Detailed Answer
Short version: After the insurer issues a settlement check, the money commonly flows to the payees listed on the check (often the claimant and the claimant’s attorney). The attorney usually deposits any check they receive into a client trust account, pays liens, costs, and the attorney fee, and then sends the client their net proceeds with an itemized accounting. Timelines vary depending on lien resolution, paperwork, and whether the check is a joint payee check.
Who is listed on the check?
Insurers typically make checks payable to one of these combinations:
- The claimant alone (rare when an attorney represents the claimant).
- The claimant and the claimant’s attorney (a “joint” or “payable to” check). This is common to protect against attorney-fee disputes and to ensure attorneys who handled the claim are involved in distribution.
- The claimant’s attorney alone (less common; often occurs after the attorney has provided a signed release and authority to accept the check).
What attorneys normally do after they receive the check
When an attorney receives a settlement check in a South Carolina case, professional rules require the attorney to protect client funds. In practice that means:
- Deposit the check into a client trust account (not the attorney’s personal account) until final distribution decisions are made and all conditions for payment are met.
- Resolve and pay any valid liens or subrogation claims (medical providers, hospitals, health insurers, Medicare/Medicaid, and other creditors). Some liens must be negotiated or legally established before distribution.
- Pay litigation costs or disbursements the attorney advanced, if the client agreed to that in the engagement or retainer agreement.
- Deduct the attorney fee as set in the fee agreement (often a contingent percentage) and provide the client with an itemized accounting showing gross recovery, fees, costs, liens paid, and the net amount to the client.
- Issue the client’s net funds by check or electronic transfer, along with the accounting and a copy of the release or settlement paperwork showing the claim is closed.
Timing: how long will it take?
Timing depends on:
- Who is on the check (joint-payee checks require signatures and processing).
- Whether outstanding liens or subrogation claims exist and how quickly they can be resolved.
- Whether the insurer required a full signed release before issuing the check (some insurers delay payment until the claimant signs a release and returns it).
- Bank clearance times if the funds are large or a bank places a hold.
Typical range: a few days to several weeks after the insurer issues the check. If Medicare or Medicaid may have a claim, expect more time to resolve conditional payment or subrogation issues.
Common complications and special situations
- Joint-payee checks: If the check is payable to both the client and the attorney, most banks require endorsement by both payees. Attorneys usually have procedures (and client authorization in the retainer agreement) to endorse and deposit such checks into their trust account.
- Minor or incapacitated claimants: Settlement funds for minors or incapacitated people often require a guardian, conservator, or court approval. Court-ordered procedures can delay distribution significantly.
- Outstanding medical liens or subrogation: South Carolina medical providers, health plans, and federal programs (like Medicare) may assert claims against the settlement. Lawyers often negotiate and pay these claims before releasing funds to the client. Federal Medicare recovery rules can impose separate requirements; see Centers for Medicare & Medicaid Services guidance: https://www.cms.gov/medicare/coordination-benefits-recovery/coordination-of-benefits-and-recovery-overview.
- Liens and statutes: Some providers or insurers have statutory lien rights or contractual subrogation rights under South Carolina law. A claimant should ask their lawyer which liens exist and whether those liens must be paid from the settlement.
Hypothetical example
Client settles a car-accident case for $50,000. The insurer issues a check payable to “Client” and “Smith & Associates, Attorney at Law.” The attorney deposits the check into the firm’s client trust account, confirms a $10,000 hospital lien, deducts $7,500 in attorney fees (per contingency agreement), pays $1,200 in litigation costs the attorney advanced, pays the hospital lien after negotiating it to $8,000, and then issues the client a check or wire for the remaining $23,300 with an itemized accounting showing the math.
What you should ask your attorney right away
- Who will be listed as payees on the check?
- Will the check be mailed to me or to the attorney?
- What liens or subrogation claims exist and how long to resolve them?
- How long before I receive my net funds after the check arrives?
- How will I receive the money (paper check, wire transfer) and will I get an itemized accounting?
Attorneys in South Carolina follow rules requiring safekeeping of client funds and honest accounting. For a statement of professional responsibilities, see the South Carolina Rules of Professional Conduct: https://www.scbar.org/public-resources/for-public/sc-rules-of-professional-conduct/. You can also contact the South Carolina Department of Insurance for questions about insurer practices: https://doi.sc.gov/.
Helpful Hints
- Get the expected timeline in writing from your lawyer so you know when to expect funds.
- Ask for an itemized accounting that shows gross settlement, attorneys’ fees, costs, and all lien payments before you accept the net check.
- Confirm whether the attorney will handle lien negotiations or whether you must deal with certain creditors yourself.
- If the check is joint-payee, don’t endorse or deposit it yourself without talking to your attorney—doing so could complicate lien resolution or your attorney’s ability to pay required creditors.
- Keep copies of all releases, settlement agreements, and accounting documents for tax and records purposes. Consider consulting a tax advisor about tax reporting for your settlement.
- If you suspect undue delay or mishandling of client funds, you may contact the South Carolina Bar or the state courts for guidance.
Disclaimer: I am not a lawyer and this is general information, not legal advice. Use this to prepare questions for a licensed South Carolina attorney who can advise you about the specific facts of your case.