.jpg)
Receiving a settlement check is the final step in resolving a legal claim, but the following process isn’t always straightforward. After winning a settlement, many clients wonder:
Can a lawyer cash a settlement check? The answer isn't as simple as a "yes" or "no." Lawyers play a significant role in the distribution of settlement funds, which involves legal obligations, timelines, and processes.
This article will explore how settlement checks are handled, the lawyer's responsibilities, and what to expect once your settlement is finalized.
The short answer is no. A lawyer must do more than cash a settlement check for themselves.
However, they are heavily involved in managing the settlement funds and ensuring the proper distribution to all parties involved, including the client, creditors, and themselves for legal fees.
A settlement check is the final payment issued by the defendant (or their insurance company) to resolve a legal case, typically after negotiations or court proceedings.
Once both parties agree to settle, the defendant or their insurer writes a check payable to the plaintiff and attorney.
This joint payment ensures that the attorney can deduct legal fees and any outstanding costs before distributing the remaining funds to the plaintiff.
Once the settlement check is issued, it is sent to the attorney’s office. The attorney's crucial responsibility is to process these funds in a way that complies with ethical and legal requirements.
The first step in the process is endorsing the check. Since the client and the attorney write the check jointly, their endorsement is required.
When clients come into the office, the attorney typically asks them to endorse the check. Depending on the circumstances, the attorney may also send paperwork for the client to sign.
Once the check is endorsed, the lawyer deposits it into a particular trust account.
This account often called an IOLTA (Interest on Lawyer Trust Accounts), is used exclusively for client funds.
These trust accounts ensure that the lawyer does not combine client money with their funds, which could breach professional conduct rules.
After depositing the check into the trust account, the lawyer distributes the funds according to the settlement agreement. The distribution usually happens in the following order:
The settlement process, especially the disbursement of funds, can take time. Several factors may cause delays:
In many cases, clients can expect to receive their portion of the settlement funds within 2-6 weeks, though it can take longer if complicating factors exist.
It is uncommon, but there are situations where a lawyer may refuse to release settlement funds immediately.
This can happen with unresolved liens, disputes over the settlement amount, or ethical concerns. If the client disputes the lawyer's fees or expenses, this could also cause a delay.
However, the lawyer must act in good faith and work toward resolving these issues as quickly as possible.
If a lawyer improperly handles settlement funds, it can lead to severe consequences.
Legal ethics require attorneys to maintain complete transparency regarding client money and strictly follow the rules for managing trust accounts.
Mishandling funds—whether by mistake or intentionally—can lead to disciplinary actions, including disbarment.
Clients have the right to receive a full accounting of how settlement funds are distributed. If a client suspects that their lawyer is mishandling funds or delaying payment without cause, they can take steps such as:
Once clients receive their portion of the settlement funds, they should consider several financial steps to ensure the best use of their money.
Clients may want to consult with a financial advisor to create a plan for managing their settlement, especially if it's a significant sum.
Settlement money can be used to pay off debt, invest for the future, or cover any ongoing medical costs or other expenses resulting from the case.
While lawyers cannot directly cash a settlement check for personal use, they are crucial in managing and distributing settlement funds.
Lawyers ensure that all legal and financial obligations are met by endorsing, depositing, and disbursing the funds according to the settlement agreement. Clients should stay informed about the process, know their rights, and be prepared for potential delays, especially if there are outstanding liens or legal fees.
Understanding how settlement checks are handled will help clients better navigate the final stages of their legal case and receive the compensation they are owed.
Can a lawyer cash a settlement check without the client's consent?
No, a lawyer cannot cash a settlement check without the client’s consent, as both parties must endorse the check.
How long does it take for a lawyer to release a settlement check?
It typically takes 2-6 weeks, but factors like bank processing and lien resolutions can cause delays.
What happens if a lawyer mishandles settlement funds?
Mishandling funds can lead to disciplinary actions against the lawyer, including suspension or disbarment.
Can I dispute the lawyer’s fees after receiving a settlement?
If you feel the fees are unfair, you can discuss it with your lawyer or file a dispute with the bar association.
What should I do with my settlement check after receiving it?
Talk with a financial advisor if you want to use your settlement money wisely for debt repayment or future investments.
Copyright © 2022 Hughes Law. All rights reserved
