Detailed answer — what to expect when a settlement check is issued
Short version: after the insurer issues a settlement check, the money usually passes through your lawyer’s client trust account (or is issued jointly to you and your lawyer) so liens, fees, and costs can be paid first. You then receive the net amount. The exact mechanics depend on how the check is made payable and on any liens or third‑party claims against the settlement.
Typical steps in Washington
- Check payee and delivery. The insurer will issue a check once the release is signed or when final settlement terms are met. The check may be made payable to:
- only you (the injured person),
- you and your attorney jointly, or
- you, your attorney, and one or more lienholders (medical providers, Medicare/Medicaid, ERISA plan, etc.).
- Endorsement and deposit. If the check is made payable jointly to you and your attorney, the attorney will typically endorse and deposit it into the firm’s client trust (IOLTA) account. Washington lawyers must hold client funds in appropriate trust accounts until distribution. For general information about court rules and lawyer obligations in Washington, see the Washington Courts rules page: https://www.courts.wa.gov/court_rules/ and the Revised Code of Washington: https://apps.leg.wa.gov/rcw/.
- Liens, subrogation, and third‑party claims. Before disbursing money to you, the attorney will review and resolve any outstanding liens or subrogation claims. Common examples:
- medical provider bills and hospital liens,
- ERISA or private health plan subrogation claims,
- government benefits liens (Medicare or Medicaid),
- outstanding legal costs or court‑ordered obligations.
Some liens require negotiation or a separate payoff demand. The lawyer will typically pay these amounts directly from the settlement before giving you the remainder.
- Attorney fees and costs. The attorney’s fee (usually a contingency percentage unless you signed a different fee agreement) and any litigation costs are taken out next. Your lawyer should provide a written closing statement showing gross settlement, fees, costs, lien payments, and your net recovery.
- Timing and bank clearance. Once the firm deposits the check, banks may place holds (especially on large checks) until the funds clear. That clearance period affects when your lawyer can issue your check or wire you funds.
- Distribution to you. After all liens and fees are paid and the funds clear, the attorney issues your net payment. This may be by check payable to you, by wire/ACH (if you consent), or, rarely, by issuing a check jointly if other payees remain. The lawyer should also give you an itemized closing statement and copies of any lien releases.
Common special situations
- Minor or incapacitated claimant. If the settlement is for a minor, a court‑approved settlement or guardianship/conservatorship distribution may be required before funds can be released.
- Medicare or Medicaid involvement. Federal and state programs may assert reimbursement rights. Your lawyer should identify any potential recovery interests and coordinate with the appropriate agency. For Washington Medicaid issues, see the Department of Social & Health Services: https://www.dshs.wa.gov/.
- Joint checks to multiple payees. If the insurer issues the check to multiple parties including lienholders, each payee must endorse before deposit; this can complicate and slow the process.
- Structured settlements or annuities. Sometimes parties agree to a partial lump sum and an annuity. That requires working with an annuity provider and additional documentation before full payment flows to you.
What you should ask your lawyer
- Who will the check be made payable to?
- Will the money be deposited in a client trust account?
- What liens or other claims against the settlement need to be paid?
- How much will you receive after fees, costs, and liens?
- When can I expect the net check or wire?
- Will I receive a written closing statement and copies of lien releases?
Illustrative example (hypothetical)
Imagine the insurer issues a $50,000 settlement check payable jointly to you and your lawyer. Your contingency fee agreement is 33%. Medical providers claim $10,000 in liens. The attorney deposits the check to the firm trust account, negotiates a $8,500 payoff with the medical providers, deducts $16,500 in attorney fees and $1,000 in costs, and then issues you a net check of $24,000 along with an itemized closing statement and releases for the lienholders.
What to do if you have a problem
- If your lawyer won’t give you a closing statement or you suspect funds are being withheld improperly, ask for a written explanation.
- If you think the lawyer mishandled client funds or trust accounting, you can review the Washington Courts rules and contact the Washington State Bar Association for guidance or to file a grievance: https://www.wsba.org/.
Disclaimer: This article explains general practice under Washington law and is for educational purposes only. It is not legal advice. For advice about your particular case, talk to a licensed Washington attorney about the facts in your situation.
Helpful Hints
- Get the fee agreement and settlement documents in writing before signing a release.
- Ask for an estimated net recovery in writing before you sign anything.
- Keep copies of all checks, receipts, closing statements, and lien releases.
- Ask whether net funds will be delivered by check or wire and how long the firm expects the bank to hold the funds.
- If a lien seems excessive, request written justification and consider asking your attorney to negotiate or demand proof.
- For settlements involving Medicare/Medicaid, notify your lawyer early so required notifications and potential repayments are handled properly.
- If you are a minor or have a guardian/conservator, confirm whether court approval is required for distribution.
- If you are not represented and the check is made only to you, ask the insurer whether the check is conditional on release paperwork and whether you should get independent legal advice before endorsing the check.