Interview with Jack Meligan on ethic's issues surrounding compensation disclosure.
Wednesday, April 19, 2006 at 09:10AM Jack Meligan, past President of the Society of Settlement Planners, as well as the principal of Settlement Professionals joined me in studio last week for a discussion on the topic of ethics, compensation disclosure and the changes taking place in the trial lawyer and settlement community as they relate to the engagement of settlement professionals by trial lawyers.
The full audio podcast is available by clicking here. You may also find it by going to The Settlement Roundtable link and checking the show archives.
Jack, as well as the professors whom he refers to in his discussion, Professor Erwin Chemerinsky from Duke Law School, and Professor Stephan A. Saltzburg of George Washington University Law School, have begun a discussion on a topic that is going to grow in both importance and relevance to our industry . That topic being what duty does the trial lawyer have in disclosing compensation conflicts and issues to their clients, when they engage the services of a settlement professional to negotiate structured settlements for their injured clients. Both Professor Saltzburg, in a presentation to The Academy of Catastrophic Injury Attorney's, and Professor Chemerinsky in a supporting opinion letter to the same group, present the opinion that trial lawyers have a definite ethical duty to obtain a clear disclosure of who is getting paid when a structured annuity is being negotiated and presented, and in particular, whether or not the annuity compensation is being split between brokers, and if any of those brokers are involved in commission sharing or rebating with a casualty company or defendant.
Jack's opinion, and one that a share, is that we are about to enter a period of time in which the undisclosed compensation agreements between casualty companies, self insureds and even law firms in many cases is about come to an end. For too long our industry has flown under the radar on issues such as rebating, commission splits, conflicts of interest and other ethical matters, but the transition to a business where trial lawyers MUST engage an specialist to represent their client, and then MUST disclose their compensation and conflicts is going to dramatically alter the landscape of our business in many aspects.
I encourage you to listen to this podcast, to read both of the opinion letters that I have made available in our resource section, and to weigh in with your thoughts on this issue. You should also take a look at Pat Hindert's comments in his S2KM blog on the topic, available here. We will be doing an ongoing series on the compensation and disclosure issues as I think it will be the single largest change in our business model in the coming two years. If you can't defend what you are paid, or are afraid to disclose it, then you probably have some issues you need to resolve in how you handle your practice.
Reader Comments (4)
1. Is it the professor's conclusion then, that the plaintiff/plaintiff attorney who should compensate the broker in order to avoid a conflict? That would certainly seem to solve all sorts of problems in our industry. It would certainly put the plaintiff broker on equal footing with other plaintiff experts, such as economists, doctors, etc. A few brokers over the years have done just that. Would the professor consider that an adequate solution to avoid ethical conflicts and avoid any potential breach of fiduciary duty (if indeed one exists between agent/broker and plaintiff attorney).
2. The professor seems to labor under the misconception that the defense pays the broker. In actuality, it is the life company that pays the broker, irregardless of who they represent. No contractual relationship exists between broker and client (whether defense or plaintiff), but one does exist between broker and life insurer when they submit money, documents, and an application.
3. The cases cited, while interesting, are not on point. Are there any cases specifically involving structured settlements? Any specifically involving an agent or broker brought in to sell an annuity? Or any financial product from a life insurer?
I've sent Jack an email to see if he can get you a little more detail on your questions. As to your prior post the Academy is essentially a sub-committee, for lack of a better term, of ATLA, focused on issues involving catastrophic injuries and claims.