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Basic Portland Personal Injury Settlement Breakdown: How Much Goes in My Pocket?

Posted on February 11, 2023 in

Negotiating a Portland personal injury settlement for, say, a truck accident or a wrongful death, is tricky business. The opposing party might be able to reduce your settlement based on comparative fault, the uncertainty of the results should your case go to trial or other factors. 

Once you negotiate a specific amount, however, you face another uncertainty—the amount that you put in your pocket relative to the full amount of the check. This blog post will explain the details.

The Disbursement Process

The opposing party (typically an insurance company, not the defendant) will transfer the money to your lawyer’s client trust account. Your lawyer will then deduct any applicable amounts and pay any outstanding debts. They will then forward the rest of the money to you, typically by bank-to-bank transfer. Your lawyer should provide you with a written list of deductions.

Common Deductions

Following is a description of common deductions that will reduce the amount of your settlement payout.

Legal Fees

When you signed the fee agreement with your attorney, it probably contained a contingency fee arrangement. The system works like this: if your lawyer negotiates a settlement, they get a certain percentage of your award (usually about a third). If you lose, however, you owe your lawyer nothing in terms of attorney’s fees.

Your lawyer’s contingency fee comes out of your settlement before you ever see it. It sounds like a lot, but once you consider that injury victims who hire attorneys typically take home several times the amount that unrepresented victims do, it is usually worth it. 

It’s also worth it for your lawyer only if they are reasonably certain they can win your case. That means if the lawyer takes your case on a contingency fee arrangement, they are probably confident they can win.

Case Expenses

Most of the time, a personal injury lawyer will pay your case expenses out of their own pocket. This way, you can afford to hire a lawyer for a personal injury claim even if you’re dead broke. If you lose the case, your fee agreement probably specifies that it is your lawyer who must swallow the loss, not you. 

This type of arrangement gives your lawyer plenty of motivation to win your case. If you win your case, you have to reimburse your lawyer for any out-of-pocket case expenses. Typical case expenses include:

  • Expert witness fees;
  • Court costs (filing fees, etc.);
  • Investigation expenses;
  • Medical records; and 
  • Postage.

Your lawyer might deduct many other items, depending on the specific facts surrounding your case.

Outstanding Medical Liens

Medical treatment is expensive. If your injuries were serious or extensive, you may or may not be able to pay them as they come due. If not, you might have arranged for your healthcare provider or your insurance company to take a lien on the amount of any personal injury settlement you manage to negotiate. 

Arranging a medical lien can be a good idea because it can ensure that you receive adequate medical treatment. If you do settle your case, you will need to settle any relevant liens as well.

Federal Taxes

Most of the time, a personal injury settlement is tax-free because the IRS does not consider compensatory damages to be earned income. The following settlement components are taxable, however:

  • Punitive damages: In most cases, this item doesn’t matter because few personal injury claimants win punitive damages anyway.
  • Interest: Interest on any settlement is taxable.
  • Emotional distress and mental anguish: Emotional distress and mental anguish are taxable only if they do NOT arise from a physical injury. This doesn’t apply to most personal injury settlements, but it could apply to damages for a claim such as intentional infliction of emotional distress.

Consult a tax professional, not a personal injury attorney, if you have any doubts. 

An Attorney Is Definitely Worth Hiring if You Have a Significant Personal Injury Claim

Your attorney only makes money if you do. Consequently, they will probably strive to obtain the largest possible settlement for you. Take advantage of the fact that most personal injury attorneys offer free initial case consultations.

Contact Our Personal Injury Attorneys in Portland, OR – Tillmann Law Personal Injury Lawyers

If you were injured in an accident in Portland, OR, please contact our Portland personal injury lawyers at Tillmann Law Personal Injury Lawyers to schedule a free consultation today.

Tillmann Law Personal Injury Lawyers
101 SW Main St. #1905
Portland, OR, 97204
(503) 272-8986
Open 24/7

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