When you have a personal injury claim, you likely want to know how much money you will receive when your case settles when you have a personal injury claim. Certain items will get deducted from the gross settlement amount.
It could help to get an answer to the question, “how much goes in my pocket?”
We need to start with the total settlement amount. Let’s say that you have $20,000 in medical bills from a car accident and some lost wages. Suppose we negotiate a settlement with the at-fault driver’s car insurance company. After offers and counteroffers, you agree to accept $120,000 to settle your claim.
How Proportionate Fault Works in Texas
The at-fault driver caused the accident by running a red light. Because you were distracted by your GPS app, you were unable to avoid the collision. The other driver was 90% at fault, and you were 10% responsible.
Texas has a proportionate responsibility statute. This law reduces the amount of a settlement or verdict to account for a injury victim’s own negligence. Also, a person who is more than 50% at fault can not recover any compensation from the other party.
The proportionate responsibility statute in Texas will reduce your $120,000 settlement by 10%, in other words, $12,000. After this reduction, the subtotal will be $108,000. Even if the other driver got injured, he would not be able to recover any money damages from you because he was more than 50% at fault.
Medical Expenses and Liens
Next, the medical bills get paid out of the subtotal of $108,000. After paying the $20,000 in medical bills, there will be $88,000 remaining.
Case costs, also called claim costs or litigation costs, are the out-of-pocket expenses of pursuing the claim with the insurance company or filing and handling the lawsuit. The personal injury lawyer often pays these out-of-pocket costs during the case and waits until the settlement or jury award to get reimbursed for them.
In this scenario, the attorney paid $100 out of pocket to obtain the medical records the insurance company required during negotiations. The lawyer will get reimbursed for that expense out of the settlement proceeds. In a lawsuit, costs can include things like the court filing fee, additional court costs, deposition expenses, expert witnesses, and other things.
Typically, personal injury lawyers handle cases on a contingency fee basis. You do not have to pay any upfront legal fees with the contingency fee arrangement. The attorney waits until the end of the matter and then gets paid a percentage of the settlement proceeds or jury award.
In essence, the lawyer bets his paycheck that your case will be successful. The attorney only gets paid when you win.
The lawyer and client agree early on in the case about the specific percentages of attorney fees. For purposes of this basic personal injury settlement breakdown, let’s assume that your contingency fee agreement provided a 33% attorney fee if the case is settled without the need for filing a lawsuit.
The attorney fee will be $35,640. That amount represents 33% of $108,000.
The Bottom Line: How Much of the Settlement You Receive
Let’s recap what happens to the settlement proceeds. You had a claim value of $120,000. This amount got reduced by $12,000 to account for your 10% proportionate responsibility of fault, leaving an actual settlement of $108,000.
You had these deductions from the settlement amount:
- Medical bills – $20,000
- Case costs – $100
- Attorney fees – $35,640
After these deductions, you will receive $52,260. With your medical bills all paid, that amount will truly be in your pocket.