by Structured Settlement Watchdog®
I've obtained a copy of the complaint in the legal malpractice case of Maryalice Rose v Charles E. Smith and CES Law Group, LLC In the Circuit Court for Baltimore City. In my opinion, the case is significant because it questions the standard for statutory independent professional advice given to would be sellers of structured settlement payments rights. The plaintiffs allege that it was never the Defendant Smith's intention to provide independent professional advice, rather it was Defendant Smith's intention to make money for himself and his law firm and that he breached his fiduciary duty and legal duties owed to the plaintiff.
Maryland is one of the minority of states that mandates independent professional advice, also known simply by an acronym familiar to beer connoisseurs , "IPA"
The now 21 year old plaintiff is functionally illiterate and suffers from cognitive deficits and learning disabilities, [ Complaint at 18-19] and does not have the cognitive ability to work. [ Complaint p 12 #70 legal malpractice count]
According to the timeline alleged in the Complaint...
November 4, 2013
a notary public hired by Access Funding arrived at Maryalice Rose's home in order to have Ms. Rose sign multiple documents. The notary brought the documents for Maryalice Rose to sign with her. Because she cannot read , Maryalice Rose does not know if the documents the notary brought were identical to copies of documents she previously . The notary advised ms. Rose that she could not read the documents for her, but simply directed Maryalice Rose where she had to sign [ Complaint at 31-32]
Plaintiff alleges that Charles E. Smith Esquire accepted the legal and fiduciary responsibility toward Maryalice Rose to render independent professional advice to her. At the time he accepted the responsibility, he entered into an attorney-client relationship with Mary Alice Rose. [ Complaint at 36]
October 29, 2013
Attorney Charles E. Smith signed the letter (reproduced below) from the Complaint (obtained from the Baltimore City Court) dated October 29, 2013, in which he stated that he spoke to Maryalice Rose on November 4, 2013 (6 days after the date of his letter), and that he reviewed on her behalf the proposed transaction between Ms. Rose and Access Funding, LLC. Plaintiffs alleged this to not be true. [ Complaint at 37]
Attorney Smith further stated that he explained to Maryalice Rose the financial, legal and tax implications of the transaction. Attorney Smith further stated that Ms. Rose understood "every aspect" of the transaction and the implications of the transaction. These statements were not true [[Complaint at 38]
Back to beer for a moment...
How Was IPA Invented?
IPA was allegedly invented by the British during their efforts to colonize India. Again and again, the beer they sent their troops failed to endure the sea voyage all the way around the Cape of Good Hope. Extreme temperatures and prolonged storage without the benefits of refrigeration were less than ideal conditions for transporting beer. As a result, it kept spoiling on the trip. The British had two tools to work with: alcohol and hops. Both of these work as preservatives. According to legend, it was George Hodgson of East London’s Bow Brewery who eventually created the first IPA. It was bitter and highly alcoholic, but it could make the long ocean trip.
Structured settlements are intended to make the "long ocean trip". Prior to 2002 at least, cash now pushers behaved like figurative pirates who saw opportunity and whose profit making objectives impaired the journey of the structured settlement annuitant around the "Cape of Good Hope", the hope that their previously negotiated long term financial security was assured. Unfortunately for some, the Sirens (working a little Greek mythology in there) of "Cash Now" masked the bitter high discount rates that "plundered" more of the structured settlement annuitant's future payments than were necessary.
The provisions of the Victims of Terrorism Tax Relief Act of 2001 which gave rise to IRC 5891 and over time, the state structured settlement protection acts, were enacted to protect structured settlement annuitants. The concept of independent professional advice is to make sure people in a "cash now stupor" know what they are doing and understand the potential consequences. And, critical, in my opinion, it is the responsibility of the professional providing the IPA to actually advise against the transaction if it doesn't make sense. An IPA is not supposed to be a "hall pass".
Having to sell your structured settlement really sucks, but if you must do so, you should be able to depend on laws that have been put in place to protect you and a review process such as an IPA.
There are people who provide independent professional advice, that truly take the time to do the job, but like just about everything else in the structured settlement secondary market, self-regulation doesn't work.
According to the Complaint, Charles Smith, for himself and CES Law Group, LLC has signed at least forty identical or substantially similar letters under similar circumstances in other petitions where Access Funding was seeking a transfer of a structured settlement. [ Complaint at #57)
Maryland's structured settlement protection act failed Maryalice Rose, exactly the sort of person that the act was designed to protect. Had a mandatory court appearance been required a judge could have interviewed Ms. Rose and possibly determined for himself of Ms. Rose's a capacity or incapacity to make a decision that was in her best interest. This same scenario has played out in other states, like Florida. Unless and until mandatory court appearances are required nationwide, we're bound to see more victims.