Are you noticing more and more “cash now” commercials on TV? If ad frequency is any indication, the market for this business is alive and growing. So, what is a lawyer to do these days to protect his/her clients? It used to be that the subject could be ignored, and the client would most likely never know any options to undo their structure exist. But, with the influx of these ads, that scenario is highly unlikely these days. So, the subject must be tackled head on.
The Structured Settlement Protection Act exists to protect plaintiffs by setting up safeguards for transactions involving the sale of a structured settlement. There are secondary market companies that follow not only the letter but the spirit of the SSPA, and then there are the rest. The legislation outlines disclosure and procedural requirements, application process requirements and court approval mandates. The goal for many parts of the Act is to try and keep the client as well informed as possible. Full disclosure of expenses and fees is a must a requirement to receive professional counsel on the financial advantages and disadvantages of the transfer.
Still, even with the SSPA, the offers a seller could receive from various secondary market companies can be vastly different. The market is unregulated in terms of the discount rates companies can use. Some may approach it from a “how little can I offer this client” approach, while others will use a standard mathematical present vs. future dollar value approach.
This is why the outcome could be disastrous if entered into blindly or without understanding the need to seek multiple bids. A second bid gives a client a point of reference for what is fair and reasonable. Only through such comparison can he or she really know if the offer is competitive.
As lawyers who may receive calls from former clients who desire the sell their structured settlement, not providing assistance identifying a fair and reputable company is no longer a wise choice, because your clients have seen the ads. Thus, it is most important to ensure that your client has fully vetted his/her decision, has exhausted all other options, and that he/she requests bids from multiple companies in order to ensure a fair deal.
Jay Fisher is co-founder of Vantage Capital Consultants, a company that purchases structured settlements with fairness and professionalism in mind.