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Whether or not they are good deals is a secondary question to whether or not the people signing the contracts have any idea what is going on. The article makes

Whether or not they are good deals is a secondary question to whether or not the people signing the contracts have any idea what is going on. The article makes it pretty clear: the legal protections are too weak, and severely impaired people are signing documents they don't understand. It's easy to construct scenarios where the closing prices are fair - even generous. It's also totally irrelevant.

reader5000 11y ago
Fair enough. I am not familiar enough with lead poisoning to understand the degree of mental impairment, but you are getting to a gray area where you're saying people with lead poisoning shouldn't be allowed to handle their own finances nor enter contracts etc.
- dangerlibrary 11y ago
  It is both the degree of mental impairment, and the legal protections put in place. These people ostensibly have an "independent advisor" who makes sure they understand the settlement. That should be enough, even for an impaired person who can't read but is capable of basic decision making. But there are judges who accept a sixty second phone call as sufficient. Even if the seller is an illiterate person being asked if they understand the ramifications of a 12 page legal document. And even if the "independent advisor" has done dozens of deals with the buyer before, and has no other clients. This is a local article. Many of the problems it points out are specific to the weak legal protections in Maryland. It calls out specific people and companies, and specific conflict of interest issues. Talking about structured settlement pricing or mental impairment in the abstract really isn't relevant. Also, maybe read the whole article before commenting.
  - reader5000 11y ago
    Well I hope you never get lead poisoning and want to liquidate your settlement and a judge doesn't let you because she thinks you're too dumb to understand the deal. Also, this isnt a Maryland internet forum so the article's only relevance is in the abstract. Maybe check what forum you're on before commenting.
    - dangerlibrary 11y ago
      re: abstract discussions - you're right, of course. But "net present value with a twist" wasn't the title of this article, and I suspect it's not why it was voted to the top. re: my hypothetical lead poisoning woes - I would want an effective, truly independent advisor to explain the deal. I would want a requirement that I show up in court, and that the judge verify that I exist, and am capable of making decisions. These aren't tall legal barriers - they are the law in many other states. This article exposes some weaknesses of the Maryland regulatory regime.
    - brazzledazzle 11y ago
      Are you being intentionally obtuse? We all know articles like this rarely give you both sides of the story but amidst the emotion in this article are facts which demonstrate a very clear picture of shady business practices and obviously unethical behavior. The legality is certainly questionable but you can't seriously consider the company in the article to be providing a legitimately useful service to these people. I hope this is some kind of contrived case of devil's advocacy or blind obsession with an economic ideal on your part because if not your moral compass needs some serious tuning.
      - dang 11y ago
        > Are you being intentionally obtuse? [...] your moral compass needs some serious tuning Please don't include personal attacks in HN comments, even when another person seems obtuse. This comment would be fine with just the second and third sentences.
e28eta 11y ago
The article said structured settlements are preferred over lump sums specifically because these individuals wouldn't do well with a lump sum. I think it would be really interesting to compare what the lump sum value would have been against the structured settlement buyout value, and that could be a reasonable approximation for whether or not the price is fair.
- IkmoIkmo 11y ago
  No need, you can just value it. It's pretty basic discounted cash flow analysis you learn on your first day of college if you study finance or something like that. And if you apply it you can see you lose almost $1.4m by forgoing the settlement payments for $63k in a typical investment context. Without an investment context (i.e. comparing investing $63k for 35 years, to investing the settlement payments for 35 years, which is the valuation for the company that ripped her off), the nominal amounts are such that she sold $573k of payments for $63k. And that $573k in today's dollars is worth about $340k. She didn't even get 20c on the dollar. It'd literally be like you forgoing your $70k annual salary for the next 35 years, for a one-time payment of $250k. And I'm referring to a unique type of salary of $70k that is guaranteed and requires 0 hours of work. She sold it off for $250k because of a combination of a normal person's ignorance of finance and the fact she's mentally handicapped, too. It's an absolute disgrace and the fact her lawyer didn't have alarm bells going off is quite sad. I'd have easily given her double and I'd still make hundreds of thousands of profit, without any real effort. Hell I could just resell the contract the next day to lines of investors willing to pay even more, including the company that ripped her off. That's how bad the deal was she got.
Lawtonfogle 11y ago
>and severely impaired people are signing documents they don't understand. How many people understand their cell phone contract? The ToS for Facebook? Their work contract? If we voided contracts that aren't understood well enough by both parties, we would fundamentally alter our society. (Though maybe that is a good thing in the long run.)

reader5000 11y ago

Fair enough. I am not familiar enough with lead poisoning to understand the degree of mental impairment, but you are getting to a gray area where you're saying people with lead poisoning shouldn't be allowed to handle their own finances nor enter contracts etc.

dangerlibrary 11y ago
It is both the degree of mental impairment, and the legal protections put in place. These people ostensibly have an "independent advisor" who makes sure they understand the settlement. That should be enough, even for an impaired person who can't read but is capable of basic decision making. But there are judges who accept a sixty second phone call as sufficient. Even if the seller is an illiterate person being asked if they understand the ramifications of a 12 page legal document. And even if the "independent advisor" has done dozens of deals with the buyer before, and has no other clients. This is a local article. Many of the problems it points out are specific to the weak legal protections in Maryland. It calls out specific people and companies, and specific conflict of interest issues. Talking about structured settlement pricing or mental impairment in the abstract really isn't relevant. Also, maybe read the whole article before commenting.
- reader5000 11y ago
  Well I hope you never get lead poisoning and want to liquidate your settlement and a judge doesn't let you because she thinks you're too dumb to understand the deal. Also, this isnt a Maryland internet forum so the article's only relevance is in the abstract. Maybe check what forum you're on before commenting.
  - dangerlibrary 11y ago
    re: abstract discussions - you're right, of course. But "net present value with a twist" wasn't the title of this article, and I suspect it's not why it was voted to the top. re: my hypothetical lead poisoning woes - I would want an effective, truly independent advisor to explain the deal. I would want a requirement that I show up in court, and that the judge verify that I exist, and am capable of making decisions. These aren't tall legal barriers - they are the law in many other states. This article exposes some weaknesses of the Maryland regulatory regime.
  - brazzledazzle 11y ago
    Are you being intentionally obtuse? We all know articles like this rarely give you both sides of the story but amidst the emotion in this article are facts which demonstrate a very clear picture of shady business practices and obviously unethical behavior. The legality is certainly questionable but you can't seriously consider the company in the article to be providing a legitimately useful service to these people. I hope this is some kind of contrived case of devil's advocacy or blind obsession with an economic ideal on your part because if not your moral compass needs some serious tuning.
    - dang 11y ago
      > Are you being intentionally obtuse? [...] your moral compass needs some serious tuning Please don't include personal attacks in HN comments, even when another person seems obtuse. This comment would be fine with just the second and third sentences.

e28eta 11y ago

The article said structured settlements are preferred over lump sums specifically because these individuals wouldn't do well with a lump sum. I think it would be really interesting to compare what the lump sum value would have been against the structured settlement buyout value, and that could be a reasonable approximation for whether or not the price is fair.

IkmoIkmo 11y ago
No need, you can just value it. It's pretty basic discounted cash flow analysis you learn on your first day of college if you study finance or something like that. And if you apply it you can see you lose almost $1.4m by forgoing the settlement payments for $63k in a typical investment context. Without an investment context (i.e. comparing investing $63k for 35 years, to investing the settlement payments for 35 years, which is the valuation for the company that ripped her off), the nominal amounts are such that she sold $573k of payments for $63k. And that $573k in today's dollars is worth about $340k. She didn't even get 20c on the dollar. It'd literally be like you forgoing your $70k annual salary for the next 35 years, for a one-time payment of $250k. And I'm referring to a unique type of salary of $70k that is guaranteed and requires 0 hours of work. She sold it off for $250k because of a combination of a normal person's ignorance of finance and the fact she's mentally handicapped, too. It's an absolute disgrace and the fact her lawyer didn't have alarm bells going off is quite sad. I'd have easily given her double and I'd still make hundreds of thousands of profit, without any real effort. Hell I could just resell the contract the next day to lines of investors willing to pay even more, including the company that ripped her off. That's how bad the deal was she got.

Lawtonfogle 11y ago

>and severely impaired people are signing documents they don't understand. How many people understand their cell phone contract? The ToS for Facebook? Their work contract? If we voided contracts that aren't understood well enough by both parties, we would fundamentally alter our society. (Though maybe that is a good thing in the long run.)