A line-by-line walk through a mid-size settlement, showing how the contingency fee, case costs and medical liens stack on each other before anyone writes a check.
The number quoted on the phone is not the number on the check, and the distance between them is arithmetic rather than mystery. A settlement passes through three deductions in sequence: the attorney's percentage, the costs advanced to build the case, and whatever medical providers or health plans claim out of the proceeds. Each is governed by a different document, and the order in which they are applied changes the result. A careful reader asks to see the closing statement in draft, before the release is signed, and checks each line against the paperwork that created it.
Which number the percentage is taken from
Contingency agreements commonly run around a third of the recovery before suit is filed, rising to something nearer forty percent once litigation begins, and higher again if an appeal follows. The percentage matters less than the base it is applied to. A fee calculated on the gross settlement produces a larger fee than the same percentage calculated after case costs are subtracted, and the fee agreement says which method governs, usually in a single sentence that is easy to skim past. On a $90,000 settlement with $4,200 in costs, the two methods differ by $1,400.
Costs are a separate ledger, not a rounding error
Case costs are money the firm advanced and is entitled to recover: the filing fee, service of process, certified medical records, deposition transcripts, a treating physician's narrative report, the mediator's share, postage and copying. On a case that settles after suit is filed but before trial, the total tends to be modest next to the fee, though expert reports move it quickly. Ask for the itemization rather than the total. Records charges and transcript invoices are third-party bills with receipts behind them, and a firm that keeps clean books produces them without friction.
Liens take their bite last, and negotiate
Medical bills that went unpaid do not simply disappear when a settlement arrives. Most states allow a hospital to file a lien against the recovery for its charges, health insurers assert subrogation rights under the plan document, and an ERISA self-funded plan can be harder to reduce than a commercial policy. The Centers for Medicare and Medicaid Services oversees recovery of conditional payments where a federal program paid first. Med pay coverage from the client's own auto policy may also be reimbursable, depending on the policy language and state law.
The useful principle here is the common fund doctrine, which in many states requires a lienholder benefiting from the attorney's work to bear a share of the fee and costs. In practice that often means a hospital lien of $18,000 settles at $12,000, and a health plan claiming $9,500 accepts $6,300, though the reductions are negotiated case by case and the numbers vary widely. Nothing about that reduction is automatic. Someone has to write the letter, cite the statute, and follow up when the lien vendor does not respond.
The closing statement, line by line
Take the $90,000 gross figure. Costs of $4,200 come off first under a net-fee agreement, leaving $85,800, and a one-third fee on that base is $28,600. Subtract fee and costs and $57,200 remains in trust. The reduced hospital lien of $12,000 and the reduced health plan claim of $6,300 come out of that, leaving roughly $38,900 to the client. Rounded, the attorney received about 32 percent of the gross, the medical claimants about 20 percent, and the client about 43 percent, with costs accounting for the rest.
What to check before signing the disbursement sheet
Compare the fee percentage on the closing statement against the tier in the signed agreement, since a case that settled during a mediation scheduled before suit was filed should not be billed at the litigation rate. Confirm that each lien figure is the reduced figure and that a written reduction letter exists for it. Look for any provider bill still outstanding that no one has addressed, because those follow the client home. Ask whether any balance is being held back in trust pending a final Medicare or plan demand, and how long that hold is expected to last.
None of these deductions is hidden, and every one of them appears somewhere in writing, in the fee agreement, the cost ledger, or the lien correspondence. The reader who lines those three documents up against the disbursement sheet is doing the arithmetic the file already contains.