The Gazette 1989

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GAZETTE OCTOBER 1989
In gjb?
this
Issue fÉgff GAZETT INCORPORATE D
LAWSOCIETY
OF IRELAND
Vol.83 No. 10 Octobe r 198
Viewpoint
Statutory Deductions from
Damages in Tort 341
Younger Members News 355
New Facilities at Four
Courts 357
Solicitors Computer Systems
What Next? 361
Medico Legal Society 371
Statutory Self Assessment
for CAT 373
Professional Information 376
*
Cover Photo: Younger Members Com-
mittee Network launch (left to right):
Justin McKenna, YMC, Maurice Curran,
President of the Law Society, Miriam
Reynolds, Chairman of the YMC, Sandra
Fisher, Secretary to the YMC. See also
pages 355, 356.
*
Executive Editor:
Mary Gaynor
Committee:
Geraldine Clarke, Chairman
Eamonn G. Hall, Vice-Chairman
John F. Buckley
Gary Byrne
Patrick McMahon
Charles R. M. Meredith
Daire Murphy
John Schutte
Advertising:
Seán Ó hOisín. Telephone: 3 0 5 2 36
Fax: 3 0 7 8 60
Printing:
Turner's Printing Co. Ltd., Longford.
*
The views expressed in this publication,
save where otherwise indicated, are the
views of the contributors and not
necessarily the views of the Council of
the Society.
The appearance of an advertisement in
this publication does not necessarily
indicate approval by the Society for the
product or service advertised.
Published at Blackhall Place, Dublin 7.
Tel.: 710711. Telex: 31219. Fax: 710704.
Structured Settlements
Much has been said about the
inadequacies and problems associ-
ated with the single lump sum
me t hod of compensa t i on in
personal injury claims and yet
insurance compan i es haven 't
shown the slightest interest in
remedying the situation. The
concept of "structured settle-
men t s" has become very popular
in other jurisdictions and could
have benefits if adopted in this
country.
When a plaintiff receives a lump
sum of compensation it may well
be the single largest amount of
money he or she has ever received.
For somebody who is not used to
dealing wi th money there is a
danger that it will be spent foolishly,
rather than invested wisely. This is
borne out by statistics in England
and America which indicate that,
even in the case of fairly substantial
awards, half of the successful
claimants will have spent the
compensation within three years of
receiving it and the vast majority
will have done so within five
years.
A further problem is that if the
person is very seriously injured he
is unlikely to get much advantage
or pleasure from a large lump sum
and it may well cause jealousy and
resentment between him and his
loved ones. It may put him in the
position where he has to buy their
affection by giving them presents
of money or loans which will never
be repaid.
Unless the lump sum is very
skillfully invested inflation will erode
it and may cause real hardship.
In the United States structured
settlements have become very
popular. In the United Kingdom the
concept has recently received
judicial approval. Essentially the
idea is that the defendant agrees
with the plaintiff that because he
is so badly injured he will need an
income of so much per week for
the rest of his life.
In many cases the Defendant's
Insurers buy an annuity to cover
these payments. The annuity
provides an income to the Plaintiff
for life and the income can, within
limits, be index-linked.
The primary advantage to the
Defendant is that the cost of the
annuity may well be less than a
lump sum settlement. Statistics
show that many seriously injured
Plaintiffs do not live a long time.
On the other hand the Plaintiff
can outlive his lump sum wi th
resultant financial hardship. Under
the concept of Structured Settle-
ments he would be entitled to the
continued income no matter how
long he lives.
A key element in the success of
"structured settlements" is that
tax should not be payable on the
payments received by the Plaintiff.
This has been agreed wi th the US
Revenue authorities for many years
and has also been agreed in the UK
between the Association of British
Insurers and the Revenue. Some
structured settlements are of a
sophisticated nature providing for
payment of lump sums at intervals
when it is anticipated the Plaintiff
will have particularly significant fin-
ancial demands upon him. Struc-
tured settlements can provide a
great sense of security for the
claimant. Because the money is
being rationed to him he does not
have a lump sum to invest and will
not incur the costs associated with
investment nor is he in a position
to squander the money or give it
away to family and friends. Essen-
tially he is protected from his own
generosity and foolishness.
It is obvious that structured set-
tlements have many advantages
over the present system where a
claimant is very seriously injured
and will require ongoing attention
for the rest of his life. It is therefore
surprising that so little interest has
been shown in Ireland in this
concept which has financial, social
and moral advantages which could
benefit Plaintiffs, Defendants and
their insurers. •
339