Frank C. Kilcoyne, CSSC

Experience is The Best Teacher

Are there any lessons to be learned from being involved in a personal injury lawsuit? Of course there are, but the adversarial process often makes learning more difficult. After all, isn’t winning/defending compensation a matter of proving it was the other guy’s fault? Truth be told, the best lesson of all is to stay out of harm’s way in the first place.

This may seem easier said than done for an injured claimant who was minding his or her own business when wiped out by an inattentive driver or negligent manufacturer. Yet even in blameless situations, valuable lessons can be learned. For example, in general: don’t ride in the back of pickup trucks; stay off the road after 2:00 AM on Friday nights; and, if you have a family, always carry life insurance.

What about defendants? They never intended to hurt anyone; that’s why they call these “accidents,” right? Well, even here, most cases offer wisdom for future conduct: when your friends try to take your car keys away, maybe you should give them up. If a design element of your company’s new product is worrying you, maybe you should speak up. And, when it comes to protecting yourself by carrying adequate liability insurance, always be sure to pay up. Liability insurance coverage always looks mighty cheap after an accident has occurred.

My point is this: we may call them “accidents,” but most compensable personal injury claims are preventable. Some, gallingly so. In life, it just makes sense to pay attention to what goes on around you and to learn from other people’s mistakes.

You see this in finance all the time: people make the same horrendous mistakes over and over again - usually due to lack of experience. Take sports stars and lottery winners: sudden big money combined with zero financial experience often leads to catastrophic financial failure.

These situations are not only tragic, but they can be highly embarrassing as well. When basketball great Charles Barkley was once asked what the biggest financial mistake he ever made was, he answered: "The biggest mistake I made was trusting [other] people with my money," Barkley said, "My first agent was a scum bag who stole all my money." Barkley says the lesson he learned was to pay closer attention to his finances and take precautions even with his closest allies. "You should get your money audited every year, because money makes people do crazy things," he added.(1)

But Mr. Barkley is actually one of the lucky ones. He had two rare things going for him: a lengthy NBA career and the guts to admit his mistakes. Being able to admit his mistakes enabled him to learn from them; his lengthy career meant he had a way to replenish lost funds, recover, and continue on a safer course.

How “unlucky” can a person be? Well, in large personal injury settlements, you would have to answer “mighty”: it’s not uncommon at all for injured claimants to emerge from a catastrophic injury lawsuit only to plunge headlong into financial disaster.

What I’m talking about here is the utterly preventable secondary injury of dropping a ten-ton load of cash on a person with little-to-no financial experience – which is most injured claimants. The time and expense pressures of the litigation resolution process mean that the majority of recovering claimants are never informed that they had any choice other than cash in how to receive their recovery.

Suffering a physical injury is a hugely de-stabilizing life event. So is receiving a single outsized sum of cash. How on earth does it make sense to try to cure one knockout blow with another? It doesn’t. And yet this remains the standard practice and the wreckage continues.

As with most claims themselves, it doesn’t have to be this way. A settlement can be planned which releases funds over time, allowing claimants to earn a “Barkley Second Chance.” Rather than sink them at the outset with one large cash cannonball, you can create a custom-designed structured settlement which releases funds in more manageable doses. Will they make mistakes with their money? Of course! But, the damage will be limited in amount and you will have put into place for them a source of replenishment.

And when you do this, do claimants actually learn from their mistakes? Absolutely. Time and again we learn that much of the initial cash provided at settlement to a claimant was quickly stripped away by dubious friends, greedy relatives, lack of spending discipline, or hideously simple-minded investment schemes. But…the key thing here is that they all survived to tell us about it. Sure they blew money early on, just not all of it, and they became much more careful with how they handled future distributions.

As you may have noticed, I have not stressed tax benefits here. Those benefits are real and they are incredibly valuable. But as I enter my third decade of sitting at people’s kitchen tables and helping them design meaningful settlement plans, more and more I am coming around to a belief that the greatest benefit of structured settlements is not profit, but protection.

It seems that even old structured settlement guys can learn from other people’s mistakes.

Do you have a case nearing settlement? Want to maximize the value of available funds while preventing double disaster? Call Frank C. Kilcoyne, CSSC at 800-544-5533, I am here to help.


(1) “Money Mistakes: What these NBA Standouts Learned”, Jessica Golden | Eric Chemi CNBC, Friday, 11 Mar 2016