Use a Broker Addendum
Once you answer the financial consideration question, I suggest adding non-financial considerations to the final mediation agreement through a broker addendum. This addition could be most beneficial before your negotiation power diminishes.
What is a “Broker Addendum,” you ask?
A broker addendum addresses who will handle the structured settlement (SS), which type of carriers, such as an A+ Rated. will be used for this specific case. Moreover, the consideration also addresses the time the defense is allowed to fund each section of the settlement (Cash/ SS) after the paperwork and/or court approval occurs. Finally, I also suggest you place an exact timetable on the paperwork needed to complete the settlement. Why do I consider this so important?
Unwarranted delays by the defense force the client, who in most cases lived a nightmare for years, to continue living it while the defense delays the process. Delays caused by busy schedules and archaic time limits set by insurance companies make this an arduous task at best for all involved. Reducing these delays stand first on my list of issues to tackle. Another factor contributing to the timeframe and client outcomes is honest brokers entering late in the process. Finally, clients should know that a defense broker need not participate in setting up an SS for the client or you. Their interests lie in protecting their clients, the insurance company, which conflicts with our interests.
After working with clients on cases ranging from complex birth injuries due to medical malpractice to straightforward personal injury, I see a recurring theme in the process. Despite my best efforts to move a settlement forward, the defense lacks a sense of urgency to facilitate the closing of the case. You and I have almost no leverage to move the defense swiftly after signing the mediation agreement. Because it benefits the defense to move as slowly as possible, they are supported by the system to do just that.
The defense’s lack of urgency often appears as they generate documents and fund the settlement. Before I explain how these barriers can be reduced, let’s examine the root of each issue, starting with funding.
Funding is the insurance carrier’s domain and often stipulates a 30- or 60-day funding period. How and why can they do this? Does it take that long to pull the money together? No. The insurance carrier sets aside a reserve to cover the potential loss after the liability recognition event occurs. Their motivation is financial; they maximize the accrual of interest on their money by slowing the release of funds.
Given the uniformity of documentation, the processes of releasing funds, qualified assignments, and other pertinent routine paperwork, the insurance company and defense should take only a few minutes to produce these for each case. However, days, weeks, and months can elapse before a draft appears in an email. All the time, the clock spins, and interest accrues in the defense’s account while no payment is forthcoming for the money you earned and the client deserves.
Identifying the defense settlement broker’s crucial role could be seen as self-serving. However, forcing the defense to identify their broker early, if they have one, eliminates confusion later in the case while allowing me to establish a conduit to the appropriate client settlement defense broker. In addition, these steps, on my and the client’s behalf, open a window for me to learn about the insurance company’s funding protocols, carrier preferences, and correct party names, which are germane when multiple layers of coverage exist. Most importantly, in most cases, defense settlement brokers for the insurer can accelerate the settlement process.
Their absence leads to working without a colleague for months coordinating the defense and the plaintiff legal teams to complete the process, causing unwarranted delays. As the final stage approaches, miraculously, a defense broker materializes. asking for half the commission just to facilitate the mailing of a check. Naturally, I acquiesce, as causing harm to my client would be unacceptable to me.
Additionally, outcomes of these events can leave the client in limbo, unable to move forward with their lives. This situation is avoidable for everyone by utilizing a broker addendum in your next mediation agreement early in the process. It costs nothing but can mean the world to you and the client.
For a complete copy of the broker addendum reach out to me at firstname.lastname@example.org.