It isn’t every day that a law firm hosts a graduation party for their client, but that is exactly what Miller & Chevalier did for Marie Walker* -- a single mother with four young children who works as an aid in a nursing home.
Last year, Legal Aid reached out to Miller & Chevalier requesting help with a new pro bono project to protect persons like Ms. Walker from abusive transfers of their rights to structured settlement annuity payments in exchange for immediate cash. Personal injury settlements are sometimes structured so that the injured party will receive monthly or periodic lump-sum payments over time. Often enticed by television advertising or direct solicitations, low-income persons holding such annuities may seek to transfer rights to all or part of the annuity in return for immediate cash.
Because cashing out the annuity is inherently at odds with one of the principal purposes of a structured settlement -- to provide a guaranteed stream of income to a person who may have a long-term disability, who has lost an income-producing parent, or who may have difficulty managing a lump sum payment -- federal law requires that a company seeking to purchase rights to these future payments must first obtain a state court order finding that the proposed transfer is in the annuity holder’s “best interest.” Even so, the cases are filed by the purchaser’s counsel as uncontested matters and are often presented to the court without a full and accurate disclosure of relevant information.
The terms of the proposed transactions are generally unreasonable and result in the annuity holder losing a large percentage of the underlying settlement funds. In many cases the annuity holder’s best option is to walk away and seek alternative sources of cash to address their immediate financial needs.
Legal Aid has been working with the D.C. Superior Court to bring enhanced awareness to the issues raised in these cases. As a result, low-income annuity holders are regularly referred to Legal Aid for advice and counsel at a pace that exceeds our in-house capacity.
Miller & Chevalier’s Pro Bono Counsel Kathleen Wach and her colleagues thought this project would be a great fit for their firm. With training and mentoring from Legal Aid, the firm agreed to help annuity holders like Ms. Walker review and evaluate the terms of a proposed transaction; consider alternatives to the sale of annuity rights to achieve one’s financial goals; when appropriate, re-negotiate the financial terms of the transaction; and, help navigate the court process.
When Miller & Chevalier Member Linda E. Carlisle first met with Ms. Walker, she learned that Ms. Walker wanted to sell her annuity rights to obtain cash so she could pursue an educational opportunity with the goal of better providing for her family. Ms. Carlisle helped Ms. Walker review the proposed transaction and then re-negotiate the terms so that Ms. Walker would get significantly more money.
“Getting to know Ms. Walker and helping her secure a favorable outcome was a highlight of our firm’s pro bono program this year,” said Ms. Wach.
With the cash she received from the sale of her annuity, Ms. Walker paid for school and recently earned a medical technician and nurse’s assistant certificate. And the Miller & Chevalier team hosted a graduation party to help Ms. Walker celebrate!
“It was enormously satisfying to work on behalf of Ms. Walker,” said Ms. Carlisle. “She is a smart, resilient and determined young woman, and I am so pleased that we could help her pursue and achieve her goals.”
*Name changed to protect confidentiality.