Guide

Gross versus net proceeds

The number in an offer is the gross amount. What reaches you is smaller, and the order in which fees, expenses, and liens come out can change it.

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What comes out of a settlement

A settlement offer states a gross amount. Before you receive anything, the attorney fee, the costs of the case, and any liens are paid from that amount. Your representation agreement sets the fee. Expenses are the costs your attorney advanced to pursue the case. Liens are claims by others, such as a health insurer or a government program, that must be repaid from the settlement.

Your attorney prepares a disbursement statement that lists each amount. That statement, not an estimate, settles the exact figures.

Fee on the gross amount or after expenses

Some agreements calculate the fee on the gross amount. Others calculate it after case expenses are subtracted. The same percentage then applies to a smaller number, so the fee is lower. Look for the wording in your representation agreement, and ask your attorney if it is unclear.

The two methods differ by the fee percentage times the expenses: one third of $6,000 is $2,000. The difference is always in your favor when the fee is calculated after expenses.

Why liens are often uncertain until late

Lien holders usually confirm their final amounts late in the process, and the figures can change. That is why the calculator lets you enter a low and a high amount and shows a range instead of a single number. Ask your attorney which liens have been identified and which could still change.