If you have ever been injured or hurt by someone else’s negligence, you might have considered filing a personal injury case, and rightly so. Even though you might be in the right, filing a personal injury settlement isn’t always that simple or straightforward, especially if you have suffered from injuries.
When deciding to file a personal injury claim, one of the most crucial things you would want to know is how the compensation is divided and where the settlement goes. Before you plunge into filing a lawsuit, knowing how the personal injury settlement will be shared and dispersed is essential.
Types of Personal Injury Damages in California Lawsuits
All personal injury damages in Sacramento and the state of California fall into two main categories – compensatory and punitive damages.
Compensatory damages are those that reimburse the victim for any losses they incur after an injury. They intend to compensate the plaintiff by returning them to the situation before any injury when everything was normal. These damages comprise both economic and non-economic damages suffered by the plaintiff and are compensated in monetary form. Economic damages are measurable and identifiable. They include property loss, wage loss, or medical expenses. Non-economic damage costs include compensation for the mental and emotional trauma caused to the plaintiff, such as pain, suffering, distress, and loss of consortium.
Punitive damages are when the court decides to punish the defendant for an injury other than paying the mandatory compensation to a plaintiff for their losses. Punitive damages are quite unusual unless that case entails some seriously outrageous behavior on the defendant’s part. The point of punitive damages is to teach a lesson to the plaintiff and keep them from conducting any wrongful acts again. Moreover, it also acts as a warning for other people from doing so. Punitive damages are usually applied to large corporations such as insurance, pharmaceutical, or automobile companies.
If you’ve suffered from a personal injury, you can expect the defendant to incur any one of the damages, as mentioned earlier. However, the best thing for you to do is to consult a good personal injury lawyer to sort out your case.
Personal Injury Settlement Breakdown
Not all personal injury cases receive the same amount of compensation. Since the intensity and nature of all personal injury cases vary, the compensation claim is also adjusted accordingly. For instance, a work accident differs from a car accident, and hence, the compensation for each accident can vary.
An important thing to remember is that the entire compensation amount doesn’t go directly to the plaintiff. Many people often get confused because they aren’t aware of this when filing a case. Once the court has decided the personal injury compensation amount, different deductions and costs are accounted for before the plaintiff receives their entitled amount.
So, let’s consider a hypothetical situation. You find yourself in a car accident and file a personal injury case with the help of your personal injury lawyer. You then win the case, and the court gets the defendant to compensate you with a check of $100,000.
Here is a full breakdown of the personal injury settlement and how the amount you won will be divided:
The first charge that will be taken out of your personal injury settlement amount is your personal injury lawyer’s fee. An attorney’s fee can vary depending on many factors. However, the amount of the settlement that they are awarded is compensation for their legal expertise, front money for other cases, and payments of their staff members. Moreover, sometimes your fee also gets split between various firms. In this case, both the firms will split the lawyer’s free.
If your personal injury claim is settled before the lawsuit, you will usually pay around 33.3% of your compensation amount to your attorney.
For instance, if your settlement is $100,000, your personal injury lawyer will be subject to $33,300.
However, if a lawsuit is filed, the attorney’s fee falls between 40 to 45% of the settlement amount. So, if you are being compensated with $100,000, your personal injury lawyer will receive between $40,000 to $45,000. Since the fee can vary, it is crucial for you to go through your contract and establish an agreement at the beginning of the settlement.
Legal Expenses and Case Costs
After your personal injury lawyer has received their fee, you will need to account for the legal expenses and other costs associated with the case. Hypothetically, if you have paid your lawyer $40,000 from the $100,000, only $60,000 will be remaining.
Legal expenses include all the costs incurred by your attorney, such as depositions costs, expert free, traveling costs, etc. In some cases, these expenses can amount up to several thousands of dollars. Other case costs include charges for medical records, copy charges, and postage for pre-suit cases. The costs constantly keep escalating when you’re filing a suit. These charges can also cost thousands of dollars.
So, for instance, if the legal expenses amount up to $15,000 and the case costs add up to $500, then the remaining amount of the settlement will be $45,500.
Liens and Medical Expenses
At this point, $45,500 remains from the original settlement amount of $100,000. The third step of the process includes outstanding liens and medical expenses. If an ambulance rushed you to a hospital, those types of costs need to be paid.
California requires you to compensate the Government agencies, physicians, and hospitals. You need to pay all those individuals and agencies that brought you to the hospital and treated you. This is known as the right of subrogation.
Theoretically, we will assume the following. After the accident, the plaintiff is rushed to the hospital in an ambulance, where she is treated in the emergency room and has multiple tests and x-rays. The results show that the plaintiff has suffered from a back injury. After weeks of pain, the plaintiff makes frequent visits to a chiropractor to help with the pain.
Once the plaintiff is back to normal and has won the personal injury lawsuit, the medical expenses will include the emergency medical service bill. This bill will comprise of the facilities availed at the hospital, the x-ray and radiology costs, and lastly, the emergency physicians. Moreover, the chiropractor’s fees will also have to be accommodated within medical expenses.
Assuming that the entire medical expenses amount to $25,500, since these expenses benefited you they are subtracted from your award and the remaining amount of the settlement will be $20,000.
The Plaintiff's Portion
Once all the expenses and fees associated with the case have been accounted for, the remaining amount will be $20,000 in this example. This is the amount the client or plaintiff is entitled to for lost wages, any pain, and suffering they experienced, and the time they invested in filing the lawsuit. Moreover, this portion also covers lost relationships with a significant other.
If you have a personal injury lawyer, they will try their best to put as much money in your pocket as possible, that is their responsibility. They can reduce your expenses by engaging in effective negotiations with the medical providers by getting them to reduce the total bills. Even though this can be an extremely lengthy and tiring process, it is usually in the best interests of the plaintiff. However, it isn’t guaranteed that these bills will be reduced to a certain amount, but a great personal injury lawyer will work diligently to help the plaintiff as much as possible.
Referring to our theoretical personal injury settlement amount, if the personal injury lawyer manages to bring the medical expenses down by $3,000, the client will receive $23,000 in total.
This personal injury breakdown is called ‘the settlement pie.’ Anyone planning to file a personal injury lawsuit should be aware of how the personal injury settlement amount is divided and how much the plaintiff will end up with.
It’s important to underscore that medical and lawsuit costs are for the client’s benefit and are subtracted from their total. The only fee not directly for the client’s benefit, although indirectly, are the fees for the lawyer’s time and experience. However, the lawyer was also doing an additional service by fronting the hard costs and bearing the risk of financial loss. Since lawyer’s fees are considered income they are taxed while personal injury settlements for the client are tax-free.
Hopefully, this article provided a clearer explanation of how the settlement pie is divided and where your settlement goes.
Consult With An Attorney
The legal experts at Phoong Law Corp have extensive experience winning personal injury lawsuits for those who have been injured and damaged by the negligence of others. Schedule a free no-obligation consultation to find out what legal options you have. You will of course not be charged unless we win your case.