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I believe a personal injury attorney has an ethical obligation to advise a client about the option to structure their settlement.  I think it is fundamentally different then giving investment advice.  The option to structure a settlement is provided for in the Internal Revenue Code and is supported by IRS PLRs.  It is an option available under the law and failure to advise the client about their legal options could be actionable malpractice.  Failure to advise about the option prevents the client from exercising the option as once settlement occurs and the client takes receipt of the funds, a structured settlement can’t be set up at that point (constructive receipt has occurred).  The only case I know of that has been publicized about failing to advise about a structured settlement is the Grillo case out of Texas.  Grillo was a medical malpractice case where the lawyers didn’t protect the child’s Medicaid eligibility and failed to give advice about a structured settlement.  A legal malpractice case ensued.  Clearly the failure to set up an SNT to protect Medicaid eligibility was malpractice.  However, the other allegation was that the plaintiff attorneys were negligent in causing constructive receipt and failing to fully and properly inform the victim’s mother of the tax free benefits of a structured settlement with a qualified assignment and rated age.  The case settled for 1.6M against the plaintiff attorney and 2.5M against the GAL in the case. 

In my opinion, the PI lawyer has to explain the laws that impact settlement to the client.  Failing to provide the advice means the client can’t make an informed decision and there is no opportunity to exercise options available under the law.  Damages can flow from the failure to provide advice.  The client loses the protection that Section 222.14 provides for annuities.  The client loses the ability to have cost-free financial management for a portion of their recovery.  They lose the tax-break structured settlements are afforded.  If you look at the ABA Model Rules of Prof. Conduct you can make the argument that there is such a requirement. 

I disagree that a lawyer can arbitrarily draw the line as to which cases are appropriate or not appropriate for a structured settlement.  There are reasons that the elderly might want to structure their settlements.  For example, it can provide income tax-free payments to their heirs and manage the assets for the heirs.  Fully competent adults decide all of the time to structure their settlements because of the benefits that the product offers. 

Those are just my opinions on the subject and I don’t know of any guidance from the bar.  I don’t think there is an obligation to insist upon a structure and that probably is never a good idea.  I just think the option has to be presented to the client.  Structured settlements are done all of the time with small amounts (as little as 10k) in minor settlements.  A small structure can be done so there really isn’t a guideline; it is fact and case dependent. 

I wrote an article on the ethical obligations at settlement that was published in the Florida Justice Association journal.