In a recent article titled "Time for Congress to Reform Structured Settlements", published April 20, 2015 in the Congress Blog, attorney Richard Risk alleges "Congress’ noble goal of supporting accident victims has been upended by the current system in which insurers and their consultants often deceptively rig structured settlements against accident victims."
To "clean up" the primary structured settlement market, Risk recommends that Congress or the Consumer Financial Protection Bureau (CFPB) should take action against "abusive practices" in the structured settlement industry and, "at a minimum", these reforms should include:
- "Ensure victims have better access to their own structure consultants."
- "Require diversification in large cases."
- "Demand better disclosure from the defense."
Even assuming Risk's prognosis is correct, his proposed governmental solution is not - at least not for injury victims who are represented by legal counsel. Each of the three "reforms" Risk highlights falls squarely within the fiduciary role and responsibilities of plaintiff attorneys which encompass settlement planning and negotiation as well as litigation.
In the past, many plaintiff attorneys have relied on defendants and their advisors to make structured settlement proposals and to provide expertise regarding structured settlements. This practice was and continues to be a mistake and could be considered professional malpractice.
Plaintiff attorneys should never rely exclusively on the defense for structured settlement advice. Defense attorneys, structured settlement brokers and other consultants working on the defense side are not engaged to work for the plaintiff or to advise the plaintiff’s attorney. Defense settlement objectives are to secure a full release for all defendants and related parties at a reasonable cost.
A broad range of professionals, including structured settlement consultants, currently provides settlement planning related services to plaintiffs and their attorneys. Most structured settlement consultants belong to one of two primary market structured settlement associations: the National Structured Settlement Trade Association (NSSTA) or the Society of Settlement Planners (SSP).
NSSTA and SSP share a divisive political history which may explain, in part, the indirect critique of NSSTA (whose members are meeting this week in Washington, D.C.) that envelops the article by Risk, an SSP member. Whether intentional or not, Risk's article appears to represent a step backward from recent attempts by leaders of both associations to unify the primary structured settlement market.
During the NSSTA Fall 2014 Conference, for example, SSP President Neil Johnson outlined a "Blueprint for Industry Unification" which he and NSSTA President Kevin Silo continued to discuss at the SSP 2015 Annual Conference in a repeat performance of their "Presidents' Panel". Johnson's appeal for unity characterized "industry disarray" as a "threat to our future." Labeling diversity "good" and disparity "bad", he called for a united front before the public.
In Johnson's words: lack of structured settlement industry unity is "a drain - a drain on financial resources ... a drain on productivity ... a drain on our public image ... a drain on physical and emotional health. Lack of unity diverts attention from productive projects. It always focuses attention on the negative, never on the positive. Lack of industry unity shows no partiality or favoritism for either NSSTA or SSP."
Many structured settlement professionals increasingly recognize the need to acknowledge and address structured settlement industry problems - including the need to improve primary and secondary business practices and standards. Relatively few industry participants, however, are likely to support Risk's proposal for federal legislation and/or regulation to attempt to force defendants to fulfill the fiduciary responsibilities plaintiff attorneys owe to their own clients.
A better solution, in S2KM's opinion, would encompass a combination of structured settlement industry self-regulation and improved education of plaintiff attorneys (and consultants themselves) about the client benefits and professional responsibilities associated with structured settlements in the context of personal injury settlement planning. This solution represents both an opportunity and a challenge for a new generation of structured settlement leaders.
For more detailed analysis about the role and responsibilities of plaintiff attorneys in structured settlements, see chapter 5 of "Structured Settlements and Periodic Payment Judgments" (S2P2J).