Opinion 07-41

June 7, 2007

Digest:         A judge may (1) require plaintiffs’ attorneys to include a proposal from the plaintiff’s structured settlement broker in an application for approval of a structured settlement for an infant or an impaired person; and, (2) may provide counsel with a list of brokers known to the judge and/or contact information for the National Structured Settlement Trade Association, or any other association known to maintain a list of structured settlement brokers. The judge should not endorse any specific structured settlement broker, however.

Rules:          CPLR 1207; 22 NYCRR 100.2(C); Opinions 05-38; 04-14; Joint Opinion 95-14 and 95-21 (Vol. XIII); Valdimer v. Mount Vernon Hebrew Camps, Inc., 9 N.Y.2d 21, 24 (1961).

Opinion:

         A judge regularly presiding over structured settlements for infants, incompetents and conservatees, asks if he/she may ethically require plaintiffs’ attorneys who submit an application for approval of a structured settlement for an infant or an impaired person to include in the application a proposal from a structure broker that the plaintiff selected, as opposed to one selected by the settling defendant’s insurance carrier. The Rules promulgated by the inquiring judge for settling claims by infants and impaired persons provide that “obtaining an independent competing broker is not a useless precaution. Unfortunately, there have been instances, where, when using a defendant selected broker only, that (sic) abuses have occurred; and plaintiffs did not get the best deal available. (citation omitted).”

         The judge also asks if it is ethically permissible to provide counsel with a list of between five and ten brokers known to the judge and/or provide counsel with contact information for the National Structured Settlement Trade Association or other association known to maintain a list of structured settlement brokers.

         Pursuant to CPLR 1207, a court may order settlement of an action commenced by or on behalf of an infant, incompetent or conservatee. This statute is intended to “. . . safeguard the rights and interests of infants by empowering the courts to scrutinize the facts regarding the propriety and reasonableness of the proposed settlement of an infant's claim.” Valdimer v. Mount Vernon Hebrew Camps, Inc., 9 N.Y.2d 21, 24 (1961).

         The Rules Governing Judicial Conduct state that “a judge shall not lend the prestige of judicial office to advance the private interests of the judge or others. . .” 22 NYCRR 100.2(C). In the past, this Committee has concluded that “no ethical bar exists to the use of courthouse space to publicize availability of legal services for litigants, as long as it is clear that the court is not making an official recommendation of a particular provider or service.” Opinion 04-14. A judge therefore may permit the display of brochures promoting a not-for-profit mediation corporation in the court waiting room. Id. A judge also may permit a county bar association to make a directory of attorneys available in the courtroom that includes the attorneys’ contact information and areas of practice. Joint Opinion 95-14 and 95-21 (Vol. XIII).  

         Although a judge reviewing a proposed structured settlement buyout may not advise an applicant that better terms may be obtained from a specific company (Opinion 05-83), we see no ethical impropriety in the inquiring judge’s practice of requiring plaintiffs’ attorneys to include, with an application for approval of a structured settlement for an infant or an impaired person, a proposal from a plaintiff’s structured settlement broker; nor do we see impropriety in providing counsel with a list of brokers known to the judge and/or contact information for the National Structured Settlement Trade Association or other association which maintains a list of structured settlement brokers. These practices are consistent with the court’s statutory obligation to determine that the transfer is in the best interest of the payee. In addition, so long as the judge avoids endorsing any specific structured settlement broker, he/she will not violate section 100.2(C) of the Rules Governing Judicial Conduct.