Plaintiff attorneys are becoming increasingly aware of the many advantages of retaining their own “plaintiff-loyal” expert to represent their clients in the process of designing, selecting, and purchasing a structured settlement annuity. Likewise, plaintiff attorneys are becoming increasingly concerned about the pitfalls of relying on the representations of a structured settlement broker hired by the defendant casualty company.
Many casualty companies and defense-loyal structured settlement brokers still believe they have the right to dictate to the plaintiff the terms of a structured settlement annuity. Many casualty companies insist on using their “approved broker” exclusively to handle the structured settlement transaction. These “approved brokers” are required to play by the casualty company’s rules in order to continue to receive that casualty company’s business in the future.
These rules may include such things as steering any structured settlement to the casualty company’s own life insurance company affiliate (asset retention) or to an annuity company on their “approved list.” These rules may also include rebating 25% or more of the broker’s commission back to the casualty company. While casualty companies are entitled to have representation in the structured settlement process, it seems elementary that the plaintiff should be able to choose which annuity company is responsible for his/her future payments and choose his/her own settlement planning expert to design and implement the structured settlement plan.
Since many plaintiff attorneys are now wising up to the fact that they need to retain their own structured settlement expert, some defense-loyal structured settlement brokers are now holding themselves out as impartial “neutrals”. Some of these brokers are now even offering to sign home-made “affidavits” in an attempt to assuage plaintiff attorney’s fears. Such affidavits include disclosures regarding the commission paid to the broker, assurances that the plaintiff has received the “best available” rates, etc. Such affidavits regarding a broker’s business practices are, on their face, a positive development – more openness and transparency in any industry is generally favorable to consumers.
However, a plaintiff attorney should not let his/her guard down just because the broker hired by the casualty company is offering to sign an affidavit. Not all affidavits are created equal. For example, an affidavit may state that the broker has quoted “all available” annuity companies. Available to whom? The casualty company? That particular broker? Additionally, broker affidavits should clearly state whether or not the broker has any on-going relationships with any casualty company, whether or not the broker participates in any kickback or rebate program, the requirements and fees associated with being an “approved broker” of a casualty company, and whether or not the casualty company will fund a structure only with a particular “approved list” of annuity companies.
Certainly there are defense-retained brokers that will do what is in the best interest of the plaintiff, and some now even offer an affidavit to try and convince plaintiff attorneys of that. The question for plaintiff attorneys then becomes, “why take a chance?” The defense broker is an agent of the defense, and will likely be fully released along with the other agents of the defense when the release agreement is signed. What happens if the defense-retained broker does something that jeopardizes the tax-treatment of the structure or something else that works against the interests of the plaintiff? Who is left cleaning up the mess and answering to the disgruntled plaintiff? The plaintiff attorney.If you represent plaintiffs, consider yourself warned. When presented with an affidavit from a broker that you did not hire, that should be a red flag reminding you to retain your own plaintiff-loyal broker. A broker that has no alliances with any casualty companies has no reason to recommend anything other that what is in the best interest of your client and will not be “released” once the settlement agreement is signed – becoming your liability firewall. Next time you hear a broker claiming to be neutral or sporting an “affidavit” give us a call at 888.826.4287.