Not every lawsuit or tort goes to all the way to the courtroom. In those instances, it’s important to know what happens in a lawsuit settlement in order to prepare.
What Happens in a Lawsuit Settlement?
Filing a lawsuit doesn’t necessarily mean that your case will go all the way to trial. In fact, in many mass tort cases, lawsuits don’t reach a courtroom at all, around two-thirds of civil cases settle.
It’s important to know that when you start the process of getting justice for a wrong committed against you or a loved one, you know the possible outcomes that may be coming your way. A lawsuit settlement is a likely and often good source of closure for any harm you’ve experienced. Read on to understand what happens in a lawsuit settlement and what happens when you win a settlement, so you’re prepared for the road ahead.
Why Settle a Lawsuit?
Trials can be expensive and time-consuming for both the victim and the business or organization responsible. As a result, parties will frequently try to work out a settlement agreement to avoid going to trial altogether.
A settlement can occur at many different points during any civil legal dispute. A settlement can happen before a lawsuit is filed, during the litigation process, or even during trial—as long as the final verdict has not yet come back.
Settlements can also happen in mass tort cases. A mass tort case happens when one act or omission injures numerous people. Those injured individuals then come together to file a group of lawsuits against the party that has caused the injuries. Examples of mass tort cases include the Roundup lawsuits, talcum powder lawsuits, hernia mesh lawsuits, and Zantac lawsuits.
In a mass tort case, a settlement is structured so that each plaintiff’s (the victim’s) case is evaluated on its own merits. This means that causation, injuries, damages, and exposure are examined separately for every individual victim to determine a settlement amount. The settlement is not split evenly between all victims. In addition, each victim has the right to make their own decision on whether or not they would like to 1) accept the settlement amount or 2) settle at all.
This type of settlement arrangement differs from class actions cases where a single settlement is given to each victim involved, regardless of the differences between what was done to each individual.
What Happens When You Win a Lawsuit?
After you win a lawsuit, one of two things generally happens: the court orders a party to do something (or stop doing something), or you receive a monetary award.
If you win a monetary award, the defendant (the business or organization) will pay that sum to your attorney. Your attorney will then use the money to pay off any expenses accrued from the trial and write you a check for the remaining amount.
The good news is that you don’t have to rely on winning a lawsuit with a jury trial in order to obtain your compensation. This is where settlements come in.
A settlement agreement happens when parties decide to settle their differences without going to trial. A settlement agreement will typically state that the lawsuit will be dismissed in exchange for a specific sum of money. This agreement may also include confidentiality clauses and information about the payment. The settlement agreement may also include a full liability release, which releases the defendant from all liability in the future.
Settlements often, though not always, provide a quicker way to get closure and financial compensation from the guilty party for your or your loved one’s injuries.
Common Types of Settlement
A settlement is typically paid as either a lump sum or a structured settlement. There are advantages to each and, depending on your situation, one may be better than the other.
With a lump sum settlement, you receive the entire settlement amount at once. The advantage is that you get to choose how to spend and invest your money. In most cases, your payout will be tax-free.
With a structured settlement, you won’t get all of your settlement money at once—instead, you will receive regular payments for a specific period of time. For example, you might receive monthly payments for the next ten years. You can negotiate most of the terms of a structured settlement, including terms such as:
- How often you receive the money
- How much money you receive in each payment
- Whether you receive any lump sum at the beginning or end of the payment period
- The length of the structured settlement
If you are not good with money management skills, you may prefer the security that regular, long-term payments provide. A structured settlement is also often tax-free.
The support system provided by the Guardian Legal Network can help you manage the settlement amount you were awarded to help you put it to its best use. As you work with us, let us know if this is another area you would like assistance with, and we’ll be happy to connect you to those who can help.
How to Claim a Tort Settlement
What happens when you win a settlement? If you choose to accept a settlement, you will have to sign various documents that will end the legal process, including a settlement agreement and a full liability release. We recommend that you work with a lawyer to help navigate this process and close out your case.
A settlement agreement will typically state that the lawsuit will be dismissed in exchange for a specific sum of money. This agreement may also include confidentiality clauses and information about the payment.
A full liability release is also often necessary and states that you release all claims against the defendant. This release is sometimes a part of the settlement agreement.
After these documents are signed, the defendant will send a check to your attorney. The money will be allocated to expenses, legal fees, and finally, to you to use as necessary.
Possible Hurdles to Receiving Your Settlement
Once you settle a lawsuit, you hope that you receive your settlement money in a timely manner. Unfortunately, this is not always the case.
In some situations, the other party may claim that they do not have the money to pay you, or they may make it difficult for you to collect. In these situations, you may have to take additional steps to get the money you are entitled to. An experienced lawyer and support system can help you navigate this situation.
If a party refuses to pay a settlement, you may need to go back to court or go through the “collection” process. In the collection process, you can use a variety of legal tools to get the other party to pay the money it owes you. Your lawyer can help you with this process or refer you to another lawyer specializing in this type of work.
Contact an Experienced Lawyer Today
Guardian Legal Network knows that the process of filing a lawsuit and obtaining a settlement can be confusing, but we are here to help. We have the resources that you need to make the process easier. We connect you with the right legal team to get you the justice that you deserve. Contact us today for more information.
- Internal Revenue Service, Treasury. § 1.104-1 Compensation for injuries or sickness. https://www.govinfo.gov/content/pkg/CFR-2012-title26-vol2/pdf/CFR-2012-title26-vol2-sec1-104-1.pdf. Accessed February 15, 2022.
- Thomas Eisenberg and Charlotte Lanvers. “What is the Settlement Rate and Why Should We Care?,” Cornell Law Faculty Publications, https://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=1202&context=facpub. Accessed February 15, 2022.