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One Suggestion on Mediatian Agreements…

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

Breaking Our Reptilian Habits

Evolution drove caution into human nature. Our reptilian brain’s braking mechanisms–fear and pain–created resistance to behavioral change that worked well in early human history. However, these breaks could limit our potential in the modern world. The longer we resist changing our behavior, the greater our fear mounts, preventing us from taking action. So how can we break the cycle?

You have taken the first step if you acknowledge that the reaction is natural. However, the question becomes how to reduce the reptilian fight-or-flight response and use rational thought before deciding to act. The bottom line is to recognize when you need to change the behavior, right?

The following process has always worked well for me:

Define – Process – Change Behavior

In this paradigm, a goal can be realized by shifting behavior. A goal is optimized by defining a clear outcome with measurable values, realistic results and a time parameter. Time is not the enemy; it can give us reference points to evaluate progress towards behavioral change. In addition, time allows us to judge the effectiveness of our path to completion.

Defining a Goal

Using Pareto Analysis, hazard analysis or any analytical framework worked for me when defining my goal parameters. Analysis through a constructive framework eliminates cognitive gaps or assumptions of causation due to familiarity. Identifying the root factors that warrant a behavior change diminishes the likelihood of creating an inefficient process.

Following the Define/Process/Change Behavior methodology, you create a work product, such as defining what kind of business you want. Then, an 80/20 Pareto Analysis can help evaluate your current client base to determine revenue to time spent on each client. A continuing theme has emerged during frequent conversations with my CPA colleagues: focusing on more complex clients increases revenue while attending to less affluent clients does not.

An example of a defined goal could be: Defer twenty percent of the clients that provide less revenue value to shift my business towards complex clients that provide a better balance between time spent and revenue earned.

Implementing a Goal

Now that a goal is defined, what process do you need to implement the goal? In our example above, the process could include the following steps:

  • Identify the clients to be transitioned
  • Determine a course of action for the account, such as finding them another CPA
  • Create a script for what you want to say to your clients

Then, incorporate a time frame: Each month for the next ten months, I will transition ten percent of selected clients to other CPAs. Therefore, the goal will be completed in ten months.

Changing Your Behavior

Sweat beads up on your forehead. Palms get cold and clammy. You suddenly remember a hundred other things to do, like get a tooth filled. Goal denied. How do you stop procrastination?

Break down the process required to achieve your goal into its constituent parts. Then identify the first action required in the process. In my example, contacting the client on the phone started the process. The key to change is becoming the force that acts upon your inertia. You are the change agent. You create the force that alters the speed or direction of your progress.

After I defined my goal and saw the value of that goal, why did the phone seem to weigh a thousand pounds? The same creative ability that allows you to solve complex problems for your clients also creates images that lead to fear related to picking up the phone. Fear that the client may get angry or the conversation might not go well. All of these possibilities could happen. However, the pain your mind creates often far exceeds the reality of the pain that might occur. Once you make that first phone call, you break the cycle. Fear no longer chains you to failure.

Your change in behavior starts with the first phone call. I know from experience that each successive call becomes easier as you build momentum.

I entered the professional financial profession in 1999, which required hours of dialing for clients. I had monthly, yearly and personal goals I had to achieve to become a financial professional. So did my colleagues. Less than two percent of my colleagues made the grade. Why? It wasn’t because they weren’t capable. Once they defined a problem and a goal, they failed to pick up the phone. What appears as an easy step prevented their goal from becoming a reality. Do not let that be you. Make the future you want by being an agent of change.

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