How Long Can a Lawyer Hold Your Settlement Check?

When you reach a settlement, you may think to yourself, “When will I get my settlement check?” It is important to understand that a personal injury lawyer has the duty of care to handle your funds responsibly while also looking out for you. In some cases, instead of a lump sum settlement, you may be compensated through a structured settlement. This will spread payments over time. Knowing how such a check is managed and the reason for delays can give you a peace of mind during the legal process.

Can a Lawyer Keep Your Settlement Money?

A lawyer can keep your settlement money, but temporarily. Usually, the money is deposited into a client trust account, also called an IOLTA (Interest on Lawyers Trust Accounts) account. Your legal representative can hold funds there until everything has been finalized. Or, if you establish a fee agreement, such as a contingency fee, they may take out their agreed-upon fees and other expenses from the settlement before handing you the remainder.

To learn what your settlement could be worth, you can use our personal injury settlement calculator by including the losses you incurred as a result of the accident.

Why Is My Lawyer Taking So Long to Give Me My Check?

It can be frustrating to wait for a settlement check. You need to take into account that such a process does take some time to fulfill due to several reasons. First, the settlement funds typically come in the form of certified or bank checks. This often requires time to clear before your lawyer can hand the money over to you. Banks, in certain cases, may put a hold on large settlement amounts to verify the funds.

In addition, a personal injury lawyer may hold onto a client’s funds to compensate any debts related to your case before giving you what is left, including medical liens, attorney fees, and court expenses.

Another factor is the necessary paperwork. Your legal representative is required to finalize release documents to prevent you from taking legal action again. They will also need your signature and to ensure that court and insurance requirements have been fulfilled.

In some cases, if surveillance footage is presented, the insurer may want to review it to assess whether you did something that goes against your personal injury claim.

For instance, if you say you are unable to lift heavy objects, but the video shows you carrying numerous bags of groceries, insurers may use that to challenge your credibility. This, as a result, may cause the insurer to reduce their offer, or require your personal injury lawyer to dispute the captured footage to ensure you receive a fair settlement.

Surveillance footage does not always damage your case, but it can present controversy and may be one of the reasons why your settlement check will be issued later than expected.

Lastly, if there are any disputes about legal fees, liens, or how the settlement payment should be divided, your lawyer may hold onto your settlement in a trust until all matters are resolved. You can regularly follow up with them for updates. They should keep you informed and explain what issues are causing the holdup.

How Long Does a Lawyer Have to Give You Money?

A lawyer will need to give you your money soon after:

• Receiving and clearing funds
• Deducting fees
• Resolving valid third-party claims or liens

In California, this is backed by professional conduct rules. Your lawyer will need to let you know when the money has been acquired and will then have to distribute your share without unnecessary delay.

Typically, this means you should be given your portion of funds within a few business days after the check has been cleared and all the deductions have been applied. If delays arise, your lawyer will need to keep you updated. Unexplained issues may cause concern. In this case, you should ask for a full accounting of the funds.

How Long Does a Lawyer Hold a Settlement Check?

When a lawyer is handed a settlement check, they must have it deposited into a client trust account and hold it until the check clears the bank and other related obligations, like outstanding liens, are resolved. This holding period can be anywhere from 5 to 15 business days. It all depends on how quickly the bank will process the check and if any legal or financial issues need to be handled before initiating a timely disbursement.

A lawyer cannot give you your funds until the check has been cleared to avoid any overdrafts or errors. At this time, they could also finalize lien negotiations or gather necessary documents, like release forms. Once all of these matters have been addressed, your lawyer should distribute your portion.

What Is the Longest a Settlement Can Take?

The duration of time a personal injury settlement will take varies based on several factors, like:

• The extent of your injury
• Disputes over liability
• Legal representation
• The amount of compensation you are seeking
• Any delays or lowball offers presented by the insurance company
• The number of parties involved

Simple cases with minor injuries or clear liability can take a few weeks or months to settle. However, complex situations, including severe bodily harm or a high settlement agreement, can take much longer (about 1-3 years).

In a study involving 364 participants, the following details were presented:

• 54 percent of claimants settled their personal injury lawsuit within 12 months
• 17 percent underwent the legal process for 12 to 24 months
• 30 percent took more than 24 months to settle

The severity of the injury and legal representation affected the duration of claim closure.

In addition, it was found that California ranked as the fourth-fastest state to process civil lawsuit settlements. About 27,788 civil suits were resolved in a yearlong period, ending on March 31, 2022. Local attorneys took an average of 7.1 months to reach a settlement agreement. Other states that placed higher than California include the following:

• Nebraska (5.2 months)
• Vermont (6 months)
• Georgia (6.1 months)

Can I Sue My Lawyer for Taking Too Long?

You can sue your lawyer for extending the duration of your settlement check. However, pursuing a lawsuit will only apply if the delay amounts to legal malpractice. Being slow is not enough for you to file a claim against them.

Your lawyer has the responsibility to maintain professional representation, meaning they should act with skill, care and diligence, as any other competent lawyer would under such similar circumstances. If they choose to do either of the following actions, they may breach this duty:

• Ignore deadlines
• Procrastinate without a valid reason for doing so
• Fail to communicate time-related information

If either of these actions resulted in you suffering financial or other losses, specifically because of delays, you may have grounds to sue.

How Do I Track My Settlement Check?

To track your settlement check, you will need to contact your attorney’s office. They will:

• Confirm if the settlement is finalized
• Let you know when the check was issued or deposited
• Give you updates on what factors are contributing to the delays

If your settlement involves an insurance company, be sure to get in touch with the insurer’s claims department and ask them what the payment status is and what the estimated mail or wire transfer date will be. Some insurers have online portals that you can access to be up-to-date with your settlement check process.

What Happens if a Settlement Is Not Paid?

If someone does not pay a settlement they are required to, you or your personal injury attorney can send a letter requesting for the money. If that does not work, you can reach out to the court to have them convert the settlement into a legal order. Then, they will help you get the money you are entitled to by taking it from their paycheck or property. 

This can be a lengthy process, particularly if the opposing side does not agree to this or does not have enough money at hand. This is why it is important to check if they have sufficient funds before making a settlement agreement.

Are Lawsuit Settlements Taxable?

Whether a lawsuit settlement is taxable will depend on what type of damages are included in a personal injury lawsuit. Typically, physical injuries are not taxable under state law. This includes:

• Medical expenses
• Lost wages
• Pain and suffering

But, if you received compensation for emotional distress that did not stem from such pain, you may have to pay taxes on it.

Furthermore, if you wrote off medical bills on your taxes within the past year, and then got compensated for those same bills in your settlement, you may have to pay taxes on that part. It would be ideal to speak to a tax expert or even a lawyer to learn what the IRS or California tax agency might expect you to mention.

Why Do Lawyers Drag Out Cases?

Lawyers may drag out cases for multiple reasons, whether it be strategic or unjustifiable. Under some circumstances, delays can be used to gain leverage in order to pressure the opposing side to settle or to wait for stronger evidence. Other times, lawyers may be handling too many cases at once, thus causing them to miss deadlines or lack communication with their clients.

Lawyers could also delay the settlement agreement if there are unresponsive witnesses or court backlogs. Nonetheless, if they are doing this without a valid purpose and it is impacting your personal injury case, that could be considered legal malpractice.

Settlement Delays and Prop 213

Under Proposition 213, also known as the Personal Responsibility Act, certain types of damages are barred in personal injury cases if the affected individual broke the law when they sustain a minor or serious injury. This regulation is mainly targeted towards uninsured drivers and intoxicated drivers.

If you do not have car insurance and you were harmed as a result of a motor vehicle accident, you will not be entitled to non-economic damages from the other party. This includes:

• Emotional distress
• Loss of enjoyment of life
• Pain and suffering

However, you may still acquire economic damages, such as medical bills and lost wages.

If you are being sued as an uninsured driver and you have no money or assets, this particular issue will become even more complicated. The opposing side may struggle to actually acquire any damages. This could lead to delays or extended negotiations as each party tries to figure out a realistic result.

Now, if you were operating a vehicle while under the influence of drugs or alcohol and you were more than 50 percent at fault for the crash, you will not be qualified for non-economic damages. The intent behind this is to discourage people from drinking and driving.

Because of these restrictions, insurance companies and defense attorneys may try to dispute or challenge legal claims. This can result in a lengthier negotiation process or delays in settlement agreements. For instance, if the insurer believes Prop 213 applies in your case, they may try to lessen your settlement offer or deny non-economic damages, which can trigger disputes and slow down the payment process.

In addition, if the injured party’s right to recover compensation is limited under Prop 213, the insurance company could try to push back the settlement process to verify whether the correct amount has been calculated or if they should negotiate with you on stricter terms.

How Long Does an Insurance Company Have to Subrogate?

In California, insurance companies will be given two years to file a subrogation claim for collisions or property damage caused by someone else’s negligence. This will begin on the date of the incident or loss. For claims based on a contract, like the insurance policy itself, a 4-year time limit will be in effect, starting from the day you were paid.

So, if your insurer covered damages, like medical expenses, caused by another party, they may seek reimbursement from that individual or entity within a two-year period. But, if their right to recover compensation derives from the insurance contract, they will be given four years, beginning on the payment date.

Still Waiting on Your Settlement Check? Contact West Coast Trial Lawyers Today

If you are dealing with unnecessary settlement check delays, it is important to know your rights and the legal obligations of the insurance company. At West Coast Trial Lawyers, our team will step in to address the issue and hold your insurer accountable for failing to uphold their responsibility of paying you in a prompt manner. If necessary, we will pursue further legal action to ensure you receive your settlement funds without experiencing prolonged delays.

Our law firm operates under a contingency-fee basis, meaning you owe us nothing unless the case settles in your favor. For guidance and support, you can schedule a FREE consultation with us by calling (213) 927-3700 or filling out our convenient online contact form.