The Art of Settlement

#5: This episode of Settlement Nation we chat with Jason Lazarus, a legal settlement services expert out of Orlando, Florida. Jason discusses several of the topics covered in his new book, The Art of Settlement, intended to help attorneys avoid mistakes when finalizing a settlement. If you are a personal injury attorney, this is a MUST listen for you and your legal team. Jason's book can be purchased here:  https://geni.us/theartofsettlement 

Transcript

Chris Bua:

What is up, Settlement Nation? If you're a personal injury attorney, you picked a great episode to download. This is going to be extremely valuable information for you to know when working up and finalizing your future settlements. We are joined today by Jason Lazarus, the founder and chief executive officer of Synergy Settlement Services based out of Orlando, Florida, and author of the brand new book, The Art of Settlement. Jason is a renowned legal settlement services expert. His company allows trial lawyers to focus on what they do best by handling all the issues that frankly many attorneys don't like to deal with such as lien resolution, Medicare compliance, public benefit preservation. We will touch on many of those today. Synergy also has a robust settlement planning team to help your clients protect their recovery. In his free time, Jason is an avid cyclist and has a passion for UCF and FSU football, so make sure to add him to your prayer list each and every night. Welcome to Settlement Nation, Jason.

Jason Lazarus:

Thanks. Yeah, not sure what this season's going to hold. Certainly FSU did not get off to a good start. We'll have to wait and see how UCF does. Of course, my pro football team is the New York Giants and they lost, so I did not have a good first weekend of football.

Chris Bua:

Let's get right into it. I've seen enough interviews with authors to know that my first question needs to be: Why did you want to write this book? So Jason, why did you want to write this book?

Jason Lazarus:

I have been dealing with these issues for 20-plus years and working with trial lawyers and the common theme always is how do I deal with all these complexities when I settle a case and really wanted to create a guide that allows them to "issue-spot" because the most critical thing for a trial lawyer is to understand when and how to protect their clients when they're resolving cases and this idea of closing cases compliantly is becoming more and more important every day because of the Medicare compliance complexities, dealing with other government benefit programs, making sure the client's recovery is protected financially, and dealing with liens.

Jason Lazarus:

Frankly, one of the things that really drove me to write the book was my own personal experiences after becoming a personal injury victim and going through all of that myself and even having done this for years and years and years, it was a challenge for me and I negotiated my own lien, did my own settlement-planning, so it was an opportunity for me to really see that even if you've been in the industry, it's tough to deal with these issues, so I wanted to create something that ultimately help trial lawyers in their daily practices when they're resolving cases for people that are disabled and catastrophically injured.

Chris Bua:

I did get a chance to read your book before the interview and your intro was very powerful, very personal, and I think a lot of readers are going to find it to be pretty engaging, so I highly encourage you when you check the book out, don't skip the intro, make sure you start there.

Chris Bua:

Right after the intro, you dive right into ethical issues at settlement for attorneys. So many of them do such great work fighting for their clients and getting great results, but then they put themselves at risk unnecessarily sometimes. They do this through either inaction or the wrong action as it relates to the way that the great result is paid out. Can you walk us through some of the common mistakes that attorneys make when a settlement's being finalized?

Jason Lazarus:

Really, it boils down to typically a failure to communicate and educate the client about the issues that they may face when they resolve that case. The critical thing ultimately is making sure that either as a trial attorney, you understand the issues in that particular case and can explain and articulate the laws that impact settlement so that the client can make an informed decision because the model rules of professional conduct by the ABA requires that of a lawyer and the issues that I deal with in the book are all issues that are of the law, meaning a lawyer has the responsibility ultimately to explain those issues to the client.

Jason Lazarus:

Commonly, there's the mistake about not advising clients about Medicare compliance issues or not appreciating the impact of, for example, needs-based government benefits and then the need for those, because oftentimes, settlements do not fully compensate an injury victim, so they're either going to rely upon government benefits to provide for their future care and also help offset the fact that they can no longer work, or they may be completely dependent upon those, depending on the size of the recovery, the problem is even a small recovery of 10 grand could cause someone to lose their needs-based benefits based benefit, so the challenge for a trial lawyer is it's even the smaller settlements that can cause a problem and ultimately trigger potentially a malpractice claim against them. That's obviously a worst-case scenario and for the lawyers, understanding these issues - which is why I wanted to this book - helps them avoid those kinds of traps and make sure ultimately the client is getting educated, whether they do it or engage experts like myself and my company to educate those clients about what they need to do to make sure that they are fine for the long-term.

Jason Lazarus:

We use this phrase inside of Synergy, "litigation to life." Once somebody settles their case and moves on, hopefully they've got a plan that will last the rest of their lives because most of these people are not going back to work, they're permanently disabled. So the decisions that are made at the time of settlement are so critical, so vital because they're not going to have another bite at the apple, so mistakes that are made can be catastrophic down the line.

Chris Bua:

Yeah, so to piggyback off a little bit about what you just said, you go into great detail in the book on public benefit preservation for plaintiffs. My guess is more than half of personal injury attorneys are not experts on these issues. Do you think that's true and do you have maybe an easy trick or method that attorneys can use to identify that their client needs protection at settlement in order to preserve the benefits that they do have?

Jason Lazarus:

It is a highly specialized area. For most trial lawyers, it's not something that they have been educated about in law school. I mean, you don't learn about that stuff in law school, anyway, it's more theory, but even in continuing education settings for trial lawyers, typically, it's focused on litigation tactics and maybe resolution tactics to get them the most amount of money, but the idea of "issue-spotting" and understanding what to do in terms of the planning side of it, really, there's not much focus on that, which again, going back to what I just said, if it's not dealt with properly, it can have devastating consequences for the future of that injury victim.

Jason Lazarus:

Really, the critical thing to understand when you're a trial lawyer and representing someone that's disabled is if they are disabled within the Social Security definition of disability, then they're going to be getting some type of government benefits, and that's where if they're catastrophically injured or disabled under the Social Security definition, they're going to need this type of planning, so that's your trigger to know, "Okay, if I don't know what to do here, I've got to bring in experts to advise my client about the impact of settlement on their government assistance programs," because that's where the typical mistake is made is failure to protect those different government benefit programs.

Chris Bua:

You've been personally involved with thousands of settlements at this point in your career through different roles, but mostly through being a settlement planner and helping clients decide what to do with their recovery. I've spent my entire career in structured settlements, and now being on the provider side with Independent Life, my opinion is certainly biased, but I think I speak for both of us when I say we truly believe that integrating a structured settlement for at least a portion of the recovery is an excellent decision for most plaintiffs to make. Every case, every client's different, so the circumstances ultimately dictate what the best course of action should be.

Chris Bua:

In your book, The Art of the Settlement, you spend a full chapter on structured settlements, the benefits and protections that they provide plaintiffs and how they're safe. When you sit down with an injury victim and their family, what do you want them to remember about structured settlements when you leave that room?

Jason Lazarus:

Well, I start out now with the fact that I'm a structured settlement recipient. I did this with my own settlement. I believed in the benefits of it so deeply that I did it with a portion of my recovery. I mean, I really want them to understand that it is so critical to make sure that the money is protected and there for them for the long term. They just simply are not going to have another opportunity to make the right decision and that decision of whether you take a portion of the settlement and future periodic payments is a very important decision to make. They need to understand the benefits, they need understand the drawbacks.

Jason Lazarus:

To me, a structured settlement is the cornerstone of any type of comprehensive settlement plan. It may include trusts, it may include other things, but those future periodic payments that are guaranteed, that are income-tax-free, that there's no expense of administration. I mean, that's priceless, and there's so many benefits when you start pairing that with a trust to use it as a funding mechanism because then it reduces your overall expenses of operating the trust because the structured settlement isn't assessed the trustee fees that you would incur, but it's also a way to leverage the tax-free investment vehicle, because any trust is going to have a tax burden to it.

Jason Lazarus:

Most clients that are catastrophically injured, we're typically marrying a trust and a structured settlement for all those reasons, because it really is a powerful combination to make sure the client has the financial peace of mind for the rest of their lives. That's one of the critical things, being able to transfer the risk of outliving your settlement to a incredibly strong financial institution like Independent Life or any of the other structured settlement life insurance providers out there is a huge benefit.

Jason Lazarus:

The fact in our jurisdiction, for example, and there are other states that have this, annuities are completely exempt from legal process, so you've got judgment and creditor protections that are an enhanced way to protect the recovery, so there's so many reasons why when I sit down with a client plan, I want them to really understand all these benefits so that they can make an informed decision as to what to do with that recovery. I do spend some time in the book talking about a lawyer's responsibility to explain this and make sure that the client understands the opportunity to do this because there's some precedent out there for lawyers being sued because they didn't communicate this potential option. It's part of the internal revenue code, so a lawyer has the legal responsibility to explain these matters to clients, and if they don't, there's definitely malpractice risk from failing to communicate about their financial options that are available under the law.

Chris Bua:

Absolutely. Let's switch gears a little bit, pun intended. I mentioned in the intro that you are an avid cyclist. What drew you to cycling and where is your favorite place in the world to ride?

Jason Lazarus:

I love the sport and it's great right now because the Tour de France is going on, which is abnormal. They changed the timing of it due to COVID. The sport itself is one that it's all about overcoming things that you thought were not possible. Riding a hundred miles when you didn't think that you could do it, and mentally, there's always points wherein a ride you're like, "Oh, I can't go any further," and then you do and it gets a little easier and you go, "Okay, I was able to push past a boundary that I didn't think I could do," and I just love the challenge of that.

Jason Lazarus:

When I was younger and started racing, it was me going out and training and had to develop the discipline and self-motivation. Those things have really served me in everything I've done. I think it set the foundation early on for what I could achieve later on down the line, so really, I feel like I owe a great debt to cycling. Of course, the sport almost cost me my life in an accident, but even since then, as soon as I could get back out on my bike after the accident, I was back out on the roads. I rode a trainer within a month of my accident. I was in the hospital for three weeks, so after that I was, I was back on a trainer just trying to get back into it because I loved it.

Jason Lazarus:

I think my favorite place to ride is France. I got the opportunity in 2015 to ride some of the routes that they do in the Tour de France and climbed Mount Ventoux and Alpe D'Huez and Colombier, which are all famous climbs in the Tour de France, and I tell you, the scenery was amazing. Beautiful, beautiful place.

Chris Bua:

That's great. Let's get back into the topics covered in the book. One of the best ways for plaintiffs to maximize their recovery is to aggressively and smartly negotiate with lien holders that have asserted a claim to their recovery over the course of the litigation. I don't think injury victims are negotiating lien payments on their own. I suspect many attorneys don't really like doing it, so can you tell our listeners how Synergy helps in this regard and maybe share an example where Synergy's expertise in lien resolution changed the settlement outcome dramatically for the plaintiff?

Jason Lazarus:

Yeah, I mean, absolutely. I feel like we do that on a daily basis and it's part of our mission to improve people's lives. Every single month, when we do our all-hands meeting, we highlight these types of outcomes because it's so important to us to deliver on that, so our lien resolution group are made up of experts. Most of them have come from the recovery contractors who trial lawyers fight all the time, so knowing the ins and the outs and the tricks to get the best possible outcome does make an incredible difference.

Jason Lazarus:

For lawyers, trying to negotiate and resolve liens is something historically they've done, but frankly, they don't have the time to spend getting the knowledge and keeping up with changes because changes occur very rapidly in the subrogation area, so for most law firms, it's just not a good use of their time, and frankly, presents the opportunity to potentially commit malpractice, so law firms will outsource that to our lien resolution group. Ultimately, because our lien resolution group is led by a lawyer who spent a ton of time on the other side running one of the biggest recovery contractor groups, West Coast Operations. I mean, she just knows how to extract the best possible results and that is a meaningful difference in cases, and ultimately, we have situations where we get a lien completely resolved or Medicare conditional payment completely waived where that means a difference between the client netting zero or netting $100,000 or $200,000. There's so many opportunities to really make a drastic change in someone's life by getting the right results.

Jason Lazarus:

The ERISA plans, the Medicare advantage plans, Medicare itself, I mean, all of these entities have become really aggressive about their recovery rights. The DOJ has been going after law firms about failing to reduce Medicare-conditional payments. Medicare advantage plans have been suing under the double damages provisions trying to get double the lien amount from law firms, PI [personal injury] law firms, and from the insurers, the ERISA plans have been emboldened by the McCutcheon case in the US Supreme Court, so you've got all these things that make it really hard for law firms to get a great result, whereas when you've got experts who are trained in this, and that's all you do day in, day out, you're just naturally going to be able to get better results, and ultimately, for the law firms, it's about mitigating risks, that is critical for their practices, and to get back time.

Jason Lazarus:

The whole COVID crisis, I think, has shown law firms that there are opportunities to become more efficient outsourcing lien resolution to a group of experts like we've assembled, and certainly, there's nobody in the industry that can touch the level of expertise that we've got. It just makes sense for the law firm, and particularly, in most states, the cost of lien resolution is passed along as a client cost, so for the law firm, it's less time an hour spent dealing with those issues and it doesn't cost the law firm, so it becomes a win-win for the law firm.

Chris Bua:

Yeah. Speaking of mitigating risk, as you mentioned, Medicare is one of the biggest minefields to navigate for an attorney. This, I think, is due in large part to Medicare having a lack of formal guidelines for liability cases. They have really great formal guidelines for workers' comp claims. You spend by my count in the book eight chapters on Medicare alone. Why do you think that Medicare doesn't have formal guidelines for liability cases? Do you think they will have them and how should the guidelines differ? If they do institute guidelines, how should they differ from workers' comp claims, if at all?

Jason Lazarus:

I don't have a great answer of why they have not regulated in this area because I think it's really dangerous for them. Now, they are the ultimate arbiter of the Medicare Secondary Payer Act and they've interpreted it as requiring a Medicare beneficiary to set aside money so as not to shift the burden under the Secondary Payer Act to Medicare when they recover damages for future medicals. Medicare has a couple of times tried to issue formal regulations in this area. The guidelines they have in workers' comp are just that, they're guidelines, it's policy.

Jason Lazarus:

CMS can change, I mean, they've done that, which makes it tough for people in the industry, so it really is pretty critical that they actually formally issue regulations, so there is a current process going on. We were told that we could expect something in August, and of course, August came and went without guidance, and that's been pretty typical of what we've seen in the past. My hope is ultimately we'll get that guidance. It's got to defer more comp because in workers' comp cases, the workers' comp carrier is liable for 100% of future medical and when they settle those cases, they settle it for whatever that Medicare set aside is, plus indemnity.

Jason Lazarus:

PI [personal injury] third-party liability cases don't get resolved that way. They're resolved very frequently either with no dollars being paid towards future medical or a significant compromise that doesn't take into consideration all of the future medical because there could be liability issues or causation, so there has to be a system to deal with that particular issue. It's critical and probably a threshold, having a low-dollar threshold, maybe 250,000 or 500,000 or maybe even a million in that. If you're below that, you don't have to worry about these issues because Medicare, they really don't have the resources to deal with these issues as it currently stands.

Jason Lazarus:

You tell Medicare, or Medicare decides now that every case needs some type of allocation or some type of analysis, then Medicare would get buried, so I think they've got to be careful what they wish for. We provided some input the last time when they asked for industry input. They've not done that yet in the process here. Hopefully they will, because I think they really do need to hear from not only the trial bar, but the insurers, too, because this is an area where trial lawyers never want to rely upon the other side.

Jason Lazarus:

But I do think that you do need to be a bit collaborative with the other side when it comes to Medicare, at least at settlement, because with mandatory insurer reporting and all of this information getting transmitted by insurers to Medicare, trial lawyers really have to understand what's being reported and how it's being reported and dealing with all these Medicare issues in a collaborative sense when the case resolves is really going to be critical for the future because right now, that's not happening, and what happens is is lawyers will get releases with pages and pages of Medicare language and we get the reach out, like, "What do we do with this? Does this make sense?" That system isn't workable. I think for the future, you've got to develop a system where the parties can work collaboratively on Medicare-related issues.

Chris Bua:

Yeah, I absolutely agree. One of the last chapters of The Art of Settlement deals with attorney fee structures. Through legal precedent, attorneys have access to one of the most generous tax breaks in the United States and my team has surveyed attorneys and found that over 80% of them don't even know that they can defer their fee and take advantage of this tax break. First, why do you think that is, and second, can you maybe share with our listeners an example of an attorney or a law firm that you consult for that takes advantage of this opportunity and how they do it?

Jason Lazarus:

Yeah. I added this into the book, even though it doesn't really fit because I thought it was just so critical to educate lawyers about this potentially great way to smooth out the income that trial lawyers get and defer taxation. So, the whole reason I included it was because a lot of lawyers just simply don't know about the availability of attorney fee structures and tax deferral opportunities that they have. It's a unique thing that only trial lawyers have access to, so I don't know why they've not understood these options.

Jason Lazarus:

Perhaps it's a bit on the industry itself for not educating as much as perhaps they could have on this issue, but I think that trial lawyers are trying to manage their practices and sometimes don't think about necessarily this idea of putting some money away, but the law firms that do do it, the ones I've worked with, and one in particular that I did a ton of planning for, what they did was they just took small chunks of fees, $25,000 here, $50,000 here, a $100,000 here, and they might be making a million-dollar fee or a $3 million fee. They're just taking small chunks, putting it away. You do that over 10, 15, 20 years, you're building up a huge nest egg.

Jason Lazarus:

Every everybody's portfolio should have some fixed income. This is fixed income, but it's pre-tax and tax-deferred. I mean, that's just a no brainer. Yeah, it's more conservative, but that's the idea of having a fixed income portion of your portfolio, so for trial lawyers to not avail themselves of this in a systematic way, to me, they're missing a huge opportunity to do some tax-planning that there's just no other way to do it. That was why I felt it was really critical to include that chapter in the book and my hope is it helps to educate more lawyers about the opportunity to do this when they're resolving cases.

Chris Bua:

Yeah, so we are at the end of the podcast, we have one final question, which we ask every guest, and that is: What do you know now that you wish you knew five or 10 years ago that would have made a real difference in your career and with the clients that you help?

Jason Lazarus:

Well, I guess I would go back to my accident. It's eyeopening. Even though I had spent years and years and years sitting in mediations, talking to families, talking with people that have been injured, until you walk yourself down that path, you really truly don't understand what someone goes through. When I woke up in the hospital not knowing where I was, not knowing what had happened to me, and I had significant facial injuries and wound up on a ventilator and my jaw was wired shut, so I couldn't talk, I couldn't communicate, and it's a scary thing to wake up, not know what's happened to you, be in pain, and then go through everything that you go through as an injury victim.

Jason Lazarus:

Learning about that just gave me insights into what clients I deal with have gone through and I've used it internally in our company. Every new person that gets onboarded into the company, I do a session with about our corporate values and about our mission. The mission is all about helping to improve lives and I go through my accident, what I experienced, pictures of it, and saying, "I was a lucky one. My accident in comparison to what many people go through is minor, so be mindful of the fact that every person we work with has gone through something pretty horrific if they're working with us. They might have had a family member killed, they might now be in a wheelchair, or it could be a loved one that's so severely brain-injured that they can't function independently anymore. That's a devastating thing to go through."

Jason Lazarus:

I just know from my experience, I think it's just helped me better understand and be truly empathetic and understand what people have gone through by the time they're sitting in a mediation to try and resolve their case, and frankly, there's, there's so many emotional issues attached with that. I'd seen it in the looks of people's faces, but when you are sitting in mediation, I actually did my damages presentation to the adjuster and to the defendant and there's something truly emotional and there's this connection and catharsism about that, so experiencing all those things, I think, for me, has truly, really made a difference ultimately in not only how I approach things, but our company as a whole, because I am so motivated to make sure I get that message across every person of our team, that they understand truly the importance of the mission, the importance of what you guys do. It is a critical mission and a critical function and population that we're serving and it's opportunity to make a positive difference in somebody's life after they've been through something catastrophic.

Chris Bua:

Jason, I really appreciate you coming on Settlement Nation. Can you let our listeners know how they can get in touch with you?

Jason Lazarus:

Yeah, absolutely. My email address is jason@synergysettlements.com. Our website is synergysettlements.com. I do a lot of free consultation. I do think if as a trial lawyer, you pick up that Art of Settlement book, it's going to help you really be able to "issue-spot" and also understand some of these issues that can get pretty complicated, so I would encourage you to pick up that book because I think it really will help in terms of your representation of catastrophically-injured clients.

Chris Bua:

Yeah, I would agree. I think it's a must-read for any attorney that's working these types of cases. It's going to help your clients and help you tremendously.

Chris Bua:

I want to thank all our listeners for downloading and listening to the episode. Don't forget, subscribe, like, and review our podcast. It really helps more people find us when they search for legal content on their preferred podcast platform and we will see you next time on Settlement Nation.