LETTERS: `Bottom-up' legal settlements

Sir: Grania Langdon-Down's article on structured settlements (3 April) was very timely, given that this method of paying damages in a personal injury claim was given a major fillip by the Finance Act, 1995. This enabled the annuity payments to be made directly from the life insurer to the plaintiff, rather than through the defendant insurer, effecting considerable savings in administrative costs and tax for the insurer. Further useful changes are on the way in the Damages Bill, which will shortly begin its passage through Parliament.

However, the article was somewhat misleading in suggesting that arranging a structured settlement from the bottom up, rather than the top down, is new. Both approaches have been adopted by solicitors and insurers for some time and it is arguable whether they are radically different. Generally, those advising the plaintiff will need to consider the potential size of any lump sum the plaintiff may receive, in order to be able to evaluate the advantages of resolving the claim by a lump sum, or in whole, or in part, by a structured settlement. While the bottom-up needs-based approach certainly has advantages in cases where liability is disputed, or there is an element of contributory negligence, or where life expectancy is reduced, the plaintiff certainly needs robust and independent advice on whether the annuity package on offer from the insurer is in his or her best interests.

Suzanne Burn

Secretary, Civil Litigation Committee

The Law Society

London WC2