Recently, here at the Injuryboard there was a very interesting topic about the selling of a structured settlement by Hank Didier:
The Top 5 Mistakes People Make When Selling Their Structured Settlement or Annuity,Hank Didier | November 09, 2011 9:03 AM
This is a very good place to start.
It was particularly timely with a story, in this past Sunday's Minneapolis Tribune that looked at a local case of a young woman who, for various reasons, has been selling parts of a structured settlement she had that was meant to take care of her for life.
As identified in the story she has been involved in the following transactions:
Over two years, Tasheeka Griffith tried five times to sell payments from her structured settlement for lead poisoning she suffered as a child. Here's a look at the result of her requests, in which she ended up selling $351,904.88 in payments in exchange for $77,089.29 cash.
May 2008: Griffith applied in Hennepin County District Court to transfer $96,000 in future payments to Henderson Receivables in exchange for $47,481. District Judge Mel Dickstein denied the transfer, concluding that it was not in her best interests. "The cost of Ms. Griffith's request is so great that it diminishes her future ability to care for herself and her child," the judge said.
August 2008: Griffith applied in Dakota County to transfer $82,210.48 in future payments to Seneca One in exchange for $30,544.42. District Judge Robert King approved the transfer the following month.
December 2008: Griffith and Seneca One filed a new petition in Dakota County proposing the transfer of $91,200 in future payments in exchange for $20,264.87. District Judge Karen Asphaug denied the transfer, saying it would "undermine her long-term economic well-being."
July 2009: Griffith filed an application in Hennepin County District Court with RSL Funding proposing the transfer of $269,694.40 in future payments in exchange for $46,544.87. District Judge Charles Porter approved it after asking Griffith's attorney, James Martin, "Any reason you think I should not sign the order?" Martin responded that he explained the ramifications of Griffith's sale "and she has been very clear to me she wishes to do this."
August 2010: Griffith, again with RSL Funding, requested the transfer of $299,000 in future settlement payments in exchange for $19,000. Dickstein halted the transfer and appointed guardian ad litem Kimberly Lowe to begin an investigation. RSL Funding later withdrew its petition to transfer.
The exchange seems at best questionable and may be unconscionable. We from time to time get contacted by individuals who want representation in selling past structures. My opening advice is always not to do it. But as can be seen with this case, it may not always be that easy. Life's expenses may make it one of the only options.
The Minnesota Legislature has looked at these transactions in the past and did pass the need for judicial approval with additional independent legal advice, as compared to the past when people were unprotected in these exchanges.
While I never lose sight of the underlying truth that it is the client's money to do with as they choose, it is important to keep a very close eye on the type of exchanges that they are being offered. Minnesota would also benefit from requiring that the judge be told of the whole history of past sales and attempts to sell to insure that all of the necessary information is out on the table.
In many cases, because the case is over and the money has been disrupted, those clients who may have had excellent representation to that point are all alone. We do our best to let clients know that we are still available and would be happy to still help. The fee has already been paid with the case, so it is worth taking advantage of the consultation. Most of all, the advice of Mr. Diedier would be worth pointing out.
A founding partner with Bradshaw & Bryant, Mike Bryant has always fought to find justice for his clients—knowing that legal troubles, both personal injury and criminal, can be devastating for a family. Voted a Top 40 Personal Injury "Super Lawyer" multiple years, Mr. Bryant has also been voted one of the Top 100 Minnesota "Super Lawyers" four times.
6 Comments
Hank Didier
Thanks, Mike, for bringing your perspective to this critical issue. As the economy has struggled over the past few years, more and more of our former clients are being faced with difficult financial choices, and many are choosing to sell their structured settlements or annuities for promises of "cash now". Millions are being spent on TV and Internet marketing by factoring companies to buy these future income streams, and, the unfortunate reality is that many former Plaintiffs are being taken advantage of. I wholly agree with Mike that we as attorneys for Plaintiffs must take the time when our former clients call to try to help them understand the ramifications of any choice to sell, discuss alternatives with them, and, if they must sell, give them guidance in finding fair and reputable companies to get competing bids from. Only by doing this, can we hope to protect our clients. My partner and I, both Plaintiffs' attorneys, formed Vantage Capital Consultants, to do just that, and help former Plaintiffs when they need it.
Jay Fisher
Mike, the truth is that the Minnesota judges are doing better than many of the courts around the country. There is a federal statute and 47 state statutes which all require court approval of the transfer of future structured settlement payments. In order to approve the sale of future structured settlement payments, the court must determine that the sale is in the best interest of the seller taking into account the welfare and support of the seller's dependents. The fact is that many judges don't take the time and effort to fulfill their duty to prevent sales that aren't in the best interest of the seller because the offer that the seller has accepted is woefully unfair and less than available offers in the marketplace. While I am not suggesting that judges should stop plaintiffs from selling their structure if that is what they are bound and determined to do, the presiding judges do sit in a place where they can require multiple bids such that a fair and competitive marketplace can prevent companies from buying future structured settlement payments at a 20% discount rate when there are companies out there that will buy the same payments at a 10% discount rate. Since there is a judicial process in place, there is no reason that our former clients need to be subjected to an opaque marketplace that often causes them to agree to accept half or even less than half of what their future payment stream is worth. Knowing that many of your clients will choose to sell their future payments, it makes sense to tell your clients at the conclusion of your representation of them that they should contact you for guidance should their circumstances ever change and they wish to contemplate selling some of their structure. That way you will have the chance to talk them out of selling or, alternatively, you will have the opportunity to steer them to a company like Vantage Capital Consultants that treats former plaintiffs fairly.
Mike Bryant
Hank, I was very impressed with your presentation and the information about what you are doing. Thanks for the comment.
Mike Bryant
Jay, this is good work by the judge, but as you can see there were problems before and we do see here what you talked about in other states. The legislation has helped a lot. Thanks for the comment and hopefully the federal bill will be looked at by more states.
Tom Smith
It's funny how the attorneys... The biggest crooks of all in the whole SS Industry are the ones blabbing about how great it is that someone else can't make a profit off of these idiots! You scumbags took 30% up front and out these suckers into an annuity in the first place?!?!?! How would you all feel if the government put a cap on your fees????
Mike Bryant
What a interesting attack Tom. Seems that you have either a personal issue or an inherent bias concerning attorneys. When you paint with such a broad brush, there my not be anything I can say that will change your mind.
Looking at your comment ( and I do thank all readers for stopping by)
Looks like you may be talking about social security which is capped and doesn't involve annuities. No lawyer I know gets paid up front on a claim and the annuity should be fully explained.
As to caps on fees , sounds like socialism to me, but I have written about it in other posts.
Take Care. Mike
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