What Happens at Settlement: How Your Attorney Pays Off Your Funding Agreement

Plaintiffs who’ve never been through this before often picture settlement day as confusing or stressful, with money flying in different directions. In practice, it’s a routine, well-defined process that your attorney handles — here’s exactly how it works, step by step, so nothing feels like a surprise.

Where Settlement Funds Land First

When your case settles or you win at trial, the defendant’s insurance company sends payment to your attorney’s client trust account, not to you directly. This is standard practice in personal injury law and is required by California State Bar rules. Your attorney holds the funds in trust until everyone with a legitimate claim against the settlement — including the funder, if you used pre-settlement funding — is identified and paid.

The Payoff Sequence

Before disbursement, your attorney typically deducts their contingency fee and case costs, pays any medical liens on the case (hospitals, doctors, health insurers with subrogation rights), and pays the pre-settlement funding payoff according to the contract terms. What remains after all of that goes to you. Your attorney provides a settlement statement that itemizes every deduction so you can see exactly where every dollar went.

How the Funder Confirms the Payoff Amount

Toward the end of a case, your attorney’s office typically contacts the funder for a payoff quote, which states the exact amount due based on how long the advance has been outstanding. A good funder responds quickly and confirms the number in writing, so there’s no ambiguity at the settlement table. If you’ve made any partial payments along the way (uncommon, but it happens), those are reflected in the final number.

What If There’s a Dispute About the Amount?

Disputes are rare when the original contract clearly disclosed the payback schedule — which California’s Consumer Legal Funding Act now requires. If a question does come up, it’s resolved directly between your attorney and the funder, not by you personally. This is one more reason the upfront contract clarity matters so much: it prevents arguments at the exact moment you should be celebrating a resolved case, rather than haggling over numbers no one anticipated.

Talk to Avocado Legal Funding

Have a case heading toward settlement and want to confirm your payoff amount in advance? Call Avocado Legal Funding at (213) 944-4147 and we’ll get your attorney’s office a written payoff quote quickly.