The check from your settlement has finally arrived. Wouldn’t it be convenient to deposit the money directly into your bank account? However, it’s not that simple to cash a settlement check with direct deposit.
To explain, let’s look at what happens when your attorney receives your settlement check. They will first deduct a portion of the proceeds to cover their legal fees and other expenses, as determined by the contingency fee contract. Court costs, expert witness fees, and medical expenses will also be deducted.
Once your attorney has distributed the funds, they can (if you provide them your bank account details), remit the remainder of your settlement check via direct deposit.
How Settlement Funds Are Received
The proceeds of your settlement are handled differently than normal cash transactions. They are deposited into a law firm’s trust account or an escrow account. Then the check must clear, so this step can add a week or more to the process.
Thereafter, outstanding liens and bills are paid. But you don’t have to wait until the check clears to draft a release form. This will speed things up when the money is available, so all parties can be paid when it is, and you can deposit the rest into your account.
Process for Handling Settlement Transactions
Attorneys and law firms follow general procedures, best practices, and state ethical guidelines when managing settlement transactions. Your lawyer knows you’re eager to get the funds into your bank account. In anticipation of being paid, it helps to know how they track, record, and pay the transaction.
- The Settlement Check Is Recorded/Deposited: Your attorney will get all the relevant signatures. They will then write the case number and client name on the check, scan or copy it, and save a copy in your file. It’s then deposited into the trust account; for an electronic transfer, a copy of the deposit verification is saved.
- A Settlement Statement Is Drafted: Serving as your audit trail, the settlement statement is signed by you and your lawyer. It states the total amount of the settlement check, your name, the amount payable to the firm (for fees and expenses), amounts payable to third parties (along with copies of respective invoices), and the amount due to the client.
- Funds Are Dispersed from the Trust Account: Once checks are written to receiving parties and dispersed, they are recorded in the trust account ledger. The attorney prepares an invoice for the client that includes their fees earned and expenses paid. Once payment is received, they will write a check from the trust account payable to the firm, and pay the invoice. Funds can then be deposited into the firm’s operating account.
- Final Documentation and Paperwork Are Prepared: Signed copies of the settlement statement and agreement, a copy of the trust ledger report, copies of invoices, and a check for your portion of the settlement funds will be delivered in person or via certified mail.
Is the Settlement Check Process Too Slow?
Once your attorney receives your settlement check, direct deposit is an option, but that doesn’t mean you’ll see the cash in your account right away. However, you can still get cash to pay for medical bills and living expenses. You can receive a portion of future settlement proceeds via pre-settlement funding. There’s no credit check, proof of income, or out-of-pocket payments required. The principal and interest/fees are paid only if you win your case.
To learn about our settlement acceleration program and other services, continue browsing, or apply for funding online in minutes. Call 855-870-2274 to speak with one of our friendly representatives.