The short answer
Most Nevada personal injury settlements are paid as a single lump-sum check (or occasionally a wire) from an insurer or defendant, usually after the parties reach agreement on the material terms and the claimant signs a release. Settlement agreements are treated as contracts, and Nevada courts can enforce them when the material terms are agreed upon. See May v. Anderson, 121 Nev. 668, 119 P.3d 1254 (2005).
If you are represented, settlement funds are typically deposited into a client trust account and then disbursed after the check clears, fees and costs are calculated under the written fee agreement, and valid liens/assignments are addressed. See Nev. R. Prof’l Conduct 1.15; Nev. R. Prof’l Conduct 1.5(c); SCR 217. While every case is different, the payout process often follows a predictable sequence.
Step 1: Agreement on settlement terms
A settlement is a contract. Nevada courts analyze settlement formation and enforceability under general contract principles. See May v. Anderson, 121 Nev. 668, 119 P.3d 1254 (2005).
Important Nevada point: A formal release document is common in injury cases, but the Nevada Supreme Court has made clear that an otherwise valid settlement agreement can be enforceable even if a party later refuses to sign a release, depending on whether the essential terms were agreed upon. See May v. Anderson, 121 Nev. 668, 119 P.3d 1254 (2005).
Step 2: Signing the release and dismissal paperwork
Most insurers require a signed release before issuing payment. Releases are powerful documents that can end the claim, so they should be reviewed carefully.
Nevada law recognizes that releases can be attacked in limited circumstances, such as mistake under the proper standards. See Oh v. Wilson, 112 Nev. 38, 910 P.2d 276 (1996); Chwialkowski v. Sachs, 108 Nev. 404, 834 P.2d 405 (1992); Home Savers, Inc. v. United Sec. Co., 103 Nev. 357, 741 P.2d 1355 (1987).
Step 3: Issuance of the settlement check
Payment is commonly made payable to:
- the client and the law firm jointly, or
- the law firm trust account for benefit of the client (depending on the payer’s practices).
Step 4: Deposit into trust and clearance
Nevada’s professional conduct rules require lawyers to safeguard client property and handle client funds through trust accounting procedures. See Nev. R. Prof’l Conduct 1.15; SCR 217.
Step 5: Resolve liens and third-party interests
Before distributing net settlement proceeds, valid third-party interests often must be addressed. Common examples include:
- Hospital liens. Nevada provides hospitals a statutory lien on injury recoveries (including settlement proceeds) in qualifying circumstances. See NRS 108.590.
- Attorney liens and fee claims. Nevada recognizes statutory charging liens for attorney fees when the statutory requirements are satisfied. See NRS 18.015; Leventhal v. Black & LoBello, 129 Nev. Adv. Op. 50, 305 P.3d 907 (2013); Argentena Consol. Mining Co. v. Jolley Urga Wirth Woodbury & Standish, 125 Nev. 527, 216 P.3d 779 (2009).
- Assignments of settlement proceeds. Nevada recognizes that an assignment of settlement proceeds can give a third party enforceable rights to a portion of the recovery, and attorneys who disburse in derogation of a known assignment can face liability. See Achrem v. Expressway Plaza Ltd. P’ship, 112 Nev. 737, 917 P.2d 447 (1996).
If there is a dispute over entitlement to funds, Nevada’s ethics rules require careful handling of the disputed portion. See Nev. R. Prof’l Conduct 1.15.
Step 6: Calculate fees and costs, provide a written closing statement, and disburse net proceeds
In contingency cases, Nevada requires:
- a written contingent fee agreement describing the method for calculating the fee and expenses, and
- at the conclusion of the matter, a written statement showing the outcome and the distribution of the recovery. See Nev. R. Prof’l Conduct 1.5(c).
After fees, costs, and valid liens/assignments are handled, the remaining amount is the client’s net settlement.
2) Lump-sum settlement vs. structured settlement
Most injury settlements are paid in a lump sum, but some cases use a structured settlement, where part of the recovery is used to purchase an annuity that pays periodic amounts over time. Structured settlements can be useful when long-term planning is a priority.
If a structured settlement is involved, the “payout” is typically:
- an initial lump sum (sometimes), and
- a stream of payments according to the structure terms.
3) Special Nevada rule for minors: court approval and protected proceeds
If the injured person is a minor, Nevada law typically requires court approval of the compromise/settlement through a statutory petition process, and it may require the proceeds to be placed in a blocked investment or otherwise protected depending on the amount and circumstances. See NRS 41.200.
This requirement can change the timing and mechanics of payout because the settlement funds often cannot be fully distributed until the court approves the compromise and sets conditions for holding or investing the funds. See NRS 41.200.
4) Why settlement payouts sometimes take longer than expected
Common reasons include:
- waiting for the settlement check to arrive and clear,
- negotiating and satisfying medical liens or reimbursement claims,
- obtaining court approval for a minor’s compromise, see NRS 41.200,
- dealing with competing claims to the proceeds (liens or assignments), see Achrem v. Expressway Plaza Ltd. P’ship, 112 Nev. 737, 917 P.2d 447 (1996),
- finalizing dismissal paperwork and release language, see May v. Anderson, 121 Nev. 668, 119 P.3d 1254 (2005).
5) One practical warning: do not treat “settlement amount” as “take-home amount”
Even when liability is clear and the settlement number is agreed upon, the amount a client receives can be reduced by:
- case costs advanced,
- agreed contingency fees, see Nev. R. Prof’l Conduct 1.5(c),
- valid liens (hospital liens, attorney liens), see NRS 108.590; NRS 18.015,
- valid assignments, see Achrem v. Expressway Plaza Ltd. P’ship, 112 Nev. 737, 917 P.2d 447 (1996).
A careful settlement plan addresses these items before the release is signed and the case is dismissed.
Nevada legal authorities cited
Nevada statutes
- NRS 18.015
- NRS 41.200
- NRS 108.590
Nevada court rules and professional conduct rules
- Nev. R. Prof’l Conduct 1.5(c)
- Nev. R. Prof’l Conduct 1.15
- SCR 217
Nevada case law
- May v. Anderson, 121 Nev. 668, 119 P.3d 1254 (2005)
- Oh v. Wilson, 112 Nev. 38, 910 P.2d 276 (1996)
- Chwialkowski v. Sachs, 108 Nev. 404, 834 P.2d 405 (1992)
- Home Savers, Inc. v. United Sec. Co., 103 Nev. 357, 741 P.2d 1355 (1987)
- Achrem v. Expressway Plaza Ltd. P’ship, 112 Nev. 737, 917 P.2d 447 (1996)
- Argentena Consol. Mining Co. v. Jolley Urga Wirth Woodbury & Standish, 125 Nev. 527, 216 P.3d 779 (2009)
- Leventhal v. Black & LoBello, 129 Nev. Adv. Op. 50, 305 P.3d 907 (2013)
If you need assistance with your personal injury case, don’t hesitate to contact Friedman Injury Law.
Friedman Injury Law
375 N. Stephanie St., Ste. 1411
Henderson, NV 89014
P: (702) 970-4222
W: blakefriedmanlaw.com