Personal Injury Settlement Distribution
in New York

Personal injury attorney fees in New York are strictly regulated by the Appellate Division of the New York Supreme Court under the Rules of Court governing contingency fees. In standard personal injury cases, the maximum contingency fee that an attorney may charge in New York is governed by a sliding scale: one-third (33.33%) of the first $500,000 recovered; 30% of the next $250,000; 25% of the next $250,000; 20% of the next $250,000; and 15% of any amount over $1,250,000. These percentages apply to the net recovery after litigation expenses are deducted. In medical malpractice cases, New York applies a different and generally lower sliding scale under Judiciary Law Section 474-a. The attorney fee is calculated on the net recovery — meaning the gross settlement or judgment minus disbursements (court filing fees, expert fees, deposition costs, investigation expenses, etc.). Some retainer agreements allow disbursements to be deducted before calculating the fee; others deduct them after. The precise language of the retainer agreement governs, but it must comply with Appellate Division rules and must be reviewed and signed by the client at the outset of representation. Clients should always receive a written closing statement showing the gross recovery, deductions for disbursements, the attorney fee calculation, any lien payoffs, and the net amount distributed to the client. Morgan Legal Group provides transparent, detailed settlement closing statements to every personal injury client across all five NYC boroughs.

Resolving medical liens is one of the most complex and financially significant aspects of personal injury settlement distribution in New York. Several types of liens may be asserted against a personal injury recovery, and failure to honor valid liens can create personal liability for the attorney and client. The most common liens in New York personal injury cases include: Hospital liens under New York Lien Law Section 189 — hospitals that provided emergency or inpatient treatment to an injured person have a statutory lien against any recovery. The lien must be perfected by filing with the county clerk, and improperly filed hospital liens may be subject to challenge. Health insurance subrogation claims — commercial health insurers typically have subrogation rights under their policy terms to recover from personal injury proceeds the amounts they paid for medical treatment. New York's anti-subrogation rule under General Obligations Law Section 5-335 generally prohibits enforcement of health insurer subrogation rights against personal injury settlements in New York, with important exceptions for self-funded ERISA plans. Medicare liens — if Medicare paid for any medical treatment related to the personal injury, the federal Medicare Secondary Payer Act requires reimbursement from the settlement. Medicare's conditional payment amount must be determined and resolved before settlement. Medicaid liens — New York's Medicaid program has a statutory lien against personal injury recoveries under Social Services Law Section 104-b, though New York courts have recognized a proportional reduction based on the ratio of the settlement to the full value of the claim. Workers' compensation liens — if the injured person received workers' compensation benefits, the workers' compensation carrier has a statutory lien against any third-party personal injury recovery under Workers' Compensation Law Section 29. Morgan Legal Group negotiates all applicable liens to minimize their impact on the client's net recovery throughout all five NYC boroughs.

A structured settlement is an arrangement in which all or part of a personal injury recovery is paid in the form of periodic future payments rather than a single lump sum. Structured settlements are established through the purchase of an annuity contract from a life insurance company, funded by the defendant or their insurer, and the periodic payments are made directly to the injured person (or their estate or trust) over a specified period of time or for the remainder of the recipient's life. In New York, structured settlements offer several potential advantages for injured clients: tax treatment — under Internal Revenue Code Section 104(a)(2), periodic payments from a personal injury structured settlement are generally excludable from federal and New York State income tax, making them potentially more valuable than equivalent lump sum investments that generate taxable income. Financial security — structured settlements can provide guaranteed, predictable income streams for injured persons who may not be experienced in managing large lump sum awards. Protection against dissipation — for younger clients or those with limited financial management experience, structured settlements prevent the premature depletion of a settlement through poor investment decisions or undue influence. Government benefit preservation — when a client receives government benefits such as Medicaid or SSI, a properly structured settlement combined with a special needs trust can preserve benefit eligibility. Structured settlements are most commonly appropriate in cases involving serious and permanent injuries with ongoing medical needs; younger claimants with long life expectancies; cases involving infants or incompetent persons requiring court approval; and cases where the client faces ongoing income needs. Morgan Legal Group analyzes structured settlement options for every significant personal injury case, working with qualified settlement consultants to design the optimal payment structure for each client's unique circumstances across all five NYC boroughs.

New York law requires court approval for certain categories of personal injury settlements to protect vulnerable parties who may not be able to adequately protect their own interests. Court-approved compromises are mandatory in the following situations: Infant compromise proceedings — when the injured person is under 18 years of age, any settlement of their personal injury claim must be approved by a New York Supreme Court judge under CPLR Section 1207-1208. The infant compromise petition must include a description of the accident, the nature and extent of injuries, the proposed settlement terms, a breakdown of attorney fees and disbursements, and the proposed distribution of net proceeds. If the net recovery is substantial, the court typically requires that the funds be deposited in a restricted account (such as an annuity or a blocked bank account) until the minor reaches age 18. Incompetent person proceedings — when the injured person has been declared incompetent or has a guardian appointed, settlement of their claims requires court approval under CPLR Section 1207. Survival actions through estates — when a personal injury action is prosecuted by the estate of a deceased plaintiff through a survival action, Surrogate's Court may review and approve the settlement as part of the estate administration process. Structured settlements involving assignment — New York's Structured Settlement Protection Act (GOL Article 5-B) requires court approval before a personal injury structured settlement recipient can transfer or sell future payment rights to a factoring company, protecting recipients from predatory purchasing arrangements. In all court approval proceedings, the court acts as an independent guardian of the injured party's interests and may reject inadequate settlements. Morgan Legal Group handles all aspects of infant and incompetent compromise petitions, ensuring proper court approval and optimal protection of clients' recoveries throughout all five NYC boroughs.