Personal Injury

Lawyers should provide planning options for settlement funds

By Kirsten McMahon, Associate Editor

When a personal injury matter settles or is successful at trial, plaintiff counsel should assist clients with their next steps, Toronto critical injury lawyer John McLeish tells

“Some lawyers give their clients the cheque, shake their hands and wish them good luck. This is a recipe for disaster for someone who doesn’t know how to handle money,” says McLeish, a partner with McLeish Orlando LLP. “I think there’s a responsibility for plaintiff lawyers to advise and assist clients about their various options.”

McLeish says a client may receive a substantial settlement and think they’re rich. He says he will encourage them to pay off any mortgage or credit card debt as well as seek investment advice from the right investment manager.

"Some clients think they are doing the smart thing by putting the money in a Guaranteed Investment Certificate at a bank. They are not," he says. "If the bank pays two per cent a year and inflation is 2.5 per cent a year, the value of the capital will erode over time.

"As well, at such a low return every year, there is a lost opportunity cost," McLeish says. "If a person should be getting a return of eight per cent a year and they are only getting two per cent, the difference of six per cent can mean hundreds of thousands of dollars or more over the person's lifetime."

In some cases, a structured settlement involving the purchase of an annuity may be the appropriate way to protect a person from prematurely spending their funds. The major benefit of this type of financial plan is that it's a tax-free guaranteed payment for a plaintiff’s lifetime or a certain period of time.

"The problem with a structured settlement is that the rate of return on funds is low. As well, there is a loss of flexibility as the injured person usually receives annuity payments monthly or quarterly," McLeish says.

He says he gives clients a standard letter with information about investing their settlement and what to take into consideration when choosing a financial advisor. “We’re also happy to provide referrals to specific investment managers,” McLeish says.

Depending on the amount and the client’s personal situation, a lawyer may also provide further information about family and estate law considerations.

“A client’s estate planning may need an update,” he says. “A domestic contract might be prudent as well.”

McLeish says his clients know that even though their file may be closed, his door is always open.

“You’re a client for life,” he says. “Don’t be shy, call us whenever you need us."

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