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: Structured Settlements 4Real

Wearing Two Hats: Your Lawyer Is Your Structured Settlement Consultant

By John Darer

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A number of practicing trial lawyers have entered the structured settlement business. Some are brazen enough to advertise such on their legal web sites. Should such lawyers be mindful of the legal and insurance ethical tightrope that is teetered on when it comes to wearing two hats on their client's case?

Can a lawyer do the legal work and also receive a commission on his or her client's case?
Can a lawyer waive or reduce legal fees for attorney work in exchange for the placement of structured settlement annuity or life insurance business?
Is the tort victim in violation of the insurance law if she or she accepts a reduction in fees from the attorney in exchange for placement of structured settlement annuity or life insurance business?

On March 10, 2000 the New York State Insurance Department Office of General Counsel opined:

Yes, an attorney violates the Insurance Law when she waives legal fees for attorney work in exchange for a client?s life insurance business and receives a commission from the sale of such life insurance in lieu of a commission.

Yes, a policyholder violates the Insurance Law when he accepts an inducement on the purchase of a life insurance policy that is not specified in the policy.

According to the express language of the statute NY Ins. Law Section 4224(c), insurance agents and brokers are prohibited from offering rebates or other inducements in connection with the sale of life insurance, health insurance or annuities, when such rebates or inducements are not specified in the policy or contract of insurance. The purpose of the statute is to prohibit agents and brokers from offering a contract other than what is expressly stated in the policy. Therefore, if it is not in the contract, it cannot be used as an inducement to purchase the policy.

With a structured settlement the tort victim consents to settle the case in exchange for a promise to pay futrure periodic payments. He or she does not actually own the policy or qualified funding asset, but has the right to recieve such payments. Such rights have a value as recognized by the Courts when tort victim's have attempted to sell them to "financial crack" dealers.

The above notwithstanding lawyers who also practice in insurance, specifically structured settlements must be mindsul of the legal ethical considerations in representing their clients.

Full post as published by Structured Settlements 4Real on September 08, 2009 (boomark / email).