Monday, July 10, 2017

Vermont Opines On Legal Fees In Structured Settlement Payout

The Vermont Supreme Court reversed  a trial court's denial of  legal fees in a structured settlement payout

Petitioner Stevens Law Office appeals a trial court decision denying assignment of a future structured settlement payment from a fund administered by Symetra Assigned Benefits Service Company for legal services rendered by petitioner on behalf of beneficiary Shane Larock. We reverse and remand so that the trial court can conduct the best interest analysis required by statute before determining whether to deny or approve assignment of a structured settlement payment.

Shane Larock retained petitioner to represent him in a child in need of care or supervision (CHINS) proceeding which he expected to follow the birth of his daughter in early 2016. As payment, petitioner asked Larock for a $16,000 nonrefundable retainer which would be paid through assignment of that sum from a $125,000 structured settlement payment due to Larock in 2022. Under this arrangement, the structured settlement payment issuer, Symetra Assigned Benefits Service Company, would pay petitioner $16,000 directly when the 2022 periodic payment became due under the original terms of the settlement. Larock agreed to the fee arrangement and the assignment.

The trial court asked Bar Counsel to opine on the ethics of the nonrefundable retainer and denied enforcement.

The court looked to state law on structured settlements

As structured settlements became more prevalent during the late twentieth century, a new industry arose dedicated to trading in future periodic structured settlement payments. In this secondary market, beneficiaries due future payments through a structured settlement—payees—trade some or all of their future-payment rights to a third party in exchange for a discounted presently payable lump sum. Beginning with Illinois in 1997, a perceived need to protect settlement beneficiaries in these transactions, which have come to be called “factoring transactions,” precipitated a wave of state legislation governing this secondary market. Hindert & Ulman, supra, at 20...

The takeaway from the preceding discussion is that a trial court must engage in the best-interest analysis called for by state and federal statute before either approving or denying a transfer of future structured settlement payment rights. Neither state nor federal statute distinguishes between a transfer of the kind at issue here and a true factoring transaction, wherein a payee transfers future payment rights to a third party in return for a discounted lump sum presently payable to the payee. Thus, the same best-interest analysis is required before approving a factoring transaction or a transfer such as the one here—wherein payee Larock would directly transfer a portion of his future payment rights to petitioner without changing the future payment date and in exchange for legal representation.

The case was remanded for the application of the above factors. (Mike Frisch)

http://lawprofessors.typepad.com/legal_profession/2017/07/the-vermont-supreme-court-reversed-petitioner-stevens-law-office-appeals-a-trial-court-decision-denying-assignment-of-a-futu.html

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