How settlement funds are typically delivered and disbursed in New Mexico
Disclaimer: This is educational information only and not legal advice. For advice about your specific case, consult a licensed New Mexico attorney.
Detailed Answer
After an insurance company issues a settlement check in New Mexico, several steps usually occur before you receive your share. The precise path depends on who the insurer made the check payable to, whether your attorney represents you, and whether any third parties (medical providers, lienholders, government programs, or creditors) have valid claims against the settlement.
1) Who the insurer makes the check payable to
- Made payable directly to you: If the insurer issues the check solely in your name, you can endorse and deposit it yourself. If an attorney handled settlement negotiations, your lawyer may advise you not to deposit it until you have signed releases and the attorney issues a written accounting.
- Made payable jointly to you and your attorney (or law firm): This is common. A joint check protects the insurer by ensuring the attorney will apply fees and costs before distributing net proceeds to you. In that case your lawyer should deposit the check into a client trust (IOLTA) or client-specific trust account and follow professional rules on safekeeping client funds.
- Made payable to a third party and you (or another party): Sometimes insurers add medical providers, hospitals, or lienholders as co-payees where they claim a lien. Those payees must usually endorse the check before it can be negotiated.
2) Attorney handling and trust account rules
If you have an attorney, New Mexico rules require lawyers to safeguard client funds and keep them in a trust account until they are properly disbursed. Attorneys must provide a written accounting of receipts and distributions when they distribute settlement funds. See the New Mexico rules on safekeeping client property for guidance on how lawyers handle trust funds: New Mexico Rules of Professional Conduct (safekeeping client property).
3) Paying attorney fees and costs
If you signed a contingency-fee agreement, the attorney will deduct the agreed percentage for fees and any case-related costs (filing fees, expert fees, medical record charges, etc.) from the gross settlement before sending you the net amount. The attorney should provide a written itemization of these deductions.
4) Liens, subrogation, and government claims
Before you receive net proceeds, the attorney generally must address liens and claims that have priority over your share. Common examples:
- Medical provider liens or hospital billing claims
- Health insurer subrogation claims
- Medicare or Medicaid conditional payment demands (federal rules apply to these)
- Child support or family court-ordered liens
Some of these claims require negotiation or a court order to reduce or resolve. Your attorney can help identify valid liens and negotiate payoff amounts. Failing to resolve known liens before distribution can create personal liability for you.
5) Timing — how long until you get money?
Timing varies. Common factors that delay distribution include obtaining signed releases, clearing endorsements from co-payees, resolving liens and subrogation demands, and completing an accounting. If there are no complications, many clients receive their net proceeds within a few days to a few weeks after the insurer issues the check. Complex lien negotiations or needed court approvals can extend the timeline.
6) Method of delivery
Once funds are available to you, attorneys typically send the net proceeds by:
- Certified check or company check mailed to your address
- Personal check drawn on the law firm’s trust account (but only after funds clear and after required accounting)
- Electronic transfer (wire) to your bank account — you may be asked to provide secure routing and account details
Ask your attorney in advance which method they will use and whether they can wire funds (faster) if you prefer that option.
7) What to do if you don’t receive funds or have questions
- Contact your attorney or the law firm’s staff and request a written accounting showing: gross settlement, fees, costs, lien payoffs, and net amount to you.
- If the insurer issued a check directly to you and refuses to reissue or endorse a joint check, request written instructions from the insurer and get your attorney’s guidance before depositing.
- If you suspect improper handling by your attorney (unexplained delay, no accounting, or missing funds), you may ask for a written explanation. If concerns remain, you can contact the New Mexico disciplinary authority or seek a different attorney to review your file.
For attorneys’ ethical obligations regarding client property and accounting, see New Mexico’s rules of professional conduct page: New Mexico Rules of Professional Conduct.
Helpful Hints
- Get the settlement terms in writing and keep a copy of the release you sign.
- Ask your attorney for a written timeline for receiving your net proceeds and a sample accounting showing anticipated deductions.
- Provide bank wiring information early if you prefer an electronic transfer; verify wiring instructions by phone to avoid fraud.
- Ask whether any medical providers, insurers, or government programs have asserted liens; request written proof of any claimed lien amounts.
- Never sign a final release until you understand how much you will receive after fees and liens.
- If the insurer issues a joint check, don’t endorse or attempt to cash it without your attorney’s direction — doing so can create legal problems or waive claims.
- Keep all correspondence and copies of checks, deposits, and accounting statements; these documents help if a dispute arises.
- If distribution is delayed, request a written status update and, if necessary, an itemized accounting from your lawyer in writing.
Every case is different. A local New Mexico attorney can review your settlement documents, explain specific rules that apply to your situation, and confirm the correct and lawful path for disbursing funds to you.
Reminder: This article provides general information only and does not create an attorney-client relationship or constitute legal advice.