Settlement statement

What it is

A settlement statement, sometimes called a closing or disbursement statement, shows the client exactly where the money goes: the gross settlement, the fee under the fee agreement, each case cost, each lien at its final negotiated figure, and the net to the client. The client reviews and signs it before funds are disbursed.

The California rule

Rule of Professional Conduct 1.15 governs the money. Settlement funds go into a client trust account. The lawyer must account to the client in writing for funds held, and promptly pay out undisputed funds to the client and others entitled to them. Amounts in dispute, such as a contested lien or fee, stay in trust until the dispute is resolved. The fee itself must follow a written agreement that meets Business and Professions Code 6147 (see contingency fee). A minor's settlement needs court approval, and the order controls the distribution (see minor's compromise).

Why it matters to a plaintiff firm

The settlement statement is where client trust is won or lost. An error in the fee math, a forgotten cost or a lien paid at the wrong figure leads to unhappy clients and State Bar complaints. Firms build the statement from the costs and liens recorded on the case, not from memory, and keep the signed copy in the file.