Comments on: Taxes and structured settlements

By: yclipse

yclipse — Wed, 13 May 2009 01:55:06 +0000

In Michigan, the fee is charged against the current value of the structured amount.

>I’ve never heard of a plaintiff’s attorney attempting to charge his client a contingency based on the expected payout over the life of the structure.

It’s been tried here. But our lawyers generally have a lower shame level.

By: VMS

VMS — Tue, 12 May 2009 03:35:29 +0000

In NY the fee is taken when each payment is made.

By: Patrick

Patrick — Mon, 11 May 2009 21:00:23 +0000

Phil, that’s not the way it generally works. Typically, the parties negotiate the settlement as a sum total. From that total, the value of which is determined easily (the present value of a dollar today is a dollar), the attorney takes his contingency, some portion is set aside for repayment of medical bills or liens, and some portion goes to the plaintiff as walking around money, while the insurer sets aside the remainder for investment into one or more annuity funds to pay the structure. All deductions, including fees, are taken from the present value of the total settlement pool.

I’ve never heard of a plaintiff’s attorney attempting to charge his client a contingency based on the expected payout over the life of the structure. I can’t say this has never happened, but it would be a matter for the bar where I practice, and I suspect it would be in most jurisdictions.

By: PhilG

PhilG — Mon, 11 May 2009 19:36:32 +0000

An interesting question about structured settlements: is how do they affect the continency fee of the lawyers involved? Presumably the lawyers are not willing to take their fees as an ongoing percentage of the strucured settlements but take their fees directly and immediately from the insurance companies as a lump sum patment to them. But those direct payment fees should be based not on the total actually paid out over the years to the plaintiff, but only on the present value of the settlement or the lawyers will be unfairly enriched. But why do I suspect that, in structured settlements, the plaintiff lawyers somehow end up getting a much higher percentage of the present value of the settlements than they are entitled to? And perhaps that is a reason strucured settlements are so common.