Can I Get a Settlement Check Via Direct Deposit?

by Toni Hipolito

After the long journey through a legal battle, the arrival of a settlement check marks a significant milestone for plaintiffs. However, the process of cashing a settlement check with direct deposit may not be as straightforward as one might expect. Let’s delve into the intricacies of this process and understand the steps involved in handling settlement transactions.

Understanding Settlement Fund Distribution

Upon receiving a settlement check, attorneys follow a structured protocol to distribute the proceeds among various parties involved. This includes deducting legal fees, court costs, expert witness fees, and outstanding medical expenses as outlined in the contingency fee contract. The remaining funds are then remitted to the plaintiff via direct deposit, provided that the necessary bank account details are provided to the attorney.

Receipt of Settlement Funds

Settlement funds are not treated as ordinary cash transactions but are deposited into a law firm’s trust or escrow account. This step ensures that the funds are securely held until all necessary deductions and payments have been made. Additionally, the clearance process for settlement checks may take a week or more, adding to the overall timeline of fund disbursement.

Handling Settlement Transactions

Attorneys adhere to established procedures, best practices, and ethical guidelines when managing settlement transactions to ensure transparency and accountability. Here’s an overview of the typical process:

1. Recording and Depositing the Settlement Check: Upon receipt, the attorney records essential details such as the case number and client name on the check. A copy is made and stored in the client’s file before the check is deposited into the trust account. For electronic transfers, a verification of deposit is retained as documentation.
2. Drafting a Settlement Statement: A comprehensive settlement statement is prepared, detailing the total amount of the settlement check, allocations for legal fees, expenses, and payments to third parties. This document serves as an audit trail and is signed by both the attorney and the client.
3. Dispersal of Funds: Once all necessary payments and deductions are calculated, checks are written to relevant parties and recorded in the trust account ledger. An invoice outlining the attorney’s fees and expenses is prepared for the client. Upon receiving payment, the attorney issues a check from the trust account to cover their fees and expenses, after which funds can be transferred to the firm’s operating account.
4. Final Documentation and Paperwork: Signed copies of the settlement statement, agreement, trust ledger report, invoices, and a check for the plaintiff’s portion of the settlement funds are delivered to the client. This ensures that all parties are provided with comprehensive documentation of the transaction.

Conclusion: Navigating the Settlement Check Process

Cashing a settlement check with direct deposit involves meticulous planning, adherence to legal protocols, and transparent communication between attorneys and clients. While the process may entail some complexities and timelines, it ultimately ensures that plaintiffs receive their rightful compensation in a secure and structured manner. By understanding the intricacies of settlement transactions, plaintiffs can navigate this process with confidence and clarity, paving the way for a smoother transition from legal battle to financial resolution.