Lynda ArtesaniLegal Accountant and Data Migration Specialist at The Proper Trust

“Whoa, Stop” The Settlement Payout Mistake That Triggers Compliance Nightmares #legalaccounting

9 Mar 2026 · 1 min

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In this segment, the speaker recounts repeated experiences at personal injury law firms where attorneys, driven by the excitement of securing a settlement, rush to disburse funds to clients without completing essential accounting steps. The speaker highlights the dangers of such premature payouts, including missed Medicare lien obligations and unpaid expert‑witness fees, which can create compliance violations and financial exposure for the firm. The speaker argues that an external compliance or accounting advisor, when trusted with the process, can more effectively intervene and halt the disbursement than internal staff, because attorneys are more likely to heed an outside expert’s warning. The narrative underscores the importance of instituting a “brake” step—full accounting review—before any settlement money leaves the firm, and notes that firms later thank the external advisor for preventing costly compliance nightmares.

Chapters

I've experienced situations where in a personal injury firm, they get that settlement and, you know, the emotions of getting that settlement, even for the attorney, is, oh boy, I'm going to look really good with the client. I'm going to shove this money out the door. Yeah. Now, an in-house person may not, for lack of a better word, stand up to that attorney and say, no, wait a minute, put the brakes on. We've got to do all the accounting on this first. There might be Medicare settlements. There might be something from an expert witness that hasn't been billed and paid out correctly yet. There's a lot of different things that can happen. We as the outside people, if we're involved in that process, if they trust us with that, can say, whoa, stop, and they'll listen to us more than they'll listen to their in-house people. I've experienced this many, many times, and later on they're like, thank you so much for making us stop and put the brakes on.