How Are Settlement Funds Disbursed?

how are settlement funds disbursed

Lawsuits are generally about two things: seeking justice and seeking compensation.

If you are considering filing a lawsuit, or even in the middle of one, you may wonder about how the settlement disbursement process works.

When and how will you receive the payments you have been anxiously awaiting, and how are your costs, including pre-settlement funding, paid?

No one likes surprises when it comes to something as important as funds disbursement, and we at Ally Lawsuit Loans are happy to help you understand what to expect. 

What Is Settlement Distribution?

The nature of your case will have a lot to do with the process and timing of your specific settlement distribution.

A settlement distribution refers to the allotment of the funds you receive once you and the opposing party or their insurance company agree to a settlement.

How funds are disbursed to you is generally set forth before your case even starts and can usually be found in your agreement with your legal counsel. 

How Are Settlements Paid Out?

After you reach a settlement, a settlement agreement is drafted to include the terms to resolve the lawsuit, along with the timeframe for any actions, including payment.

Payment may be in a lump sum or through a payment plan. Lump sums are usually paid in 30 or 60 days, depending on the agreement.

Once paid, it is common practice for settlement funds to be placed directly in your attorney’s trust account.

From there, you will see the funds distributed according to your agreement. Here are some of the ways funds are disbursed.

Attorney Fees

Most lawyers have one of three fee structures, contingency, hourly, and flat fee. If you have a contingency agreement, your attorney will take the agreed-upon percentage of the settlement.

If you have a flat fee or hourly structure for your case, the attorney will take what they are owed for legal fees. Attorney fees are typically the first deduction from your settlement. 

Reimbursable Legal Expenses

In some cases, your legal team may advance expenses associated with legal representation, such as expert fees, legal filing fees, travel expenses, or other costs.

These expenses are distinct from attorney fees and are disbursed separately.

Third-Party Expenses

Any known medical bills or liens against the settlement will also be paid before you receive your settlement disbursement. These could come from medical insurance or a provider.

It is a good idea to provide all invoices or notices of liens to your attorney. In some cases, your attorney may be able to negotiate for lower costs. 

Pre-Settlement Funding

If you received an advance on your settlement through pre-settlement funding, your attorney typically pays back your loan before you receive your settlement disbursement.

Conveniently, this means that you do not have to worry about figuring out when and how to make your loan payments. 

Client Funds Disbursed

Your settlement disbursement is issued once all other expenses have been addressed.

There will typically be an agreement to sign before you receive the money, confirming that you understand how the funds were disbursed. 

Choose Ally Lawsuit Loans

Life does not stop and wait for your legal settlement to be approved. Ally Lawsuit Loans can provide the funds you need to get you through while the legal process is underway.

We have the lowest interest rates, guaranteed, and if you do not win or settle your case, you do not owe us anything. Contact us to start your application or learn more about how we can help. 

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