they can be properly distributed. The California Rules of Professional Conduct require lawyers to safeguard client property, including settlement funds. See Rule 1.15 on safeguarding client property: https://www.calbar.ca.gov/Attorneys/Conduct-Discipline/Rules/Rules-of-Professional-Conduct.

Attorney fees and cost deductions

Before an attorney disburses net proceeds, the attorney normally deducts agreed fees and costs. Contingency-fee agreements in California must be in writing and describe how fees will be calculated. See California Business & Professions Code § 6146 for requirements about contingency fee agreements: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=6146.&lawCode=BPC. You should receive a written accounting showing the gross recovery, attorney fees, litigation costs, lien payments, and the net amount paid to you.

Liens, subrogation, and third‑party claims that can reduce your check

Common claims against settlement proceeds include medical provider liens, health insurance or Medi‑Cal reimbursements, and Medicare conditional payment obligations. Those claims must be identified and typically resolved before the attorney can release your net proceeds. If a third party has a valid lien, the attorney often negotiates or pays the lien from the settlement funds. Make sure your attorney explains any liens and provides documentation showing how they were resolved.

Special situations

Minor or conservatee settlements — California courts often require a court order or court approval before funds are released for a minor or an incapacitated person. A guardian or conservator may be required to receive the funds and manage them under court supervision.
Structured settlements — instead of a lump sum, you may agree to receive periodic payments through an annuity. This requires a structured settlement agreement and coordination with a life insurer or settlement company.
Joint payee issues — if the insurer names multiple payees, all payees normally must endorse the check. This prevents any single party from cashing it without joint consent.

Typical timeline from check issuance to your net payment

Insurer issues the settlement check (date of issuance).
Attorney or claimant receives the check and deposits it into a trust account if an attorney is involved.
Clearance and confirmation of funds (bank clearing may take several business days).
Resolution of liens, subrogation, or governmental interests (timing varies; Medicare and Medi‑Cal coordination can add time).
Attorney provides written accounting and releases net payment to you.

What you should ask and confirm with your attorney or the insurer

Who is named on the check and why.
When the check was deposited and when funds will clear.
What fees and costs will be deducted and the legal basis for those deductions.
Whether there are liens or government reimbursements and how they will be handled.
How and when you will receive the net proceeds (check, wire transfer, or other method).
Ask for a written disbursement statement (itemized accounting) before final payment.

Relevant California law and resources

Key rules that govern how lawyers must handle client funds and how contingency fees are set include:

California Rules of Professional Conduct, Rule 1.15 — Safeguarding client property and handling trust accounts: https://www.calbar.ca.gov/Attorneys/Conduct-Discipline/Rules/Rules-of-Professional-Conduct.
California Business & Professions Code § 6146 — Requirements for contingency-fee agreements: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=6146.&lawCode=BPC.
Enforcement of settlement agreements — Code of Civil Procedure § 664.6 explains how a settlement agreement that is reduced to writing and signed by the parties can be enforced: https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?sectionNum=664.6.&lawCode=CCP.

Helpful hints

Get the settlement agreement and all payee details in writing before the insurer cuts a check.
Ask the attorney for a timeline and an itemized disbursement statement before the final payment.
Confirm how liens and government reimbursement claims (like Medicare/Medi‑Cal) will be handled; don’t assume they disappear automatically.
If you are named alone on the check, do not sign releases until you understand all deductions and liens.
Consider asking for a wire transfer if you want faster access to funds; confirm your attorney or bank can accept incoming wires.
Keep copies of the check, deposit slip, bank statement, and any lien releases or payoff letters for your records.
If you believe an attorney mishandled funds, contact the State Bar of California for guidance on complaints about trust account mishandling: https://www.calbar.ca.gov.
Speak with a tax advisor about potential tax consequences before spending significant settlement funds.

Final notes

Most settlement payments in California are straightforward: the insurer issues a check, your lawyer deposits it in a trust account, liens and fees are resolved, and you receive the net proceeds. However, liens, government obligations, minors’ issues, and joint-payee checks can delay or change how funds are distributed. Always request written explanations and accounting before accepting the final disbursement.

Disclaimer: This information is for educational purposes only and does not constitute legal advice. For advice about your specific situation, consult a licensed California attorney.