Commission sharing agreement an example of Huzpah

In my day to day work i'm always confronted with commission sharing arrangements as it is now common practice for both sides of a settlement to have their own settlement brokers.

Most of these take the form of your basic 50/50 split, outline who does the paperwork, how the commission are paid to the general agent, etc. Nothing elaborate, nothing over reaching just a simple transaction sheet for that particular event and for the annuity contract being handled by the defense and plaintiff brokers.

However, yesterday I had one forwarded to me by an associate i'm working with, in which the defense broker, who has never met the client, plaintiff attorney or left his office 1100 miles away from where the settlement is occurring decided that simply getting 50% of the annuity commission wasn't enough. No, they included the following:

1. 50% of any structure written on the trial lawyer if he decides to structure his fee.

2. 50% of any 468B trust income, even though they are neither licensed to sell securities, have no relationship with the trust or trust company or have performed no duties.

3. 50% of any life insurance or non-structured annuity product written on the plaintiff, lawyer or any family members of the plaintiff.

It goes on and on, but you get the idea. Basically they want 50% of anything and everything to do with the case, even though they have no client relationship with any of the parties, are not even insurance licensed in the state in which the case is settling, are not securities licensed and have no relationship with anyone other then the casualty company that inserted them into the case at the last moment once it was clear a structure was going to be involved.

Being a fair minded guy, I decided along with my associate to insert a second clause that said the broker agrees on his part to give us 50% of all of the income he realizes from his casualty client, whom I have never met nor have a business relationship with.

I have yet to hear back from him directly but did get a stripped down split deal agreed too.

Seriously, how desperate are some brokers at this point to piggy back off the efforts of others that they feel they have the ability to reach into every level of every transaction and share in the compensation? How about they try developing some expertise and products that other people might want instead of asking for compensation they aren't even legally licensed or appointed to receive.

Posted on June 16, 2009 .