How Are Settlement Funds Disbursed?

Settlement funds flow through your attorney's trust account. The attorney pays all liens, fees, and expenses before distributing the net balance to you. The process typically takes five to ten business days after the check clears.

When a settlement is reached, the defense attorney or insurance company issues a settlement check payable to the plaintiff and their attorney jointly, or directly to the attorney's trust account. The funds are deposited into the attorney's IOLTA (Interest on Lawyers' Trust Account) — a dedicated client funds account kept separate from the firm's operating finances.

From the trust account, the attorney satisfies all outstanding obligations in order: medical liens (hospitals, health insurers, Medicare/Medicaid), attorney fees and case expenses, and any third-party funding repayment. Each payee receives a check drawn on the trust account or a wire transfer. The documentation supporting each payment is retained in the client file.

What you receive is the net balance — whatever remains after all obligations are paid. Your attorney will provide a settlement statement that itemizes every deduction and shows how the gross settlement was allocated. Review this statement carefully before signing the disbursement authorization. If any line item is unclear, ask your attorney to explain it.

The timeline from check receipt to your distribution typically runs five to ten business days. The check itself needs to clear (one to three business days for wire funds, up to seven business days for paper checks on large amounts). After clearance, the attorney prepares the settlement statement, obtains any required lien release confirmations, and issues your distribution.

Source: ABA Model Rule of Professional Conduct 1.15 — Safekeeping Client Funds. State bar trust account rules vary in specific requirements.

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