Understanding Your Final Settlement Statement

What is a Final Settlement Statement?

From beginning to end, handling a personal injury claim can be stressful. Almost everyone can agree that a huge weight is lifted once the final settlement is agreed upon and the matter is complete. Before you can actually receive any money, however, you will meet with your attorney or insurance adjuster to discuss the settlement agreement and how the proceeds will be disbursed. Generally speaking, your attorney will have a final settlement statement prepared that will explain where each and every dollar and cent came from and where it will be going.

The final settlement statement will include the total settlement amount and a detailed breakdown showing how your proceeds will be disbursed. The settlement statement should account for every dollar received and every dollar disbursed in your settlement.

Final Settlement Statement example image

View our Final Settlement Statement Example. In this article, we will break down each section of a typical final settlement statement.

Section 1 – Recovery

Section 1, labeled “Recovery,” on the final settlement statement covers the total recovery amount received from the various sources, if applicable. This section will include all the money received for your accident claim. Generally, this will consist of the amount paid by the at-fault party’s insurance and any medical payment coverage (MedPay) your attorney has received on your behalf. Section 1 also includes a Total Recovery section. The total recovery amount is the final amount that has been received for your personal injury settlement in lump sum. Also, please note that no reductions have been taken yet. The Total Recovery section reflects the Gross Recovery. In other words, attorney’s fees, liens and advanced costs have not been subtracted from this amount.

In this example, it includes the $30,000 insurance settlement payment and the $5,000 MedPay coverage, for a total of $35,000. Again, this total recovery or gross recovery is not the amount you will receive from the settlement but rather the lump sum settlement amount.

Section 2 – Less Attorney’s Fees

Section 2, labeled “Less Attorneys Fees,” on the final settlement statement includes the amount that will be deducted for attorney’s fees as agreed upon by you and your attorney in your retainer agreement. This amount, the attorney’s fees, will be deducted from total recovery identified in Section 1. Under Section 2, you will see two separate amounts for attorney’s fees in this example. The first section, entitled “Settlement (one-third),” is the agreed-upon contingency fee. The contingency fee is taken from the amount paid by the at-fault party’s insurance company and never from the MedPay section. Under Section 1, the settlement amount was $30,000. Thus, the attorney would receive $10,000 ($30,000 x 1/3 = $10,000). Also, please note that any MedPay coverage amount will not be included in determining your attorney’s one-third contingency fee.

The second section, identified as “Medical Payments (Flat Fee),” under Section 2 is the flat fee amount the attorney charged for the collection of each available MedPay. In North Carolina, an attorney may only charge a reasonable flat fee for the collection of each available MedPay. Here, the attorney charged a flat fee of $200. That amount will be deducted from the total recovery amount found in Section 1.

Lastly, under this section you will find the total attorney’s fees, which consists of the one-third contingency fee and the flat fee for handling MedPay. These two amounts totaled will equal the exact amount that your attorney will be paid (called Total Attorney’s Fees).

Section 3 – Deductions for Bill and Liens

Section 3, labeled as “Deducted and Retained to Pay Others,” on the final settlement statement covers the amount that will be deducted for any bills, liens or assignments attached to your personal injury recovery. Generally, medical providers and certain health insurance plans such as Medicare and Medicaid will have a lien on your settlement. These liens must be paid with the proceeds you receive from your settlement. For further information on liens, please visit our liens and subrogation section.

Under Section 3, you will see that there is a hospital lien and a chiropractor lien attached to the recovery. The two liens will be added together, and that amount will equal the total deductions amount under Section 3. That total deduction will be taken from your total recovery under Section 1. Furthermore, your attorney or the insurance adjuster will mail the amount due directly to the lien holder.

Section 4 – Costs Advanced

Section 4, labeled as “Costs Advanced,” on the final settlement statement covers the amount that will be deducted for any advancement costs your attorney may have had to pay for your personal injury case. Generally, these costs are relatively low and usually include costs of postage and records. These cost are deducted from your portion of the settlement amount. Thus, here the $9.00 postage the attorney had to pay will be deducted from the client’s share of the settlement proceeds.

Section 5 – Client Recovery

Section 5, labeled as “Net Recovery to Client,” on the final settlement statement covers your share of the settlement proceeds. This section is most important to you because it is the actual amount you will take home. In other words, your attorney will hand you a check for this amount at the conclusion of your meeting. Here, the client will receive a check for $15,988.05 from his attorney once they have signed and dated the settlement statement.

For more information about understanding a final settlement statement, listen to our Understanding Your Injury Settlement Statement podcast.


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