Form of the day: client settlement annuity advice letter

Photo:  Taken on a sunny deck with several former plaintiffs who made wise financial decisions.

Photo:  Taken on a sunny deck with several former plaintiffs who made wise financial decisions.

When a personal injury case settles, we are still our client's lawyer.  This means we need to continue to look out for their best interests until our job is done.  Even if we are not financial planners or accountants, we cannot walk away without first trying to help our client make well informed decisions.  Maybe this is not our legal duty.  But it certainly is our moral one.

During the period of time it takes for an insurance settlement to fund, we should be doing what we can to help our clients make wise decisions.  Particulalry for very large cases involving permanently and seriously injured people.  This can come in the form of referring them to well reputed financial planners, accountants, lawyers versed in governmental benefits, and other professionals.  Sometimes it can involve recommending an annuity or the creation of a trust.

There are times when despite our best efforts, a client will reject all of our financial related suggestions.  We may be worried and concerned for their future.  But our client has the absolute right to do what they choose with their share of the settlement funds. (Except in the case of the infirm or minors).

Once our client decides to decline our advice, it is a good practice, to have them sign a letter acknowledging their decision.  There are two good reasons for this.

First, seeing the letter in black and white may actually result in your client changing their mind and agreeing to some good financial planning.

Second, to make sure there is full disclosure so that you cannot later be blamed.

Enclosed is a form letter and acknowledgment that you can adapt for use when your client receives a very large financial recovery but declines your advice to either structure a portion or work with a financial professional.

Client re Annuity Recommendation.pdf


Thanks Karen—

This is really good advice. We have followed this trend rather closely. Clients who have been seriously injured and dissipate their settlements are frequently making claims against their PI attorneys. But the claims go all over the map. Recommending an annuity generates complaints over poor investment performance, lack of flexibility and losses to inflation. Recommending a Trust without the proper trust instrument or reliable Trustee generates complaints about the trust. Giving them a lump sum—which they then spend foolishly generates complaints that the attorney should have known about the clients financial ability.  Another significant issue is the potential loss of government benefits. The main lesson is to take this part of the representation very seriously. Pay as much attention to what to do with the settlement as you do to obtaining the settlement. If you do not feel comfortable advising the clients on this aspect—get someone who is knowledgeable and document it in the file.


William L.E. Dussault