Best Practices in Settlement Documentation With Structured Settlements

Patrick Hindert has mischaracterized my recent blog post in typical fashion on Beyond Structured Settlements to increase the sagging traffic to his blog.

My post Nuts...Protein, Cholesterol and Fiber and Your Settlement Documents stands on its own. Read it! 

While Hindert states that Mark Wahlstrom's post does not highlight the corollary question: "do current structured settlement legal practices represent malpractice by plaintiff and defense attorneys?" he ignores that I have opened these issues for discussion.

Perhaps Hindert was practicing selective reading for him to have missed these two IMPORTANT points in the above cited post!

"While the claims adjuster or trial lawyer can draw on the experience and input of the settlement planner or structured settlement professional, it's critical that there is a recognition that the responsibilities remain where they properly should" (emphasis added)

"Armed with this knowledge, I'm not sure that the settlement planner or structured settlement broker should sit idly by and say nothing*. If such input is provided* however, this does not dissolve the ultimate responsibility of the lawyers or claims adjusters who take this input to actually read the document, exercise independent thought and advise their clients properly."  (emphasis added)

*to the lawyer (I thought this was clear in the post)

For Hindert to allege that I promote, condone and participate in the unauthorized practice of law** from the above appears malicious.  He knows from precedent that his words will be memorialized on the Internet for search engines to pick up with my name.

I, John Darer, do NOT promote or condone the unauthorized practice of law. Nor do I, John Darer, promote myself as a lawyer. I, John Darer, do however, promote the fact that I work with lawyers. Here is my bio. Above all I, John Darer, am interested in developing and maintaining best practices for the structured settlement industry. My readers are aware that I, John Darer, have received and I am continuing to seek opinions on various business practices from state insurance regulators throughout the country.

Not surprisingly, readers should note that Patrick Hindert has used the opportunity to bring the subject of factoring into play as he appears to do with just about anything related to structured settlements. To Hindert factoring appears to be his "Ginsu"... "it slices it dices etc."

Back to the subject of "unauthorized practice of law"... there has been alot written on the subject. The rules seem to vary state by state. Some examples:

1. An Analytic Approach to Defining "Practice of Law" Utah's New Definition Gary Sackett Utah Bar Journal 01/20/2006

2. From the ABA Task Force on the Model Definition of the Practice of Law   (09/18/2002)

Exceptions and exclusions, whether or not they constitute practice of law, the following are permitted:

Section (d)4  "providing services under the supervision of a lawyer in compliance with the Rules of Professional Conduct"

3. "Letting Caged Eagles Fly" Kenneth L. Hardison et al.  NC Academy of Trial Lawyers Convention Summer 2003

It's not just the question of what constitutes "the unauthorized practice of law" but what if any exceptions are there in a particular state's UPL statutes for certain professional services performed by non lawyers. There are carve outs for ceratin services performed by agents (CPA, insurance, real estate) in many states. And are services performed by a non lawyer at the request by, direction of and under the supervision of the requesting lawyer, considered unauthorized practice of law?

I leave you with these questions.  In each scenario assume the settlement professional is a Certified Structured Settlement Consultant, duly licensed by the Insurance Department in the scenario state with greater than 10 years of practical experience.

Scenario 1    You are a settlement professional and the plaintiff lawyer sends you a copy of the release to review to make sure the structure is properly reflected.  You look at the document and based on your knowledge, training and considerable experience you realize the way the consideration is stated could result in "constructive receipt" which would be fatal to the structure and expose the attorney to malpractice.

Which is the proper business practice ? a) simply not review the document and tell him, the lawyer, knowing what you know, that you are not a lawyer...fend for yourself b) turf him off to another lawyer c) tell him or her what you see and that while you are a non lawyer, lay out the basis for your belief, provide him or her with any back up information to support the observation for him or her to consider d) email the documents to the proposed annuity carrier and see if they will accept it with language "as is" e) tell him it looks OK

Scenario 2    You are a settlement professional and the defense lawyer in New York sends you a copy of the release to review to make sure the structure is properly reflected.  You look at the document and based on your knowledge, training and considerable experience you realize that the lawyer has not included certain language required under the New York State General Obligations Law when structured settlements are created. Bear in mind that the statutory burden is on the defendant or its lawyer, not you.

Which is the proper business practice? a) stay silent...you're not the defendant or the lawyer and it's not your problem b) mention it to the lawyer, point him or her to the statute and save his or her, and his or her client's, caboose.

Scenario 3    At the instruction of her high strung employer, the lawyer's secretary (his gatekeeper) sends you draft proposed settlement documents for a structured settlement along with a vague note about wanting to structured legal fees. He leaves it in her hands while he's off on trial. You review and are horrified to see that it is the worst cut and paste job you've ever encountered. The secretary says that this is the same document that has been used for years and this really needs to get done. Furthermore when you ask to see and review the retainer agreement you see that its for a 1/3 fee. In the meantime the plaintiff is calling and getting restless.

Which is the proper business practice? a) think to yourself there's $40,000 commissions on the line, don't want to tick the trial lawyer off or insult the gatekeeper, so say nothing b) tell the gatekeeper that you have a point you'd like to discuss with the lawyer, that may involve a legal decision, and write or email him with your question for his consideration before you do anything else. He has his Blackberry in Court c) spill everything to the gatekeeper, you can't get lawyer on phone so she says explain it to the lawyer's client (who you've already met) which you do and then you email the client docs to sign.

The subject of unauthorized practice of law would be an excellent topic for part of a Best Practices session at the 2007 NSSTA Annual Meeting. It would be worthwhile to create a role play instructional video delivered by video podcast and have an ethics opinion customized for the industry.

**as of 4:58am EDT Hindert removed his allegation