FAQ: Where does 1/3 of the settlement go?

I have been asked lately about how a settlement breaks down. A lot of people seem to think that there is about 1/3 of the settlement that they never see. Let me see if I can help.

When you settle a case, there is a fee agreement with your attorney. Your attorney may take anywhere from 25 percent to 40 percent (some take more). Assume that your attorney takes thirty three percent (1/3) of the settlement. That leaves 67 percent (2/3) of the settlement. Then the attorney tells you that you get half of that, or 1/3 of the settlement. Where does that other 1/3 go?

Well, in most cases, your doctor or health insurance must be reimbursed. You received treatment for your injuries. The doctor may have treated you on a lien. In that case, the doctor gets paid back. Or, your health insurance may have paid for your treatment. In that case, it may need to be paid back.

In any event, you should ask your attorney for a breakdown of the settlement. He or she should show you where ever cent of your settlement goes.