5 factors that can reduce the value of a personal injury settlement.
Have you ever heard about a victim winning a multi-million dollar personal injury settlement and wondered just how much of that money they will really get to keep? Here are the 5 main factors that can lower the amount of the judgment that actually goes into a plaintiff’s pocket.
Damage Caps
If your case involved an allegation of medical malpractice, as might very well be the case for a birth injuries complaint, a damage cap will apply to any non-economic damages you may be awarded. Non-economic damages include compensation for pain & suffering, mental distress, loss of enjoyment, and other similar problems. In the state of California, these damages are limited to $250,000 in medical malpractice injury cases. Unfortunately, juries do not always realize this and they may award you more non-economic damages than you can actually receive.
Attorney Fees
Most personal injury cases are pursued on a contingency fee basis, meaning that you do not have to pay any attorney fees unless you win your case. At that point, your attorney will take a pre-determined percentage of the settlement value as their fee. Most attorneys charge between 33 and 40 percent, though the fee agreement may provide for the percentage to increase if the case goes to litigation as this requires more time and effort on the attorney’s part. The fee agreement may also provide for the percentage to decrease the bigger the settlement is. In some types of cases this sort of sliding scale fee agreement is required by state law.
Legal Fees
In addition to compensation for your attorney, you will also need to pay certain legal fees out of your settlement. This will cover expenses related court costs, filing fees, special investigators, and expert witnesses. Depending on the complexity of your case, the legal fees could vary widely from a couple hundred dollars if the case is settled out of court to over $100,000 if the case proceeds to trial.
Medical Liens
Your personal injury settlement will most likely include specific damages to cover your past medical expenses. Chances are you were not able to cover all these expenses out of pocket, in which case you must pay them out of your settlement. California law gives care providers the right to recover the “reasonable and necessary charges” they incurred in carrying for a plaintiff by allowing them to hold a medical lien against any relevant personal injury judgments.
Taxes
In most cases, the damages awarded to the plaintiff are not taxable. The only exception is if your judgment included money for punitive damages. These types of damages are not intended to compensate you for your suffering but to punish the defendant for their egregiously reckless or negligent actions. Therefore the government gets a piece of the pie in the form of taxes on your punitive damages.
