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Structured payments can help protect clients from themselves

St. Louis Daily Record & St. Louis Countian, Jan 8, 2006 by Michelle Lore

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When the parties do decide to proceed with a structured settlement, plaintiffs' attorneys say that it's important to have the lawyer's own independent consultant review the structure before their clients agree to it.

Have contact with a structured settlement broker who does these regularly, said Gale. Do your own due diligence.

Falsani encouraged attorneys to be creative. Anticipate the needs of the client over the years, and structure the payments for those times when he or she will need the money the most, such as when a child is going to college. Companies will generally do it any way you want to do it, he noted.

Selling out

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Once the structure is in place, attorneys advise against disturbing it.

Anyone who has watched late-night cable television has undoubtedly seen advertisements by companies who are willing to buy structured settlement payments. But practitioners are wary of such agreements.

I've spoken to other personal injury lawyers, and I think there is a concern, said Leighton. Structured settlement payments are set up for a reason - to protect clients over a lifetime or over a substantial period. But substantial factors may force them to into a bad deal.

According to Crumley, buy-out companies have discovered that the Minnesota market is better than they thought it was. They are touting the advantages to consumers and even contacting lawyers by e- mail to encourage their clients to sell their structured settlement payments.

Crumley, however, sees no advantage to consumers in selling their structured settlement payments and strongly advises against such transactions.

It's a financial disaster, he said. There's always going to be a better option because it's such a rip-off.

Practitioners told Minnesota Lawyer that clients generally lose 30 percent to 40 percent of the value of their settlement when they sell off their structured payments.

Companies are running away [with clients' money], and there is no risk to them, Crumley said.

Gale agreed. Those companies buy [structured payments] at substantial discounts, he said. The whole purpose for doing a structured settlement in the first place would be negated by such a sale.

According to Falsani, selling structured payments might make sense of clients are facing something drastic, like foreclosure on their home, but in all other cases, it simply doesn't make financial sense. Economically, it's a catastrophe, he said.

Because of the concerns raised by attorneys and other consumer advocates, the federal government and many states have enacted legislation regulating the sale of structured settlement payments. According to the Web site for the National Structured Settlements Trade Association, more than 35 states, including Minnesota, have enacted consumer-protection statutes that establish strict conditions for these transactions.

Structured payments can help protect clients from themselves

St. Louis Daily Record & St. Louis Countian, Jan 8, 2006 by Michelle Lore

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