SettleScore

By SettleScore · Published

How Much of a $50,000 or $60,000 Settlement Will I Get?

A stack of invoices and receipts

You hear "$60,000" and start making plans. Before you do, it helps to know what will actually land in your bank account. In New York, the answer depends on three things: the lawyer's fee, case costs and paybacks.

The short answer: With the usual one-third fee and $2,500 in case costs, you would keep about $31,700 from a $50,000 settlement. From a $60,000 settlement, you would keep about $38,300. That is a little under two-thirds, before any paybacks.

The math, step by step

$50,000 settlement$60,000 settlement
Settlement$50,000$60,000
Case costs paid back to the lawyer−$2,500−$2,500
Amount the fee is based on$47,500$57,500
Lawyer's fee (one-third)−$15,833−$19,167
Your share before paybacks$31,667$38,333

These examples use $2,500 in case costs. Case costs are things like court fees, medical records and expert doctors. Yours could be higher or lower.

How New York limits the fee

Most injury lawyers work on a contingency fee. That means they only get paid if you win. New York court rules cap that fee. In most injury cases, the lawyer can charge either:

  • One-third of the recovery, or
  • A sliding scale: 50% of the first $1,000, 40% of the next $2,000, 35% of the next $22,000 and 25% of anything over $25,000.

A lawyer can only charge more if a judge approves it in unusual cases. Medical malpractice cases have a lower limit, starting at 30% of the first $250,000.

Under the court rules, the fee is figured before paybacks, like Medicare, are paid. Whether case costs come out before or after the fee depends on your retainer agreement, which is your written deal with the lawyer.

Three fee setups compared

Fee setupYou keep from $50,000You keep from $60,000
One-third, costs taken out first$31,667$38,333
One-third of the full amount, lawyer fronts the costs$30,833$37,500
Sliding scale, costs taken out first$32,875$40,375

All three rows assume $2,500 in case costs and no paybacks.

  • Costs taken out first. The fee is figured on what is left after case costs, so you keep the most under a one-third fee. You may still owe the case costs if you lose, depending on your agreement.
  • Lawyer fronts the costs. The lawyer pays the costs up front and gets them back from the settlement if you win. The fee is figured on the full settlement, so you keep a little less. If you lose, you owe nothing for costs.
  • Sliding scale. This costs less at these amounts. Many lawyers use one-third, so ask which one your agreement uses.

In Manhattan and the Bronx, court rules require your agreement to explain both cost choices and show which one you picked. Wherever you live, ask your lawyer to explain the choice in writing.

Then take out paybacks

If Medicare or another program has a right to be paid back, that amount comes out of your share too. For example, if Medicare's final payback is $4,000, your $31,667 share drops to $27,667. Ask your lawyer early who might have a claim, so the number does not surprise you. To learn more, read Who Gets Paid First in a Personal Injury Settlement?

What about taxes?

According to the IRS, money you get for a physical injury, including lost wages, is generally not taxed as income. Punitive damages, which are meant to punish the other side, are taxed. So is any interest added to your settlement. Ask a tax professional about any part of your settlement that is not for a physical injury.

Questions to ask before you hire a lawyer

  • Is your fee one-third or the sliding scale?
  • Are case costs taken out before or after your fee?
  • Who pays the costs if we lose?
  • Can you give me an estimate of my take-home amount?

The bottom line

The number in the headline is not the number in your pocket. Ask for a written breakdown before you sign, and check it against your closing statement at the end. To try your own numbers, use the SettleScore recovery calculator. When you are ready to choose a lawyer, see how New York injury firms rank on SettleScore.

This post gives general information about New York law. It is not legal advice. Talk with a New York injury lawyer about your own case.

Sources

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