Liens and Deductions from a Settlement
A settlement figure is a gross number. Before anything reaches you, the attorney fee comes out, the case costs come out, and any liens are paid — medical providers, health insurers, and government programmes that covered your treatment. This is the single most common reason a US settlement pays far less than the headline suggests.
The Order Things Come Out
Direct Answer: Gross settlement, less the attorney fee, less case costs, less any liens and reimbursement claims, equals your net recovery. The order in which the fee and the costs are taken is set by your written agreement, and it changes the arithmetic — a fee calculated on the gross is larger than the same percentage calculated after costs.
Two ways to calculate the same fee
Take a $100,000 settlement, a one-third contingency fee, and $10,000 of case costs. The two common calculation orders produce different results from identical inputs:
| Step | Fee taken before costs | Fee taken after costs |
|---|---|---|
| Gross settlement | $100,000 | $100,000 |
| Case costs deducted first | — | −$10,000 |
| Attorney fee (⅓) | −$33,333 | −$30,000 |
| Case costs deducted after | −$10,000 | — |
| Before any liens | $56,667 | $60,000 |
Illustration only, using round numbers to show the mechanism. It is not a prediction of any case value and takes no account of liens, which come out of the figures above.
A $3,333 difference on a $100,000 settlement, from one line in an agreement. Read our fees versus costs guide for the full explanation, and check what your agreement should say.
The Kinds of Lien You May Face
| Type | Where it comes from |
|---|---|
| Medical provider lien | A hospital or clinic that treated you and asserts a claim against the recovery |
| Letter of protection | An agreement to pay a provider out of the settlement so treatment could proceed without upfront payment |
| Health plan reimbursement | Your own insurer recovering what it paid for injury-related treatment, often under the plan terms |
| Government programme claims | Where a public healthcare programme paid for treatment related to the injury |
| Attorney charging lien | A former attorney asserting a claim for work already done, if you changed representation |
The rules governing each of these — whether the lien is valid, how it ranks, and whether it must be reduced to reflect the attorney fee — vary considerably by state and by the type of plan involved. This is an area where general information genuinely will not tell you your answer, and where a qualified attorney in your state should advise.
What to Ask Before Accepting a Settlement
- What is my estimated net recovery after fees, costs and liens?
- Which liens have been asserted, and for how much?
- Have you attempted to negotiate the liens down, and what was the outcome?
- Is your fee calculated on the gross settlement or after costs are deducted?
- What case costs have been incurred so far?
- Are there any letters of protection outstanding, and at what billed amounts?
Ask for the net figure in writing before you agree to anything. A settlement that looks adequate gross can look very different once the deductions are set out.
Frequently Asked Questions
Frequently Asked Questions
Why is my settlement check so much smaller than the settlement amount?
What is a medical lien?
What is a letter of protection?
Does the attorney fee come out before or after costs?
Can liens be negotiated down?
Do I pay tax on my settlement?
You May Also Be Interested In
Where this applies: Contingency fee rules are set state by state. Check your own state's rules before acting.
Sources for this page
Every rule stated above is based on the primary sources below. Each link goes to the legislation, court rule or regulator itself so you can check it. Last verified 3 August 2026.
- ABA Model Rule 1.5 (Fees)
Model, not law. Each state adopts its own version. Rule 1.5(d) bars contingency fees in most domestic relations matters and in criminal defence.
- Cornell LII — contingency fee
- Cal. Bus. & Prof. Code § 6147 (contingency fee agreements in writing)
Who wrote and checked this page
- Written and published by
- Edward & Amaury Solicitors (Edward & Amaury Ltd, company no. 12195443), regulated by the Solicitors Regulation Authority under no. 800525.
- Legal review
- This page has not yet been through independent legal review. It is written from the primary sources listed below, which you can check directly.
- Review dates
- Last reviewed 3 August 2026. Next review due 3 February 2027.
Fee rules change. California’s medical malpractice fee limits changed on 1 January 2023, and the QOCS rules in England and Wales changed on 6 April 2023. If you spot something out of date, tell us — we publish corrections.