Structured settlements and kick backs.

I hesitated before writing this post but after a few days of reflection I decided this really needs to be discussed. Over the last few months I have had repeated conversations with both plaintiff and defense brokers who work in the structured settlement industry, and in their candid moments, they have all shared the same frustration with me; that being the relentless pressure to "pay to play" being forced on them by the PLAINTIFF side of the trial bar.

As anyone who knows me well is certainly aware, I was an early and vigorous opponent of the long standing and fortunately discredited practice of structured settlement firms that entered into rebating and commission sharing arrangements with casualty companies or self insureds. I've always felt that any time we participate in something as shady as rebating or kicking back commissions, no matter how you dress it up or try to justify it, we are devaluing our professional services in the eyes of our customers. It leads to an endless cycle of professional debasement, deterioration of our profit margins and in ability to invest in other business lines or services to help the end consumer.

However what is really upsetting is there appears to be wide spread pressure on structured settlement brokers to either make substantial contributions to a trial lawyer associations in a not so subtle pay to play extortion, as well as the more shocking and sickening stories of individual trial lawyers that pressure brokers to directly kick back commissions in return for writing an annuity for their clients.

How wide spread this practice is I can't really say, and I have to state for the record that I have NEVER been solicited by any of my client trial lawyers for such a kick back, probably as a result of the quality and character of the clients I am happy to also call my friends. I also don't make substantial contributions to trial lawyer associations, both national or state, other then a modest membership fee with some as I've always felt it was financially foolish and ethically questionable.

That said, the purpose of this post is not to take on the trial lawyer associations that are under pressure to raise funds and who look at the settlement professions as an easy mark to raise cash in return for some questionable endorsement. I'll get on that soap box another day. No, this post is about the individual lawyers who have taken the tactics even further in their own law practices.

I'm not sure what I find most appalling about this practice of demanding kick backs from structured settlement brokers, the disgusting ethics of the lawyers involved or the pure stupidity of the settlement professionals who cave in to this pressure and write checks to these ethically challenged bags of dirt.

As a senior member of the settlement profession, who before I switched to plaintiff work use to deal with the indignity of claims professionals, and I use that term loosely, asking me to provide bags of cash in order to be assigned profitable cases, ( and no I am not making that up I was told to bring cash in brown paper bags) I am well aware in every profession you have your scum that give in to those pressures and sell out to these low lifes. I know the guys who did it when I refused and they still work in our industry today, masquerading to others as "structured settlement professionals" when in fact they are nothing other then cheap bag men who buy access to accounts and then pretend they are legitimate. These brokers, some who have sat on boards and had positions of leadership in our industry, can't look me in the eye to this day and I can only speculate on the moral gymnastics they go through every morning when they look in the mirror and ponder what they have had to do to make a living.

Now these same ethically impaired dirt bags have, as well as some new faces, have taken their business practices to the plaintiff side of the transaction, with stories filtering back to me of lawyers asking for cash, trips, political contributions and other payola from young, hardworking brokers who are trying to work their way into a successful career in settlement planning. What makes it tough for these brokers to say no is they are told by these sleazy lawyers that " Broker X does this or has offered that " with the implication being that it's common practice in order to get this jewel of the legal professions business.

So, in the interest of all of the younger brokers and new players in our business let me outline a few suggestions for dealing with both the lawyers who pressure you as well as the brokers who are taking cases from you using these practices:

1. You do NOT need to give in to this pressure to be successful in this profession. Most of the professionals in our industry are honorable, decent, men and women who would never engage in such despicable behavior. It is a minority of the brokers and agents who give in to this practice and trust me word gets around quickly and we all know who they are. They are scum, always have been scum and nothing short of a criminal prosecution is going to change their behavior. However, the majority of professionals sell their services on their merits and that's the only way you can both make a long term living in this profession and not hate yourself for the way you earn the money.

2. If you are approached by a lawyer or it is requested that you provide a kickback or some other financial benefit in return for their business DON"T DO IT. In fact, ask them who they have done business with in the past they they feel it is appropriate for you to share your compensation with them, and do they disclose this to their clients. Keep in mind the lawyers who do this are essentially bullies and cowards who feel that you provide no real value worthy of compensation and they are in some fashion entitled to your pay check. You deal with a bully and coward by standing up to them and making it clear you provide a professional service, you are reasonably compensated for that service and that YOU have no interest in working with an attorney that doesn't value YOUR service. Ask yourself, why would you ever want to work with someone who has so little regard for your services that they feel entitled to your compensation? Life is too short and unless you have zero self respect why would you ever do this?

3. Discuss it with your trial lawyer clients who don't extort money from you. Trust me, the vast majority of lawyers do NOT engage in this practice and the ones that do will someday join their ethically challenged brethern in jail or be disbarred. Let the word get out that you are a professional, you won't compromise and trust me over time you will be referred to the quality trial lawyers who simply want the best for their clients.

4. Send me a note about your experience. This is a blight on our profession and something that needs to be cleaned up before we are all tainted by the stench of these kick back bag men doing on the plaintiff side what they did for so long on the defense side. I'll keep your name confidential but I'll share the story and it won't take long before people can figure out who is doing what. As a profession we need to take a firm stand against this and root it out or we will continue to be devalued and bebased as professionals.

In short, don't sell out. I promise you, you will hate yourself for it later. Most of these brokers who do it, if you look at their lives are a string of failed marriages, broken business relationships, substance abuse and other addiction problems. They are miserable people pretending they are living a life they can be proud of, but at the end of the day the money means nothing and they are forced to deal with who they really are.

Take care of yourself, your clients and work with the people in both the legal and settlement world who are true professionals. Trust me, they are the majority and you'll find them when you elevate your practice and move far away from the losers who choose to take the easy path that will ultimately lead to destruction.

Posted on April 19, 2009 .