At the Bairs Foundation, we’re dedicated to creating a new model of funding for the civil justice system to help plaintiffs make ends meet during litigation. Reaching our goals is powered in part by joining forces with minds across the legal industry and beyond. Last week, the foundation welcomed its newest intern. Madison Frank has a background in law and hopes to focus more on the person behind the lawsuit. She answered a few questions for us below.

bairs foundation intern

Where do you go to college, and what is your major?

I am a rising senior at St. Lawrence University in Upstate New York, and I am a double major in History and Economics.

What drew you to intern for the Bairs Foundation?
I was originally drawn to the Bairs Foundation internship because I was extremely interested in the way that the Foundation is looking to make the the process of litigation financing more human-centered.

I have worked as a legal assistant for the past three years, and was hoping to get into something that focused more on individuals, and less on the specifics of the litigation process. I am very interested in being involved in civil justice as a general career goal, and thought that the foundation would give me valuable first exposure to this world.

What are your long-term career goals?
In terms long-term career goals, I am interested in the legal world, and am considering law school. However, I am mainly interested in the application of the law in terms of civil justice, if that makes any sense.

We look forward to continuing our work with Madison and seeing her shine in this field.

For more information about the Bairs Foundation and our 7% simple interest rate, click here.

 

If you’re a parent of a teenager, you could probably make a mental list of the daily challenges and uphill battles involving him or her. We spend a lot of time as parents trying to do right by our kids, planning for their futures so they can be as successful and happy as possible.

teen settlement for injury

If your child has sustained a catastrophic injury, you’re dealing with a whole new set of obstacles and challenges. Lawsuits involving teens can be terrifying for parents — first, the injury of the child, then compounded by the stress of litigation. It can be a lot to handle. And although it marks the conclusion of the lawsuit, settlement can be equally stressful.

Not many teens are equipped to handle such large sums of money responsibly, and our parent clients often express their concerns with adequately protecting their teen from the risks of having a substantial amount of money at a young age.

Having consulted on thousands of settlements in the last 15 years, I’ve come to learn that cases involving teens aged 13 to 17 with settlements in the range of $100,000 to $500,000 can pose the greatest challenge to the lawyers representing them, as well as to the courts and the child’s parents.

What are Parents’ Biggest Concerns as Settlement Approaches?

For the parents of a teen who is about to receive a settlement, there are often several overlapping concerns. These seem to be the major ones:

  • What could happen if the child receives all the money at age 18
  • That the money is safeguarded and achieves a modest return
  • Whether the money can be made available in amounts that increase in tandem with the child’s maturity (less money at age 20, more at 25, then more at 30)
  • If the parent can have the ability to positively influence the child’s decision making and financial risk taking after he or she becomes an adult

Some wrongly assume that parents most often want full control of the child’s money. However, I have found that it’s is rarely the case. Instead, the parents simply want to protect their teen.  

Many parents don’t want these scenarios to occur:

  • They (the parents) come between the child and his or her money
  • The large sum of money discourages the child from pursuing college or employment
  • The child frivolously spends all the money

Simply put, parents of an injured child typically want to strike a balance between receiving the money when it’s needed and preventing the child from accessing all of it until the child is mature enough to handle it.

Teens are the toughest age group when it comes to settlement. While young children have time to allow the money to grow, teens have less of that luxury. If the payout is from age 18 to perhaps age 25 or 30, the assets only have 10 years or less for growth. It can be difficult to achieve much in such a short duration.

There are a vast number of approaches for teens to get the most of of their settlement. For example, a client of ours fell from a balcony and suffered a traumatic brain injury. As a result, he began to deal with severe anxiety and depression. When he received a settlement, Milestone identified the best plan for him moving forward. We established a trust that pays for all his medical needs, with a Medicare set-aside so he can still get government benefits and a monthly prepaid debit card to help him manage money. His trust also pays for one of the best rehab facilities in the country. He is getting the most from his settlement, and his parents have the peace of mind that he has the right financial, emotional, psychological, and physical care.

Any settlement involving a teen requires a careful, detailed approach. If you’re a parent with a teen about to receive a settlement, be sure to build your planning team. Leveraging the services of a settlement planning expert, your attorney, and other helpful professionals can give your family  the best opportunity to properly preserve your teen’s settlement so it’s as beneficial as possible.

In a first-of-its-kind joint coordination conference and subcommittee meeting on the Rules of Federal Practice at Berkeley Law, the topic of litigation finance was front and center. With in-house counsel, both sides of the trial bar, and state court and federal judges, a key takeaway for many is that not all litigation finance is the same.

litigation finance meeting at Berkeley

At the roundtable and panel discussion organized by Emory Law Professor Jamie Dodge, it was presented that litigation finance should be defined as: “an unrelated third party to litigation providing one of the parties to litigation money in exchange for a part of a recovery on a contingent basis.”

There are two important facts about litigation finance that created a foundation for the discussion at Berkeley Law:

Litigation finance is not law firm finance. Law firms throughout the country work with lenders in the legal space, and traditional banks and they are underwritten as a corporation.  This was generally agreed to not be litigation finance.

Litigation finance breaks down into three broad categories: commercial litigation finance for law firms, commercial litigation finance for parties (plaintiff and defendants), and consumer litigation finance.

  1. Commercial litigation finance for law firms is the practice in which a funding company underwrites a single case or an inventory of cases, and provides the lawyer or the law firm with contingent financing against any fees that may become available in the resolution of the cases.
  2. Commercial litigation finance to parties is the practice of providing financing to a party to the litigation, either as a risk management process or to finance the cost of the litigation if the lawyers are not working on a contingency fee.   Cases that are frequently financed are generally very large commercial litigation in which the average contract may be $10 million or more and include business to business contract disputes, intellectual property, patent litigation etc.
  3. Consumer litigation finance (also called lawsuit loans, pre-settlement funding, or plaintiff funding) is the practice in which an individual plaintiff enters into a non-recourse funding agreement for cash up front in exchange for a portion of their recovery.

The third category of litigation finance enjoyed a significant amount of debate at the conference. Several important questions were raised:

Should the agreement be a loan, in order to subject the lenders to regulatory oversight and caps on interest charges? The Supreme Court of Colorado concluded this very thing, and the effect of this ruling is that all of the litigation funding companies have left Colorado — except for the Bairs Foundation, which provides advances to plaintiffs in both recourse and non-recourse agreements. (More on our 7% simple interest rate here, which is well below any state’s usury cap.)

Should the rates that litigation finance lenders or funders charge be boldly stated in their contracts? Most funders use a mode by which they express their interest in the cases as a dollar amount every six months, and not as an interest rate or APR.  As few states have any regulation (Tennessee, Vermont, Nebraska, Maryland are the ones that do), there is widespread concern about the failure to disclose what clients are being charged or how lay-people would compare or evaluate the true cost of litigation finance.

The Judiciary generally wanted to know if the funding companies exercised control or leverage over the parties or attorneys. A clear line in attorney ethics is that no one other than the attorney representing the client shall have control or decision-making authority in the course of litigation.

Should a plaintiff or their attorney be required to disclose the existence of any litigation finance agreement?  Senator Grassley’s new bill argues that any requirement to disclose may jeopardize attorney work product.

Does the unfettered, immediate get-your-cash-now model incentivize people to create litigation? On the extremes, of course it may, however those suits must bear the burden of getting past summary judgment, or they are thrown out, and so common practice in the industry of litigation finance is don’t underwrite bad lawsuits.

Should a plaintiff with cognitive deficits or a diagnosed neurological disease — such as many of the former NFL players involved in the NFL class action — be allowed to borrow against their potential recoveries? Senior United States District Judge Anita Brody thinks not. In a powerful reprimand of the litigation finance industry and the abuses, she vacated the assignments that NFL players entered into with RD Legal Funding. This decision is on appeal to the Third Circuit, but it may provide the players, their families and their lawyers the leverage they need to negotiate these abusive contracts down.

Litigation finance for consumers or plaintiffs is an “access to justice” issue. If plaintiffs cannot prevail financially for the long duration that litigation often requires, they will be forced to settle early, or withdraw altogether.   There is little doubt that large corporations and reinsurers and insurance companies have plenty of resources to litigate. Litigation finance levels the playing field. In this sense, availability or access to capital during litigation is a civil justice issue.

However, a fundamental problem with any litigation finance is that a plaintiff may be not willing to accept a settlement, even if it’s a prudent one, as they stand to recover so little due to the required repayment of litigation advances. The single greatest concern over consumer litigation finance is how exacerbated the cumulative interest charges may become over time.  It is reported that although with the exception of few good funders offering advances in the 30% range, there exist many firms that charge 50%, or 80%, and even 200% interest.

A lawsuit is an asset, and considered to be among the property rights of individuals.  A counter-view among some in civil justice is that it’s their property, and if they want to sell it for a deep discount, it’s their choice.

Juxtapose that with the very real circumstances of real people who have been disabled, no longer can work, and have no safety net. Should these fellow citizens be preyed upon or taken advantage of during what is likely the most financially vulnerable time in their lives? A large portion of all funding requests are for basic shelter for people being kicked out of their apartments or facing foreclosure on their homes.

Because of all of these challenges, and the harsh necessity that people exhaust financially, is why we founded Bairs Foundation. It is our mission to provide ethical and compassionate funding to those in need. Stakeholders in the civil justice system are paying attention to our novel, “nonprofit” approach. Our long-term goal is to see philanthropic organizations working in the non-recourse space in every state in the United States.

 

About John Bair

John Bair has guided thousands of plaintiffs through the settlement process. Motivated by a desire to assist others in protecting their financial well-being, John and his wife Amy established the Bairs Foundation. At seven percent simple interest, the organization provides the financial assistance families need during litigation. Read more at http://www.bairsfoundation.org/.

Needs-based government programs like Supplemental Security Income (SSI) and Medicaid base a person’s eligibility on how much income and assets he or she has. If a beneficiary receives a personal injury settlement, that large sum of money can disqualify them from receiving benefits.

In our last post, we discussed a few of the public programs that are “means tested,” meaning those that come with income and asset limits. Fortunately, there are a few options for keeping a personal injury settlement AND these benefits. For example, some plaintiffs establish a special needs trust to supplement government benefits by paying for non-covered services or equipment. Another approach is to try to re-qualify for benefits through a spend down.

what is the difference between medicare and medicaid

A spend down is a process of spending “excess income,” meaning income above the amount allowed to maintain eligibility for needs-based benefits.

Paying for certain medical bills counts toward a spend down. These bills include:

  • Your medical bills or your spouse’s or child’s medical bills
  • Bills of a child who does not live with you, but whose medical bills you help cover
  • Certain past unpaid medical bills for you or the people above
  • The part of any medical bill not covered by benefits

Individuals receiving needs-based government benefits can also purchase “exempt resources” with excess income to continue eligibility. Exempt resources are items not covered by their benefits. These items include, but are not limited to:

  • A home including mortgage, monthly rent, renovations and furnishings
  • A vehicle including registration and insurance
  • Medical, dental and eye care expenses/bills not covered
  • Education expenses
  • Entertainment/recreation expenses
  • Travel
  • Cost of hiring a financial planner or estate planner
  • Paying off debts
  • Prepaid burial arrangements
  • Personal hygiene and clothing
  • Purchase clothing

A settlement planner is particularly useful in setting up the spend down approach, as he or she can help the beneficiary strategically and appropriately spend the money to comply with government programs.

It’s critical to establish a spending plan prior receiving the settlement to avoid too much lag in government benefits eligibility. The spend down must also be reported to the Social Security Administration. An expert financial planner can ensure that these purchases are reported and documented properly to comply with government rules and regulations.

If you are about to settle a personal injury case, two things are likely true: the settlement is for a substantial amount of money, and you have financial and medical needs that are (or can be) met through government benefits. Because these benefits programs are needs-based, the influx of settlement proceeds can get in the way of your eligibility. Fortunately, there are options to ensure you can have both you settlement and the benefits you qualify for.

how much does an SNT cost

Some public benefits are means-tested, meaning that there are income and asset limits. Other public benefits are not means-tested, which means that the injured plaintiff can have money without losing eligibility.

Those that are not means-tested include:

Social Security Disability Insurance (SSDI): A monthly cash benefit that depends on the amount paid into the Social Security system
Medicare: Provides medical coverage for hospital, outpatient, and prescription drugs

If a person is receiving public benefits that are not means-tested, obtaining a settlement should not affect his or her eligibility.

Means-tested programs include (but are not limited to):

  • Supplemental Security Income (SSI): Helps pay for basic needs like food, clothing, and shelter
  • Medicaid: Covers medical costs, certain types of care, group housing, etc.
    SNAP (Food Stamps): Provides an Electronic Benefit Transfer (EBT) card to pay for food
  • Federally-Assisted Housing (Section 8): Provides subsidized rent
  • Children’s Health Insurance Program (CHIP): Covers medical care for low-income and middle-class individuals (not only disabled individuals)

If an individual is receiving public benefits that are means-tested, certain trusts and settlement planning tools can allow the beneficiary to have the personal injury settlement while maintaining benefits.

If you’re about to obtain a settlement and you also receive government benefits, it would be useful to talk to an expert to ensure you’re protecting your eligibility. A comprehensive settlement planning firm will assess the benefits you currently receive as well as your future needs and financial goals. Together, you’ll then develop a plan to ensure your settlement and government benefits are as helpful as possible.

In their latest report, Social Security and Medicare trustees project that the funds for the two government programs will be tapped out in a few years.

Here are a few important points from the report:

  • The combined trust funds for Social Security will be empty by 2034
  • The trust fund for Medicare Part A will run dry by 2026
  • Medicare Part B and Part D will be financed in full indefinitely, but their costs are scheduled to grow substantially

Social Security will only be able to pay 79 percent of the benefits promised to retirees and disabled beneficiaries in 2034. Worse off is Medicare Part A, which by 2026 will only be able to pay 91 percent of its promised benefits.

will Medicare run out

To save Social Security and Medicare from running dry for decades longer than the trustees predict, the programs can do the following:

  • Raise employees’ and employers’ payroll taxes paid into the programs, and/or
  • Cut benefits for some or all beneficiaries

At Milestone, many of our clients are victims of catastrophic injuries that require the financial assistance of needs-based government programs. Without Social Security and Medicare, many individuals and their families will be either strapped for funds or have to do without the things this income pays for, such as disability-related expenses and hospital and nursing home costs for seniors.

Congress needs to make a decision soon, or it will be difficult to put Social Security and Medicare back on track to help beneficiaries the way they promised.

At Milestone, we’re all about helping people live their best lives through smart financial planning after settlement. Since we started the company in 2012, our team has worked with thousands of plaintiffs, their family members, and lawyers. A lot has changed since then, but our mission remains the same: secure our clients’ futures by finding the path that enables them to manage their needs now and for as long as possible.

When Milestone was formed, we created a logo comprised of tick marks, to symbolize the different milestones or markers along someone’s life. Our team always thinks of a catastrophic injury as a turning point in an individual’s life – and it is our goal to help guide them through that defining life moment and help them move forward. We felt our tick mark logo represented the multiple milestones in one’s life, and we hoped it could encourage plaintiffs to envision their world once they moved through the litigation that so often follows tragedy.

Even though we liked the tick marks, we felt it was time for a brand refresh. As Milestone has evolved and expanded our team and our scope of settlement services, we wanted something stronger and more substantive to represent our firm. We worked with the acclaimed agency The Martin Group to develop a new logo that is indicative of an arch. The arch concept took on multiple meanings for us, all of which we felt were accurate symbols of the work Milestone does and the values we hold.  

Milestone Consulting

An arch is a strong, foundational element that has been incorporated as a structural support since the start of time (think of the ancient Roman arches). It can also be representative of a bridge, a structure that closes the gap between two sides and brings someone from one place to the next. Lastly, an arch can also be interpreted as a gateway, an opening or entrance way to the next milestone in our clients’ lives. It is future- and goal-oriented, connecting today with tomorrow.

While the color scheme is not a total departure from our original Milestone green, it nods to the previous color scheme while giving it a bolder, more distinct, refresh. Green represents growth and new life, which is why we’ve always gravitated toward it for the work that we do. The newly-incorporated mint is calming, and the white accents help make everything seem a little more three-dimensional.

Like in everything else we do, we took on this project with intention and focus, and we worked hard to find a solution that we felt was tailor-made for us. The second phase of our brand refresh will be the Milestone website.

Our goal is to change the plaintiff funding industry. But it’s clear we can’t do this alone.

The Bairs FoundationAt the Bairs Foundation, we have funded nearly 150 plaintiffs and their families with a total of almost $1 million. However, this is only 44% of the total requests for funding we have received. It is very clear there is a huge need for what we’re doing in this industry. As a civil justice advocate, I’m sure you understand.

We need your help to continue our mission and expand our reach. We are launching a crowdfunding campaign and ask that you show your support by contributing.

For more information and to help our foundation assist more plaintiffs in need, please visit:

https://www.classy.org/campaign/revolutionizing-funding-
for-plaintiffs/c181100

If you have seen the awful effects lenders have on a client, a friend, or a family member, you understand how crucial it is to keep this alternative option in existence. Your donation will help the Bairs Foundation provide individuals and families with the capital they need to go the distance with their pursuit of justice.

Please help us amplify the work we’re doing by sharing our message in the graphic to the right. Together, we can change the landscape of non-recourse plaintiff funding.

About John Bair
Co-Founder of the Bairs Foundation

John Bair has guided thousands of plaintiffs through the settlement process. Motivated by a desire to assist others in protecting their financial well-being, John and his wife Amy established the Bairs Foundation. At seven percent simple interest, the organization provides the financial assistance families need during litigation. Read more at http://www.bairsfoundation.org/.

 

After the $7.8 billion settlement with BP for the Deepwater Horizon oil spill concluded, some plaintiffs found out too late that they had to pay taxes on their compensation. Because the lump sum of income pushed many of them into a higher tax bracket, those who did not establish a durable plan prior to settlement were left paying way more in taxes than they had ever paid before — and that’s on top of suffering losses including illness, injuries, economic loss, and property damage.

spreading taxes after settlementThis situation frequently happens when a plaintiff does not have adequate information about financial planning prior to settlement. That’s because as a taxpayer, any monetary award you receive is assumed to be gross income and is taxable. A settlement recovery that pushes claimants into higher tax brackets forces them to retain less of their recovery.

This rule does not apply to all types of cases. If your settlement is due to a physical injury, sickness, or wrongful death, for example, you will not need to pay tax on your settlement when you initially receive it. On the other hand, cases involving sexual harassment, discrimination, fraud, whistleblower situations, and intellectual property are taxable.

In a previous post, we answer the following questions about settlement and taxes:

  • Is the settlement I am about to receive taxable?
  • If I invest my settlement money, will it be taxed?
  • My family member has been injured and I will be receiving a portion of the settlement. Will I have to pay taxes on the settlement award?
  • Once I receive my settlement, what are my options?

If you’re approaching settlement, having this background knowledge is key. A comprehensive settlement planning firm can then explain your options.

Tax and Income Spreading

To ease what could be a staggering tax burden, plaintiffs may take settlement payments out over time as opposed to accepting a lump sum. Doing so reduces their taxes by remaining below the threshold for many deductions, credits and/or allowances that phase out with increased income. This method of “spreading taxes” is also referred to as deferred compensation or income spreading.

Because the settlement process is voluntary, this one-time tax planning opportunity is part of the resolution of a claim and must be made prior to settlement. As a plaintiff, the sooner you speak with a settlement planning expert, the sooner you’ll have peace of mind that you’ll get to keep as much of your settlement recovery as possible and reap the benefits of it long into the future.

Seeing the legal profession as a “boys’ club” is going out of style fast. Firms are increasingly waking up to the idea that leadership and equal pay should be based on merit rather than gender. As such, many women and men in law are working harder than ever to elevate the people who deserve it most. It feels like a lot has been happening recently to close the gender gap and increase female leadership — but how do the numbers add up?

In her forthcoming second study on gender disparity in the legal profession, Dana Alvare found that the statistics have actually been holding fairly steady. About 24 percent of plaintiff-side leadership roles in federal multidistrict litigation (MDL) went to women in 2016 and 2017. That number is down slightly from 2015, during which Alvare noted that women landed nearly 28 percent of leadership roles.

women leadership in law

While the past two years have indeed seen fewer women as leaders in MDLs, it’s important to note that the beginning of the decade saw far lower percentages. The newest statistics are “… still a deficit, but better than 2011-2014,” when women had less than 17 percent of all plaintiffs’ MDL leadership appointments, Alvare said.

Factors contributing to the gender gap include unconscious bias that prevents mentoring and structural barriers that keep women from getting needed leadership experience.

Alvare is a researcher with the Sheller Center for Social Justice at Temple University’s Beasley School of Law. She is also a member of Women En Mass, an annual meeting of the who’s-who among female mass tort attorneys. The event offers an outstanding networking opportunity and focuses on issues that affect professional women.

As the Women En Mass website notes, “The world may have changed a great deal for women in America over the last 100 years, but there’s still work to be done.” Research like Alvare’s two studies are an important way to map the growth and momentum of female leadership in law. They will surely continue to shed light on the progress and promote more action in the field.