The answer depends on the contract that you signed. First, the attorney has to have his/her client's authority to settle the matter. It is good practice to let the client know exactly how much they will get in their pocket at the settlement table so there are not any misunderstandings. It is true that contingent fees are usually taken off the top and then medical bills are the responsibility of the client. Under the scenario presented, I assume the attorney could have taken 40%.
Remember that your net recovery is the combination of the net cash to you and payment of bills for which you are responsible. The attorney's work produces the total recovery. The attorney fee is normally a percentage of the total amount collected, not the net after your medical bills are paid. If you did not have medical insurance to pay your medical bills, then the doctors and hospital have a legally enforceable lien for the amount of their bills. We often negotiate with such lienholders to reduce the amount paid to them in order to increase the net amount of cash going to the client, and often reduce our fee percentage in order to make things work out well for the client.
However, I don't recall a time that I allowed my fee to come out more than the net cash payment to the client, but there are circumstances when it would be that way. Many times when an assistant has brought be a settlement disbursal summary, I have cut my fee so that the client would net at least as much cash as my fee, even if there was a very large amount I had collected that had to be paid out to medical providers.
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