How Long Can a Lawyer Hold Money in Trust in California?
Your case settled weeks ago. Maybe months. Your lawyer said the check was deposited, gave you a vague timeline, and now you’re sitting here waiting.
You’re not being impatient. You’re asking a question that thousands of Californians ask every year, and you deserve a straight answer.
California law requires attorneys to pay or deliver client funds “promptly” under Rule 1.15 of the Rules of Professional Conduct. In practice, most personal injury settlements get disbursed within 30 to 45 days. But “promptly” is doing a lot of heavy lifting in that sentence, and sometimes legitimate delays push that timeline out to 90 days or longer.
Here’s what’s actually going on with your money, when you should be patient, and when you should start making calls.
Key Takeaways
- Bank holds and medical liens cause the most common delays. Federal law allows banks to hold large checks for 7-11 business days, and Medicare lien resolution alone can take 65-120 days.
- You have the right to a full written accounting. Your attorney must provide one when you ask. If they dodge, delay, or ignore that request, you can escalate to a State Bar complaint.
- Trust account violations make up about 10% of California State Bar disciplinary actions. The Client Security Fund has paid over $100 million to clients hurt by attorney theft. Protections exist because this happens.
What Does “Holding Money in Trust” Actually Mean?
When your lawyer receives a settlement check, they don’t deposit it into their personal account. California requires attorneys to maintain separate client trust accounts with individual ledgers for each client. Your money sits in this account, completely walled off from the firm’s operating funds, until it’s time to pay out.
Small amounts or funds held briefly go into pooled IOLTA accounts. The interest on those goes to the Legal Services Trust Fund Commission to fund legal aid programs. You don’t see a dime of that interest, and that’s fine for short holds.
But if your settlement is large, say over $50,000, or will be held for an extended period, your attorney should place it in an individual interest-bearing account. That interest belongs to you. Not the firm. Not the state. You. If your $300,000 settlement sat in a pooled IOLTA for three months earning interest for someone else, that’s a conversation worth having.
How Long Does Settlement Disbursement Really Take?
The timeline breaks down into stages, and understanding each one will help you figure out whether your attorney is stalling or just dealing with a slow bureaucracy.
Week 1-2: The bank holds. Under Federal Reserve Regulation CC, banks can hold local checks for up to 7 business days and non-local checks for 11 business days. Checks over $5,525 can trigger extended holds. Settlement checks over $100,000? Major banks routinely hold those for 7-14 business days. Your attorney can’t disburse money that hasn’t cleared.
Week 3-4: Lien verification and negotiation. This is where things slow down. Your attorney needs to confirm every medical provider, hospital, and government agency that has a lien on your settlement. Hospital liens filed under California Civil Code Section 3045.1 take 30-90 days to resolve. If Medicare paid for any of your treatment, the Benefits Coordination & Recovery Center needs a minimum of 60 days to process the final demand. Sixty days minimum. Sometimes 120.
Week 5-6: Final accounting and payout. Once liens are confirmed and negotiated down (which your attorney should be doing aggressively on your behalf), they prepare the final disbursement showing every deduction. Fees, costs, liens, your take-home. Then they cut your check.
So a clean, straightforward case with no Medicare involvement and no lien disputes? Four to six weeks. A case with Medicare conditional payments and multiple hospital liens? Three to four months is normal. Frustrating, but normal.
What Are Valid Reasons for Longer Delays?
Not every delay means something shady is going on. Some of the most common legitimate reasons:
- Medicare or Medi-Cal recovery claims. Medi-Cal third-party liability recovery averages 45-75 days, and complex cases with multiple providers can stretch past 120 days. Your attorney literally cannot release funds until these are resolved without risking your liability.
- Disputed fees or costs. If you and your attorney disagree about the fee split or case expenses, the disputed portion stays in trust until you reach an agreement or go through California’s mandatory fee arbitration program.
- Tax liens or child support holds. Government agencies can intercept settlement funds for outstanding obligations. Your attorney has to comply.
- Structured settlement setup. If part of your settlement is going into an annuity, that takes 30-60 days for underwriting, court approval, and IRS reporting.
What Red Flags Should You Watch For?
There’s a difference between a complicated lien situation and an attorney who’s avoiding you. Watch for these:
Your attorney won’t return calls or emails about the disbursement timeline. Under Rule 1.4, California attorneys must respond to client communications within a reasonable time. The State Bar considers 30 days without a response as evidence of a communication failure.
They can’t explain where your money is. You ask for a written accounting and get excuses. Or silence. Rule 1.15(e) says you’re entitled to a full written accounting when you request one. Period.
Funds have been held for 90+ days, and no one can tell you why in writing. At that point, something is either seriously wrong with the case administration or seriously wrong with the attorney.
They claim fees are “still being calculated” after 60 days. Your fee agreement was signed before the case started. The math isn’t that hard.
How Do You Get Your Money If Your Attorney Won’t Release It?
Start calm, escalate as needed.
Step 1: Send a written request. Email your attorney and ask for a full written accounting of your settlement funds, including the current balance in trust, all pending liens, and an estimated disbursement date. Keep it professional. Keep a copy.
Step 2: Send a certified letter with a deadline. If no response within 14 days, send a formal demand via certified mail. Reference Rule 1.15’s requirement for prompt delivery, state the settlement date and amount, and give them 14 days to respond.
Step 3: File a State Bar complaint. If your attorney still won’t communicate or release funds, file a complaint with the State Bar of California. You’ll need your settlement agreement, written communications, and any trust account statements you have. The Office of Chief Trial Counsel investigates trust account violations within 90-180 days, and roughly 35% of these investigations result in formal discipline, ranging from public reproval to disbarment.
Step 4: Fee arbitration. If the dispute is specifically about fees, California Business and Professions Code Section 6200 gives you access to mandatory fee arbitration, with decisions typically reached in 60-90 days.
You Have More Power Than You Think
Most attorneys handle trust accounts exactly the way they should. The delays are real, the lien resolution process is genuinely slow, and banking holds on large checks take time. But California built protections into the system for a reason. If your attorney has your settlement money and won’t explain why you don’t have it yet, you have every right to push back.
If your attorney is holding your settlement funds and you’re not getting clear answers, talk to someone who can help.
We can review your situation and help you understand your options.
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