Professional services
Law Practice Settlement Fee Calculator
Works the distribution of a settlement, where the client's net is the number that matters.
Result
Business arithmetic for running a practice, not legal advice. Fee agreements, contingency limits, trust accounting and advertising are all governed by the rules of professional conduct where you practise, and several are strict. Check the applicable rules before any of this affects a client agreement or a marketing decision. A written, itemised distribution statement signed by the client is required in most jurisdictions. Lien resolution follows different rules for statutory liens, plan claims and government interests, and mishandling them creates personal exposure. This distributes a known figure and does not estimate what any claim is worth.
Get a Free Business AuditHow the calculation works
Gross settlement less the fee, less costs and disbursements, less any liens or third-party claims, gives the client's net. Settlement funds are client property on receipt and must be held in trust and disbursed against a statement showing the calculation, which is a conduct requirement rather than a courtesy.
What moves the number
- The fee percentage and whether it steps with stage.
- Costs advanced during the matter.
- Medical, insurer or statutory liens against the recovery.
- Whether liens can be negotiated down.
Where this one goes wrong
Liens are what turn a good settlement into a disappointing net, and they are also the part most open to negotiation, so resolving them before disbursing frequently improves the client's position more than arguing about the gross would have. The procedural requirement is that settlement funds are held in client trust, not firm funds, and disbursed with a written statement of the calculation. Paying the firm first from a commingled account is a serious violation even where the arithmetic is correct.
Before you quote
- Hold settlement funds in client trust until disbursement.
- Negotiate liens before disbursing.
- Provide a written statement showing the full calculation.
Where the rules come from
Questions
About this calculator
Why is the client's net so much less than the settlement?
Fee, costs advanced during the matter, and liens. Liens are usually the largest surprise and the most negotiable, which is why resolving them before disbursement often improves the client's position more than pushing on the gross figure would have.
How must settlement funds be handled?
As client property, held in a client trust account separate from firm funds and disbursed against a written statement showing the calculation. Taking the fee from a commingled account is a serious conduct violation even when the arithmetic is right.
Can liens be reduced?
Frequently, depending on the type and the jurisdiction. Medical and insurer claims in particular are often negotiable, and the reduction goes straight to the client's net. It is usually the highest-value work available at the end of a matter.
The formula
client net = settlement - fee - costs - liens after reduction - advances
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How to use this calculator
- Settlement ($). Enter your own figure; the page starts at $72,000.
- Fee rate (%). Enter your own figure; the page starts at 33.33%.
- Costs advanced ($). Enter your own figure; the page starts at $5,400.
- Liens and bills to satisfy ($). Enter your own figure; the page starts at $16,000.
- Reduction negotiated (%). Enter your own figure; the page starts at 30%.
- Advances already given to the client ($). Enter your own figure; the page starts at $0.
The result updates as you type, so you can try a figure, see what it does to client receives, and change it back. Nothing you enter is sent anywhere or saved.
A worked example
These are the figures the calculator opens with. Every number in the results column below is produced by the same calculation the page runs, so you can follow it through before putting your own figures in.
What goes in
| Input | Value |
|---|---|
| Settlement | $72,000 |
| Fee rate | 33.33% |
| Costs advanced | $5,400 |
| Liens and bills to satisfy | $16,000 |
| Reduction negotiated | 30% |
| Advances already given to the client | $0 |
What comes out
| Result | Value |
|---|---|
| Client receives main result | $31,402 |
| Fee | $23,998 |
| Liens after reduction | $11,200 |
| Saved for the client | $4,800 |
| Client share of settlement | 43.61% |
The client receives $31,402, 43.61% of the settlement, after a $23,998 fee and liens reduced to $11,200. Negotiating those liens put $4,800 back in their hands.
How sensitive the answer is
Holding everything else steady and changing only settlement, this is what happens to client receives. It is worth knowing which of your inputs the answer actually hinges on, and which barely move it.
| Settlement ($) | Client receives |
|---|---|
| $36,000 | $7,401 |
| $54,000 | $19,402 |
| $72,000 example above | $31,402 |
| $108,000 | $55,404 |
| $144,000 | $79,405 |
Every other input is held at the example value while this one changes, which is not how a real job behaves. Treat it as a guide to which number matters most, not as five separate quotes.
What each figure means
- Settlement ($)
- A money amount, starting at $72,000.
- Fee rate (%)
- A percentage, between 0 and 50, starting at 33.33%.
- Costs advanced ($)
- A money amount, starting at $5,400.
- Liens and bills to satisfy ($)
- A money amount, starting at $16,000.
- Reduction negotiated (%)
- A percentage, between 0 and 100, starting at 30%.
- Advances already given to the client ($)
- A money amount, starting at $0.
What the results tell you
| Result | What it is |
|---|---|
| Client receives | The headline result. A money figure. |
| Fee | A money figure. |
| Liens after reduction | A money figure. |
| Saved for the client | A money figure. |
| Client share of settlement | A percentage. |
Keep going
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