My Case Settled and My Attorney Hasn't Paid Me!
Your personal injury case dragged on for two years. Finally, your attorney gets a settlement check; it is deposited to their trust account and you don't get your check. What is going on?
In theory your attorney is supposed to not distribute the settlement to you, any lien holders, and him or herself until the check has "cleared." Other clients' money is in the same trust account and if the check bounced but your attorney wrote your check right away, you could receive someone else's money.
But as a practical matter, let's say your check is a State Farm check drawn on State Farm's account at JPMorgan Bank. How realistic is it to worry about this check bouncing?
Like many other personal injury attorneys, I maintain a good relationship with my trust account bank and as a courtesy to me, my bank will usually not put a hold on many settlement checks if I request them not to. Over the years I have found out that nothing pisses off a client more than waiting a long time for their settlement check to "clear."
However, not all settlement checks are from State Farm. What if the check is from Tiny Insurance Company Few People have Ever Heard Of drawn on the Little Old Bank in Small Town USA? Occasionally insurance companies fold and their checks bounce. And these days every week it seems that the FDIC shuts down a few small banks. Or what if the settlement check is from a lawyer I sued for legal malpractice. That lawyer failed to run a case right. Does this lawyer run his books right? In these cases I want the check to clear before I distribute any money to my client.
In the "old days" a lawyer could call up their bank and say, "You know that $50,000 check I deposited four days ago, can you tell me if it has cleared yet?" and the bank would say yes or no. These days the bank will only issue guidelines as to when a check is "presumed" to have cleared. The banks simply won't commit themselves to saying the check has cleared. The guidelines the banks use for estimating when a check should have cleared or bounced depend on the location and identity of the issuer, but they are only estimates. Also, these days with sophisticated printers and scanners and software, scammers can make pretty impressive fake checks. So an lawyer who is very careful might legitimately worry about when a check has truly "cleared."
Here in Nevada where I practice law, the State Bar counsel simply cannot give any guidelines as to how long an attorney should wait for a settlement check to clear before distributing it. In my case and the case of many of my colleagues it comes down to a business judgment of balancing good client relations against protecting against the very unlikely disaster of taking good money out of a trust account belonging to other clients to pay off a deserving client whose settlement check ends up bouncing.
However, as a practical matter it is hard to imagine waiting more than a week or two at the most for a settlement check to clear. If you are waiting longer than that, "waiting for the check to clear" is not likely a satisfactory explanation.
In addition to the problem of the check clearing there can be a much longer wait problem with liens. Suppose some of the medical bills in a personal injury case were paid by Medicare. Now Medicare under federal law must be paid back out of the settlement. Unfortunately, attorneys can't just call up Medicare and say, "Hi Medicare what is your lien and are you willing to compromise it?" It can literally take many months to get a response from Medicare. Hospitals may also have liens on a case and sometimes it can be difficult dealing with a hospital because the bill amount is so inflated. So there will be times when the best lawyers have settled a case and have to hold some or all of the client's money while the issue of liens get cleared up.