To start, there is never any guarantee that your case is worth $25,000. Every case is different. Moreover, even a case that receives an award for $25,000 from one judge or jury may receive a completely different amont from another judge or jury based on the same facts. If you are settling your case, you are avoiding many of the costs and uncertainty that go along with trial. With a trial, you face higher costs de to higher legal fees, discovery costs, and expert witnesses. You also face the threat of an appeal. However, with a settlement, you avoid the wait-time before a trial, which can be months or years, and you know your answer, which is final. But where does the money go? If you settle for $25,000, how much do you get to walk away with?
Again, every case is different. So, we cannot tell yo that yo will walk away with a given amount. Below, we walk you through the typical breakdown of a $25,000 settlement, with the disclaimer that your case may be different from below’s example. You may get more, but you may also get less. For the best information as it relates to your case, it is best to speak with your attorney. The personal injury lawyers at Gelb & Gelb have experience handling a wealth of different cases. Our attorneys handle car accident claims, slip and falls, and pedestrian accidents, to name a few. If you are hurt due to a third party’s negligence, call our office today for a free consultation at (202) 331-7227.
Typical Breakdown of a $25,000 Settlement
$25,000 sounds like a substantial amount, and in many cases it is. But several deductions may apply before a plaintiff can recover what is left. The final payout depends on attorney’s fees, case costs, medical expenses, lost wages, and any liens tied to the injury.
Attorney’s Fee
Nearly all personal injury law firms represent plaintiffs on a contingency basis. This means the law firm only charges a legal fee if the firm is successful. Typically, this is one-third of the gross recovery if the recovery is via settlement. If the law firm files a lawsuit on your behalf, the legal fee is typically 40%. But again, the fee is contingent on whether the firm and lawyer are successful. If they are unsuccessful, you likely owe nothing. Of course, it is prudent to confirm this with your law firm in-writing before proceeding. At Gelb & Gelb, our legal fee is 100% contingent on whether there is a recovery.
The contingent fee enables injury victims who otherwise are unable to afford legal representation to go out and hire the best attorney available. This opportunity for the best representation is unique to personal injury law. Without the contigency fee model, tortfeasors would be less likely to be held accountable for wrongdoing resulting in injury. The downside for the law firm is that there is no legal fee if the lawyer is unsuccessful. However, this perfectly aligns the lawyer’s interests with the client’s. When a lawyer chargges an hourly rate, the lawyer’s incentive is to provide oftentimes overly verbose answers to simple questions to run up a bill. With personal injury representation, the incentive is to get the client the largest possible financial sum.
Case Costs
Case costs are expenses that the law firm advances to prove your claim. These are out-of-pocket expenses required to invesvtigate, document, and present a personal injury claim. These costs are then reimbursed from the settlement once the case resolves. Common case costs may include:
- Medical records and billing fees charged by hospitals, clinics, and providers
- Police or incident reports, including certified copies
- Court filing and service fees if a lawsuit is filed
- Postage, copying, and administrative expenses
Each of these costs are covered by the ethical rule requirement of the jurisdiction where your incident took place in. In straightforward cases without discovery or litigation, total costs may range from under $100 to a few hundred dollars. This also depends on where you receive medical treatment from. Some medical providers charge about $150 or so, while others far less. This is a cost that is ultimately out of the law firm’s hands, and is likely a cost you would need to pay regardless of if you have legal representation.
Medical Bills
Medical bills typically have the largest impact on how much your case is worth. Not only will the defendant owe you for reasonable medical expense related to the negligent act, but how large the medical bills are is typically a good indicator of how much you deserve for your pain and suffering award. As that is a more subjective award, the amount of the medical expense is a good baseline to go off of.
But just as medical bills are the most important indicator of your case’s value, they can be the most complex. In some cases, your personal injury lawyer can negotiate reductions of bills to get you an equitable amount of the recovery. This is most common in lower-policy-limit cases, where your bills exceed $25,000, but there is no more coverage to pay your bills. When this happens, the attorney should step in and negotiate a lower balance.
Medical Liens
A lien is a legal claim against part of a settlement that must be paid before the client receives their funds. Under Rule 1.15: Safekeeping of Property of the DC Bar’s Rules of Professional Conduct, when there is a dispute as to a lien amount between two or more parties, the funds in dispute should not be disbursed and instead should be deposited in a separate account meeting the requirements of paragraph (a) and (b). In personal injury cases, liens most often come from medical providers or insurance companies that paid for treatment related to the injury. However, a lien could also come from another lawyer or another plaintiff. No matter how meritless the lien is, the personal injury lawyer has an obligation to set the money aside until the parties resolve the dispute. Similar to medical balances, a personal injury attorney can negotiate the amount of a lien.
If you do not address a lien, providers and insusrers may pursue collection against you later on. Thus, resolving medical bills and liens is a necessary step in closing your case. Even if you use health insurance, your health insurer likely has a right to reimbursement when they may not otherwise if you there were no recovery. When the health insurer is part of a program such as Medicare, Medicaid, a military health insurance plan, or something similar, we are legally obligated to seek out and pay back those liens out of the recovery. However, if it is a private health insurer, we do not carry such obligation.
Moreover, some doctor’s offices require that a patient sign an authorization and assignment letter. This gives the provider permission to release medical records and assigns the provider the right to be paid directly from any settlement or judgment.
Lost Wages
This is another component of your special damages. A large wage claim can significantly increase the value of your case. This part of the claim compensates you for income you were unable to earn because your injuries prevented you from working. However, we must prove a number of elements to be successful on this point. These elements include employer wage verification, pay stubs showing pre-injury earnings, doctor’s records placing you off work or on restrictions, and potentially tax records if you are self-employed. Assuming we are successful on this claim and it is part of your $25,000 settlement, where does it go? Lost wages are not usually paid out as a separate check. Instead, the claim is part of one larger personal injury claim.
Lost wages are critical to a better recovery for the client because they do not need to be paid back to a doctor’s office or insurer. The portion of the recovery should replace income you could not earn because of your injury.
Why a $25,000 Settlement is Common
In addition to it being a round number, jurisdictions such as Washington, DC, require just $25,000 in mandatory minimum insurance limits. Unfortunately, DC’s legislative body has not touched the mandatory minimum insurance limits in 40 years. Accordingly, many motor vehicle accidents in Washington, DC involve damages that exceed the $25,000 policy limit. The result is a policy limits settlement of $25,000. Of course, if you have insurance, there are steps you can take to increase how much you recover. The most effective is an underinsured motorist claim through your own auto policy. However, these are not always available despite having your own insurance.
In these cases, negotiations are with health insurers and medical providers as much as they are with the adverse auto insurer. For the personal injury law firm, our goal is to get you to walk away with as much money as possible. This means tough negotiating. There have been countless incidents where the private health insurer innforms us there is no world where they can reduce their lien, just for us to prevail and get a fraction of their original lien offer. Over the last 72 years, Gelb & Gelb has developed strategies to leverage the existing case law and precedent to get our clients to walk away with as much money as is available.
What Factors Reduce the Amount You Actually Receive
From a $25,000 settlement amount, the more parties we have to pay back, and the more we ultimately owe, the less that will be available to the plaintiff. The list above illustrates the factors that reduce the amount you actually receive from the gross settlement of $25,000. However, there are certain correlates to be aware of. For example, in a more serious accident where the case’s value is over $100,000, but the ultimate settlement amount is just $25,000 because that is all the coverage that is available, you may walk away with less. Now, a good personal injury attorney will ensure you do not walk away with less than the attorney. So that is always a good minimum threshold to go off of. But when your case is so large, chances are, you have larger medical bills you must pay back.
If you have health insurance, this should not a be a huge concern. But if you do not have health insurance to cover your bills, that can eat into what you keep. Your attorney should explain this to you clearly. And as always, if you do not agree to the $25,000 settlement amount, you can always authorize that you attorney files suit. But beware, there are times where litigating the case is not the best option. For example, if your case is worth far more but there is no more coverage, ltiigating the case is only going to increase your costs while keeping the ultimate recovery of $25,000 the same.
How Medical Treatment Choices Affect Your Payout
To be clear, it is our position that you should not dictate your medical treatment based on your legal case. We believe that you should get the best medical care you can reasonably afford regardless of how much or how little you get back from your case. In some instances, the more medical treatment you get, the less you will walk away with at the end of the day. In other cases, your case will be worth more if you receive more medical care. Accordingly, it is best simply to receive the medical care you need and nothing more. Your attorney should explain
Will Taxes Reduce My $25,000 Settlement?
In nearly all personal injury cases, your $25,000 settlement is not taxable. This is compensation for your losses arising out of an act of negligence. It is typically not a punitive measure against the tortfeasor, though it can be in very limited circumstances. The questions for a jury are how much you were charged for your medical care because of the negligent act that injured you, how much injury did you lose because of the injury, and what is a fair amount of compensation that you deserve for the pain that you underwent. The question before the jury is not to place a number as to how much the tortfeasor should have to pay because of what they did. That is a criminal fine and is outside the scope of a civil personal injury case.
Because the settlement is viewed as compensation rather than a penalty or as income, it is typically not taxable. Exceptions may include interest, though this is generally after a judgment when the defendant delays in paying what they owe. There is usually not interest in a personal injury settlement by itself. Your lost wage claim is also typically not taxable, though exceptions may apply.
Contact Gelb & Gelb Today
If you are injured due to negligence, contact our office today for a free case evaluation at (202) 331-7227. We look forward to speaking with you soon.
