Structured settlements and a connection to, you guessed it, benchmarks

NYU’s Law School Mag., Fall 2010 at 89, has a piece about the research of a Tax Policy Fellow regarding structured settlements. With a structured settlement, “a defendant agrees to resolve a personal-injury tort claim with periodic payments over time rather than with a lump sum.” Defendants enjoy tax subsidies when they enter into a structured settlement (See my post of Oct. 14, 2005: impact of structured settlements; and Oct. 30, 2005 #1: structured settlements.). A similar arrangement is possible with qualified settlement funds.

My reason for including this esoterica of litigation and tax is to point out that total costs of resolution need to factor in structured settlements. I suppose the best way is to discount the payment stream after taxes and include it in the year of the agreement. Second, to the degree that these kinds of settlements occur, estimates by law departments of their resolution costs are more complicated.