Why do trial lawyers use defense structured settlement brokers?


In this weeks video commentary Mark takes a deeper look at the issues being revealed in last weeks decision in USDC of Oregon. A decision in which defense brokers argued, and the court agreed, that no fiduciary relationship exists between a defense structured settlement broker and the injured plaintiff who relies upon their advice regarding the selection of the life company that funds their injury settlement. Knowing this is the position of the brokers and courts, why then would any trial lawyer settle a case using a structured settlement where they did not engage a plaintiff broker who would have a clear fiduciary responsibility to the injured party? Have trial lawyers been so seduced by years of financial contributions to trial lawyer associations from defense structured settlement firms, or has it just become routine to deal with one broker and for them to not bother with engaging their own expert? 

I also discuss the increasing outside scrutiny of the process by which political figures in New York decided to liquidate ELNY and why that process is still shrouded in secrecy two years after it occurred. I believe it is time for trial lawyers to stop passively taking at face value the defense industry narrative on how structured settlements are used, sold and funded when it comes to assisting your injured clients. Trial lawyer have for years now the right to engage their own structured settlement experts, to create Qualified Settlement Funds and control the process by which the financial settlement decisions are made for you and your clients. The question we will look into early in 2015 is why aren't they doing it?

This commentary originally was posted on The Settlement Channel and is authored by Mark Wahlstrom

Will the ELNY structured settlement lawsuits lead to a deeper look into NYLB politics?

In a recently published piece in the online publication "Inside Sources", serious questions were raised for the first time regarding the management of the New York Liquidation Bureau (NYLB) in the matter of the Executive Life of New York insolvency and subsequent liquidation. These questions and issues are some of the first trade or online reporting outside of the claims or settlement profession which has taken a serious look at the ELNY insolvency, the management of the estate both at the time of the take over by the State of NY Insurance Department, as well as the subsequent management which led to a decision to liquidate the company. 

You can access the full article here, entitled somewhat provocatively, as "Andrew Cuomo's secret plan that took from the pockets of 1500 widows, accident victims and handicapped.

While I understand the need for big headlines to draw traffic, I'm not sure I can go so far as to say the intent of the Governor was to wipe out widows, orphans and the injured, but there is no denying that was the result of the actions taken once ELNY was taken into liquidation over the Christmas holidays a couple years back, with almost no notice to trial lawyers, claimants or the press. As the article notes, and as I vividly recall, the venue of the hearing to object to the plan was stuck out in Long Island ostensibly to make it harder for large numbers of people to get there and object. I have always wondered what the great rush was, after 20+ years of NYLB management, to close the deal over the Christmas Holiday, in an obscure court outside of Manhattan, with almost no time for claimants to review information, obtain counsel and raise serious questions or objections to the plan. It looked like it was railroaded on a fast track for a reason bu what those reason's are is still unclear two years later. 

Clearly the author of the article is looking for a deeper investigation as to why the decision was made at that time, how the payout arrangements were arrived at and more importantly how a prior deal worked out just years before to great acclaim, had come financially unwound so quickly at a time in which the stock market was rebounding from the 2008 melt down and bond were in the early stages of yet another massive rally in value. How was it that the previous plan, which was to assure all parties of full payment, vaporized at almost light speed? Or was that previous plan, put in place by then Governor Elliot Spitzer, based on flawed actuarial and investment assumptions which never had a chance to come true, and thus was nothing more than a cruel mirage to placate injury victims at that point in time? The fact is, as the article points out, is that the entire process was then, and is now, shrouded in secrecy and no one is talking. Even those of us in the structured settlement profession have had to rely on press release information from our trade association to glean some of the facts, while only a few intrepid souls even bothered to report on the hearings and subsequent hair cut the 1500 took in various amounts once the plan was put into action. 

Those of us in the settlement profession are use to only getting filtered information from our trade association, which in my opinion, has largely done the bidding of the few major structured settlement brokerage firms that write the bulk of structured settlements over the last 25 years. We have become accustomed to getting an executive summary of actions after the deals are cut. However, now a series of lawsuits from angry ELNY plaintiffs who were short changed in this deal, with almost zero information as to the reason why it happened, are going showing up in court looking for answers. These victims and their counsel want to reveal in court the process by which the melt down at NYLB occurred, why the process of objection was railroaded so quickly and why it is still covered by confidentiality agreements. I am sure as discovery takes place in these lawsuits, uncomfortable questions will need to be answered as to the entire deal, not just the sales practices of a few brokerage firms in the 1980's.

 As I have often said, if the sales practices and tactics of many firms from that era were ever held up to examination in a court of law vs a quiet debate among those in the settlement profession, a lot of necessary daylight light would be shown upon both past and current sales practices. Only in such an environment which gets rid of the "family secrets" of the past will we be able to have a serious debate as to how to best use these wonderful planning tools going forward and using them in a fashion that truly benefits the injury victim who ultimately relies upon them for their very financial existence. Discussion on and about the entire sad ELNY saga from 1985 to the present day is a healthy thing for the structured settlement profession and should not be avoided out of fear it might embarrass a few key industry players.

Mark Wahlstrom is a 30 year veteran of the structured settlement profession and his commentary appears on both The Settlement Channel as well as The Legal Broadcast Network.