The first question on a plaintiff’s mind after the settlement of his or her lawsuit is how long does it take to get the settlement money? There are really two time frames to consider: (1) the time it takes for the defendant to send the settlement check to your lawyer and (2) the time it takes from when your lawyer receives the check until you get your money. Unlike settlements in personal injury cases, in workplace discrimination cases, the first time frame will usually be longer than the second.
How Long Does it Take for My Lawyer to Get the Settlement Check From the Defendant?
Depending on your state, and whether your settlement is being paid directly by your employer or by an insurance company, there may be a state law that explicitly sets a deadline for the defendant to deliver your settlement check to your lawyer. For example, in Florida, Fla.Stat.§627.4625 provides: “In any case in which a person and an insurer have agreed in writing to the settlement of a claim, the insurer shall tender payment according to the terms of the agreement no later than 20 days after such settlement is reached.” If timely payment is not made, interest is added to the settlement amount at a rate of 12 percent. If the settlement was conditioned upon a signed release being executed by the plaintiff, the 20 days does not start to run until the plaintiff tenders the signed release to the defendant.
In New York, NY CPLR 5003-a states that a private (non-government) defendant has 21 days from the date a signed release and stipulation for dismissal are tendered to it (mailed by certified mail or delivered personally) in which to pay the settlement. After that, the plaintiff can enter a judgment, without notice to the defendant, for the amount of the settlement plus post judgment interest running from the end of the 21 days.
From the two state laws discussed above, you can already see some variations in how the timing of settlement payments is handled in different states. In Florida, the statute only applies to “an insurer,” so if you settle with an employer who is self-insured (no insurance company) this law probably won’t apply. In New York, the statute applies to all private defendants, whether they are insurers or not. In Florida, interest accrues at a fixed rate automatically after the payment deadline passes. In New York, the plaintiff must first have a judgment entered on the settlement before interest begins to accrue. Ask your lawyer whether there is a specific statute for your state which sets a deadline for payment of settlements. Not every state has one.
How to Ensure that Your Settlement Money is Paid Quickly to Your Lawyer
To avoid the headaches and uncertainty about how your particular state’s law might apply to your settlement payment, you can specify the terms for delivery of the settlement check to your lawyer in the actual settlement agreement. If you settle at mediation, this will be easy, as there will naturally be a written settlement agreement apart from the defendant’s release. If you settle outside of mediation, your lawyer needs to make the terms of settlement clear and in writing (usually a letter) before both sides agree that they have reached a settlement.
Because most settlement payment deadlines run from the date you deliver a signed release to the defendant, you need to make sure that there is no unneeded delay in the defendant delivering a release for you to sign. Many plaintiffs (and their lawyers) have pulled their hair out waiting for a defense attorney to draw up a release and send it over. If there are revisions that need to be made, this process can be drawn out for quite a long time. To nip this delay tactic in the bud, you need to set a deadline for delivery of the initial release, and a very short follow-up deadline for each side to make revisions. I suggest 5 business days for delivery of the initial release, and 2 business days for each side to deliver any required revisions to the other. If the defendant fails to meet a deadline, the agreement should state that interest shall begin to accrue from that deadline at a fixed rate.
Your settlement agreement should then set a payment deadline as well, even if your state already has a law regarding this. If you find the state’s law to be reasonable, adopt its deadline. Otherwise, set your own. Again, the penalty for failure to pay should be interest added to the settlement from the date the check was due. If the defendant already owes interest from missing a “release deadline” you could just let that stand or impose a higher rate starting from the missed “payment deadline”.
In short, you want a written settlement agreement that specifically provides:
- a deadline for the defendant to deliver a release to your lawyer (with a stated penalty for missing it), and
- a deadline (a fixed number of days) running from the date you deliver the signed release to the defendant for the defendant to deliver the settlement check to your lawyer (again, with a stated penalty).
The fact that these deadlines are a part of the settlement should be made clear by your lawyer whenever making or accepting a settlement offer. He won’t be able to add these terms on after the fact. So, if the defendant makes an offer and your lawyer accepts it over the telephone without expressly making the settlement subject to these deadlines, you may find yourself stuck with unnecessary payment delays. Be sure to discuss this issue with your lawyer before any serious settlement negotiations begin so he knows that you want these terms to be part of the settlement.
How Long Does it Take to Get My Settlement Money After My Lawyer Receives the Check?
Once your lawyer receives the settlement check, you will likely have to come into his office and sign it so that he can deposit it in his trust account. Most settlement checks are made co-payable to the plaintiff and his or her lawyer, and your lawyer is required to deposit such checks in his trust account by state bar rules. A lawyer’s trust account is a special type of bank account where a lawyer must hold client funds. Interest on money in a lawyer’s trust accounts doesn’t go to the lawyer — it usually goes to state bar programs for providing legal services to the needy.
Checks can take up to 10 business days to clear a lawyer’s trust account. Your lawyer wants the check to clear just as quickly as you do, as his fee payment is also tied up in the trust account. So, there shouldn’t be any delays between you signing the settlement check and being called in to receive your share of the settlement, aside from those imposed by the bank. Your lawyer has no incentive to delay the process here. He wants to get paid, too, and he can’t pay himself out of the trust account until the check clears and you sign off on the settlement agreement.
One Possible Extra Delay for Plaintiffs Who Have Received Medical Care
If you received medical treatment, such as mental health services, due to the circumstances giving rise to your discrimination lawsuit, and you received this treatment under a letter of protection or it was paid for by your health insurance, there may be an extra delay due to your lawyer negotiating (re)payment for these services. Your lawyer must resolve medical and/or insurance lien issues before he can fully disburse your settlement money. This can cause a significant delay in some cases (maybe months), as your lawyer tries to get the insurer or medical provider to reduce the amount you have to pay them.
If you find that liens are holding up your payment, you can ask your lawyer to hold back an amount sufficient to fully cover the liens and to issue you the rest of the money (after attorney’s fees and costs) as a partial distribution of the settlement money. This way, you can get (usually most of) your money now, and later you can get whatever is left over after the liens have been resolved.