What comes out of Settlement Money?
What comes out of Settlement Money?
When a client is in settlement negotiations, it is always relevant to know what payments will need to be made out of the final settlement amount. All clients want and need to know how much of their settlement money they will actually receive in their hand.
Settlement funds are paid to your lawyer’s trust account. There are payments that will have come out of settlement money before it gets to the lawyer’s trust account. And there are further payments to come out when it arrives to the trust account.
It is often the case that the total amount a client receives in their hand, comes to them from:
- Their lawyers trust account; and
- From Medicare.
Payments that come out of Settlement Money, before it is paid to your Lawyers Trust Account.
While your lawyer will discuss this with you prior to settlement, given there is a lot of information to digest in the lead up to and at settlement, many clients forget this.
After settlement, there is usually an 8 week wait for settlement money to be received into our trust account, sometimes longer.
We will always send a detailed letter explaining all payments. Every situation is different. While there are various government payments that are compulsory, not everyone will need to pay amounts to the same organisations.
Payments that come out of Settlement Money from your Lawyers Trust Account.
Once money is received to your lawyer’s trust account, there are other payments to be made. Most of these are related to the costs of progressing your claim.
Settlement Money you will receive 'in your hand':
The balance left in your lawyers trust account will be paid to you. You will also receive the refund from Medicare.
It is usually the case that the total amount a client receives in their hand, comes to them from 2 sources:
- Their lawyers trust account; and some weeks later,
- From Medicare.
will depend on everything set out above.
An Example:
If you had a WorkCover claim which settled for $400,000 clear of any refund to WorkCover and no payments were required by Centrelink, NDIS, Child Support or your Private Health Fund, this is what occurs:
We will receive $360,000 into Trust.
Medicare withhold 10% of all settlement amounts. In this case, $40,000.
Medicare call this an ‘advance payment’. It is government mandated and compulsory.
Within 10 weeks of receiving settlement money (usually), you will receive from Medicare a Claims History Statement. We go through this with you and once completed and returned to Medicare, they will refund you the difference between the ‘advance payment’ and the amount they funded with respect to treatment relating to your claim.
Most people get almost all, and often all the ‘advance payment’ back.
Let's say in this case you will get $40,000 back.
From the $360,000 received to Trust, the following amounts will be paid:
- Disbursements (your loan balance and any other disbursements)
- Barristers fees
- Our itemised invoice for fees.
The total amount of these items will depend largely on the time spent progressing your claim and at what stage your claim finalised; at a compulsory conference (Stage 1), or a Mediation (Stage 2), or sometime after that possible after going to court to receive a Judgement.
Let’s say in this case your matter settled at the Mediation or shortly after that, and the total for disbursements, barrister’s fees and our fees is: $100,000.
The settlement money you receive in your hand will come from 2 places, our trust account and Medicare. You will receive:
- From our trust account: $360,000 less $100,000 = $260,000, plus
- From Medicare, about 2 months after money came to trust: $40,000
So, the total you would receive ‘in your hand’ is: $300,000.
A Final Comment
There is considerable variation in how much settlement money clients receive in their hand. Lawyers charge differently.
Payments to Medicare and other compulsory refunds or government charges, and even a large part of all outlays necessary to progress your claim won’t vary too much, but there is definitely much variation in the professional fees charged by lawyers.
It is very important to have an experienced lawyer you trust, not only with the progression of your claim, but also with how they will charge you.
Many firms, in addition to charging an hourly rate for their time, will also charge uplift fees or fees for care and consideration. Some firms will offer to charge a ‘fixed fee’ or a ‘fixed percentage' of your claim.
We don’t do any of that. Our fees are based on the time we spend on your claim.
Pursuing a claim is indeed expensive. It is time consuming and a lot of work. It is also risky. It takes considerable energy as you are litigating with an insurance company with considerable heft. There are also many time limits and technical laws that must be navigated. There is considerably more involved that what most people think.
We consider that fees based on the time we spend on progressing the claim is the fairest way to charge.
We are also committed to our clients receiving as much of their settlement money as possible.
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Townsville Qld 4810
PO Box 1405,
Townsville Qld 4810
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