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Structured Settlements

A recent article in The Morning Call on predatory companies that prey on individuals who have been parties in legal proceedings is yet another example of the little guy being victimized.  When lawyers settle a case for a client that involves substantial amounts of money, their job is not over.  The next step is to protect the client's recovery by helping provide for the future through proper investment of those settlement proceeds. This type of financial planning is referred to as a Structured Settlement. Through careful planning and properly insured annuities a client's future medical needs and living expenses can be secured. Oftentimes clients are minors or infirmed or simply not capable of making these financial decisions. This type of planning leverages their money into the future with modest but very secure returns. It is important to note that the lawyers do not get paid anything more to provide this service, but it is their duty to assure that the proceeds they helped obtain are protected and invested wisely. This service is complex and requires much time and research. Frequently the court is required to approve the terms of these agreements. Oftentimes these Structures extend over the lifetime of an injured party. Historically, these types of Structured Settlements were untouchable and could not be accelerated, not even by the client. However, creative financial Wall-Street types have found ways to get around these non-acceleration provisions. Long after the lawyer is out of the picture they solicit these people through direct mailings and highly produced television advertisements that entice these people to sell them their Structured Settlements. They offer to buy them back from the companies the lawyer worked with to create some financial security. On its surface these "buy-backs" wouldn't necessarily be bad, if those companies were paying a fair price for them. Unfortunately, they do not as the article wisely pointed out. The immediacy of receiving a lump-sum cash payment is often too tempting for many people and they end up becoming victimized again. Frequently, when they sell out to these mercenary companies they give up what could make the difference between some financial security and certain hardship. Fortunately, in Pennsylvania, we have a statute that requires that the court approve these "buyouts." The trouble is that the court often doesn't have all the facts and appreciation of the person's situation or a full understanding of the consequences of the loss of that future certainty. The reported cases set forth in Mr. Yates article are perfect examples of how these companies work. Vinnie the loan shark would give them a better deal than these companies. They pay pennies on the dollar. Judge Zito was right on the money (literally) when he cited these companies as unconscionable and their practices usurious. When lawyers are contacted before these transactions take place we do everything within our power to discourage them, but sometimes the client has already become intoxicated with the gratification that the cash in hand will bring. As the article also points out, most of the time the money is not going to be used for a life necessity but for some consumer product such as a car. These practices should be regulated by State or Federal statutes setting limits on how much profit these companies can take out of the accounts of these victims. We need more judges like Judge Zito to set the tempo. Dennis F Feeley [email protected] Visit us on Facebook and become a fan

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