How Much of a $50,000 Settlement Would I Get? A Line-by-Line Look for Denver Drivers

This page provides general information only and does not constitute legal advice. Reading this page does not create an attorney-client relationship. Laws vary by jurisdiction and change frequently. Always consult a licensed attorney for advice specific to your situation.

How Personal Injury Settlements Are Paid Out in Colorado

A settlement is an agreement to end a claim for a set amount. Once you sign the release and the insurance company pays, your lawyer divides the money according to your fee agreement and the claims of anyone who has a right to part of it. We compare a settlement and a verdict in a Colorado personal injury case on a separate page.

Colorado’s rule on contingent fees tells you what paperwork to expect at the end. Your lawyer has to give you a written disbursement statement, and the rule lists what that statement shows (Colo. RPC 1.5(c)):

Line on the settlement statement	What it tells you
Amount or amounts received	The gross settlement, here $50,000
Itemization of costs and expenses	Each expense of handling the case, listed one by one
Sums to be disbursed to third parties	Repayment claims, liens, and any other lawyers
Computation of the contingent fee	The percentage and the amount it was applied to

The amount paid to you is what remains after those lines. If the statement your lawyer hands you doesn’t show how the fee was computed, ask.

The Attorney’s Fee: How Much of a Settlement Does a Lawyer Get?

The fee comes from your written agreement. Colorado requires a contingent fee agreement to be in writing (Colo. RPC 1.5(c)) and signed by both you and the lawyer (Colo. RPC 1.5(c)). The agreement has to spell out the method (Colo. RPC 1.5(c)):

• The percentage, or amounts, the lawyer receives in the event of a settlement, a trial, or an appeal
• Whether the fee is determined before or after expenses are deducted
• Whether it’s determined before or after other amounts you owe are paid from the recovery

Two of those points change the numbers on a $50,000 settlement. The first is the stage. An agreement can state one percentage for a case that settles and another for a case that goes to trial or appeal, so verify which stage your case reached.

The second is the order of subtraction. A fee figured on the full $50,000 is larger than the same percentage figured on $50,000 minus expenses.

Colorado doesn’t name a required percentage for injury cases. The rule says a lawyer can’t charge an unreasonable fee (Colo. RPC 1.5(a)). For a comparison of fee types, see our page on contingency fees and hourly fees for Colorado injury cases.

The Expenses of the Case

Expenses are what it cost to build and present the claim. The disbursement statement has to itemize them so you can see each one. They’re listed separately from the fee because they’re a different charge.

Your fee agreement has to include a statement about expenses (Colo. RPC 1.5(c)). The statement covers three points:

• An estimate of the expenses to be incurred
• Whether the lawyer is authorized to advance them and how much the lawyer may advance without asking you again
• Your obligation, if any, to pay expenses if there’s no recovery

“No fee unless we win” describes the attorney’s charge. It doesn’t describe expenses, so the expenses clause is the one to read twice in any agreement, ours included.

Repayment Claims and the Medical Lien

This part of the statement can change the most from one case to the next. Colorado’s rule even requires the fee agreement to warn you about it: other persons or entities may have a right to be paid from the recovery, for example an insurer or a government agency that paid benefits for you (Colo. RPC 1.5(c)).

Who has to be repaid, and how much, depends on who paid.

Health insurance and benefit plans

Colorado limits these claims by statute. Reimbursement or subrogation under a policy, contract, or benefit plan “is permitted only if the injured party has first been fully compensated for all damages arising out of the claim” (C.R.S. 10-1-135).

A plan provision that says otherwise is void. The statute doesn’t say how it applies to plans governed by federal law, such as some employer plans.

Whether you were fully compensated starts with a presumption (C.R.S. 10-1-135):

• If you recovered less than the total liability and underinsured motorist coverage available, the law presumes you were fully compensated.
• If you recovered an amount equal to all of that coverage, the law presumes you were not fully compensated.

Both presumptions can be rebutted. If your recovery is less than your total damages and you intend to rely on the rule, you must notify the payer within sixty days of receiving each recovery, and a payer that disputes it can request arbitration (C.R.S. 10-1-135).

When repayment is allowed, two limits apply (C.R.S. 10-1-135). The payer can’t recover more than it paid. And its recovery is reduced by its proportionate share of your attorney fees and expenses, based on the ratio of those fees and expenses to the recovery.

Medicaid, Medicare, and hospitals

Other laws govern three payers. The Colorado statute above excludes Medicaid and leaves hospital lien rights as they are (C.R.S. 10-1-135), and Medicare is a federal program:

• Colorado Medicaid has an automatic statutory lien against a settlement for the medical assistance it provided when a third party is liable, and the settlement isn’t satisfied until that lien is (C.R.S. 25.5-4-301). The lien is limited to what federal law allows and can’t be more than Medicaid paid.
• Medicare is governed by federal law. Its recovery contractor is responsible for recovering the conditional payments Medicare made when there’s a settlement.
• A hospital can have a lien on the net amount payable to you, but only after it submits its charges to your auto insurer and your primary medical payer the way it would for any other patient. If a hospital asserts a lien in violation of that requirement, you can sue for two times the amount of the lien (C.R.S. 38-27-101).

Same $50,000, Two Different Checks

Here’s a hypothetical with invented numbers. The 33% fee is an illustration only. It isn’t a quote from any firm, and Colorado doesn’t set one.

In both versions, a health plan covered by the Colorado statute paid $8,000 of medical bills.

Line	A: plan entitled to repayment, reduced by its share of fees and expenses	B: plan not entitled to repayment
Settlement received	$50,000	$50,000
Attorney’s fee at 33%, before expenses	$16,500	$16,500
Case expenses	$1,000	$1,000
Repayment to the health plan	$5,200	$0
Paid to you	$27,300	$32,500

In version A, fees and expenses are $17,500, which is 35% of the recovery. The plan’s $8,000 claim comes down by 35%, to $5,200 (C.R.S. 10-1-135). In version B, the client wasn’t fully compensated, so the plan has no right to repayment under the statute (C.R.S. 10-1-135).

Which version fits a real case depends on its facts, and a payer can contest it.

What Moves the Number on a $50,000 Settlement

From the lines above, these are the factors that affect what you’re paid:

1. The percentage in your fee agreement for the stage your case reached.
2. Whether the fee is figured before or after expenses.
3. How much it costs to prepare the case. A claim that settles before a lawsuit can have fewer expenses than one that went through depositions and expert witnesses.
4. Who paid your medical bills. Private plans, Medicaid, Medicare, hospitals, and MedPay each follow a different rule.
5. Whether you were fully compensated. That question can decide whether a health plan covered by the Colorado statute is repaid at all.
6. Whether the notice deadline was met. The sixty-day notice is short.

Your share of fault matters too, though it shows up earlier, in the size of the settlement itself. Colorado reduces damages in proportion to your negligence and bars recovery when your negligence equals or exceeds the other person’s (C.R.S. 13-21-111). Our post on why a first settlement offer is so low in Colorado covers how a fault argument affects an offer.

What You Can Do Before the Statement Is Written

These steps can affect the final number:

• Tell your lawyer about every payer. This includes health plans, Medicaid, Medicare, MedPay, and workers’ compensation.
• Keep every explanation of benefits and bill. They show who paid what.
• Ask whether MedPay applies. $5,000 is included in a Colorado auto policy unless it was rejected (C.R.S. 10-4-635), and it pays before health insurance (the Colorado Division of Insurance).
• Read the expenses clause and the fee clause before you sign. If you don’t see an estimate of expenses, ask for one.
• Ask to see a draft statement before you agree to settle. You should know the amount paid to you before you say yes.

If an offer comes while you’re still treating, the medical bills behind the repayment line aren’t final yet. Our post on when not to accept a settlement offer in Denver explains why that’s risky.

Is a $50,000 Settlement Taxable?

The IRS addresses the issue in a short publication. A settlement for personal physical injuries or physical sickness is non-taxable in full when you didn’t take an itemized deduction for the related medical expenses in a prior year (IRS Publication 4345). The publication treats a few items differently (IRS Publication 4345):

Part of the settlement	Federal tax treatment per the IRS
Payment for a physical injury or sickness	Non-taxable, if related medical expenses weren’t deducted earlier
Medical expenses you deducted in a prior year	Taxable to the extent the deduction gave a tax benefit
Interest	Generally taxable as interest income
Punitive damages	Taxable, even in a physical injury settlement

This is federal income tax only. Ask a tax professional about your return.

Where Clients Get Caught Off Guard

Clients tell us about the same three surprises, and each has a plain answer:

• The full $50,000 isn’t the check. The settlement amount is the first line of the statement. The amount paid to you is shown last.
• A medical payer shows up on the statement. A payer may have a repayment claim, and the law sets the conditions for it.
• The first policy may not be all the coverage. Underinsured motorist coverage is part of a Colorado policy unless it was rejected in writing (C.R.S. 10-4-609).

Talk to a Denver Car Accident Lawyer About Your Settlement Statement

If you have an offer in hand or a statement you don’t understand, bring it in. We’ll go line by line and tell you what we see. Our car accident lawyers in Colorado work from our Denver office; the consultation is free, and there’s no fee unless we win.

Call (303) 209-9395 or send the details through our Denver contact page.

Frequently Asked Questions

Written by CGH Injury Lawyers.

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