Personal injury lawsuits often result in settlements. The business or individual at fault for a plaintiff’s injuries may agree to settle so that the case doesn’t go to trial. The plaintiff then receives compensation for the losses they have sustained because of the misconduct or negligence of the party at fault. Many large insurance claims may also result in settlements. Claimants agree to lump-sum compensation and absolve the carrier of any future liability for their economic losses.
Settlement funds can help people pay their medical bills, cover property damage expenses and replace their lost income after sustaining injuries. Settlements often require negotiation and careful consideration to ensure they cover enough of the injured party’s losses.
Those who successfully settle are often unsure about what happens next. What does the payment process typically look like after a settlement?
Funds often go to the plaintiff’s lawyer
It is standard practice for insurance companies or attorneys assisting defendants in lawsuits to issue payment to the attorney hired by the injured party. The law firm that represented the injured party then deposits the funds into a specialized trust account. This is necessary to keep the funds separate from business resources.
Frequently, the law firm then assists with the resolution of outstanding expenses. They may pay medical bills on behalf of the client. They may address liens secured by creditors on behalf of the client. They also retain a portion of the funds to cover their own fees. After settling all necessary financial matters, the law firm then issues a check for the remaining balance in the trust account to the plaintiff who requested compensation.
What about structured settlements?
When the amount of compensation awarded is relatively high, the defendant or insurance company may offer a structured settlement that involves a series of regular payments. In some scenarios where plaintiffs need a significant amount of capital at once to cover expenses and liens related to injury expenses, they may work with factoring companies that provide them with lump-sum payments based on the value of the structured settlement.
Understanding what happens after settling a personal injury claim can help people determine how to protect themselves and how to manage their finances. A lawyer representing an injured party can help them explore their options and better understand the settlement process.