September 11, 2009
RWE Private Wealth, a recently-launched Orlando multi-family office, has rolled out Law Firm Advisory Services, a sub-division designed to garner investment clients among personal injury lawsuit winners. The firm will network with personal injury law firms to gain referrals to accident victims who have won large settlements, in order to put their cash into long-term investments. The firm will relax its $5 million investment minimum for this initiative, which has already yielded a $3 million client.
This program is predicated on the fact that recipients often squander their cash. Also, many plaintiffs who receive structured settlements designed to provide lifetime income streams, are vulnerable to offers of instant lump sum payouts, at huge discounts to their settlement.
“These aren’t business owners; they’re people who came across the money because of a catastrophic injury, and, unfortunately, they usually don’t come to the table with strong fiscal education,” explains RWE principal Seth Ellis. The firm will set up clients with a palate of investments, including annuities and fixed-income investments, and will park their excess funds in trust accounts with Raymond James as trustee.
The inspiration for this program unfolded over a conversation between Ellis and his old college friend John Morgan, a partner at Orlando personal injury law firm Morgan & Morgan, which RWE has aligned with for this initiative. Morgan says he’ll get no kickback from this arrangement, but thinks it’s a worthy cause, especially following the recent Wall Street crisis. “After AIG, I became particularly concerned that a client could get structured money from an insurance provider that would go defunct. I’m suspect of everything now,” Morgan notes. “And those folks on TV who say they’ll buy your settlements outright, but for a huge discount? They’re loan sharks. Their behavior would embarrass Tony Soprano.”
For lawyers, the upside is delivering additional post-trial service to the client and building up a relationship that may cause the client to put in a good word with friends or acquaintances. Ellis says he’ll charge the same 1% management fee he charges typical family office clients. Once the program is fully up and running, Ellis says he’ll approach other law firms in an attempt to set up similar arrangements. –Andrew Bloomenthal