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Structured Settlements: An Emergent Study


There are some law students and presents we typically we receive every few years. We must give a very positive shout out to Richard Lewis of the Cardiff Law School as he is across the pond in London writing up excellent literature on civil litigation, tort, personal injury, damages, structured settlement, liability insurance, taxation, and the structured settlement annuity business. We have tried our best to make the dissertetion readable and understandable and again thank Richard Lewis of Cardiff for his 1993 writeup seen below.

A structured settlement is a new way of paying common law damages for personal injury or death. Instead  of offering  compensation  only in the form of a lu mp sum, a structure allows a series of pay ments to be made over a period of time. The compensation is usually linked to investment in life insurance, with liability insurers purchasing annuities upon the lives of plaintiffs in order to fund  their  obligation  to  make these periodic payments. T'he concept 1 has been analysed in detail else­ where. It has been described as the most importa nt reform of danuges made in recent times .2 It is now the subject of a La w Commission con­ sultation pa per, 3 and fur ther reforms to encourage this form of settle­ ment a rc likely. Judges, including the Master of the Rolls, ha ve strongly supported the development. 4 Leading  Q.C.s have recently  described it as "a powerful instru men t in the hand of experienced advisers. "5 There-



1 The defendan t's insurer, usuall y after ha ving informall y agreed a lump sum figure with the plaintiff , wil l agree to con vert part of the da mages into a series of periodic payments. To fund the arrangement the insu rer  purchases an annuity from a life office. The payments are "stru c­ tured" to meet the plaintiff s needs a nd a re free of tax in his hands. This is because the Revenue ha ve accepted that they may be considered instalments of ca pital rather than income. In return for making this a rrangemen t the insu rer will bargain for a discount on the conventional lump sum figu re. The major advan tage of this is that both parties gain financially: the insurer is able to purchase an an nuity for less than the a mount he would otherwise have to pay as a lump sum; and the plainti ff, in the longer term, recei ves more money than if he had invested the lump surn himself. He can also be assured of a continuing stream of payments which, if necessary, may be inflation-proofed  and continue for the rest of his life.

2  Lewis,  "Pensions Replace Lu m p Sum Damages" (1988)  1 5 Joumal  of Law and Societ y  392.

3  "Stru ctu red Settlements And In terim And Provisional  Da mages," Consultation  Pa per No.

125, Novem ber  1992, reviewed  in (1993)  137(2) Sol. J. 36.

4 Butl er v. Vann, unreported, J uly 9, 1991. In a television docu mentary about the recipient of a particular struct ured settlement Lord Donaldson stated: "Where the sums are sufficiently la rge I shall always advocate that they be considered. " BBC film, "Heidi-Caring For Life," broadcast Jan uary 10, 1992. Simila r rcrna rks were made, for exa m ple, by the judge in M oxon v. Senior, unreported, J uly 10, 1991. He st1ggcsted that in any case coming before him for appro­ val he would need to be satisfied that the parties had fully investigated the possibility of struc­ turing.

5  Glasgow  el  al.,  "A lesponse To The  Proposals  On  Structured  Settlements"  [1993)  (1)



Structured Settlements: An Emergent Study                



fore, in spite of the dearth of academic literature on the subject, 6 the basic concept behind the structure is now well known to leading per­ sonal injury practitioners. However, there is little understanding of the history of structures, and there are many misconceptions as to how structures came to achieve their present prominence.

This article seeks to dispel some of those misconceptions by looking at the original of structures in the United States, and how the concept came to be transplanted to this country. The Association of  British Insurers (A. B.I.), although important, was not the only or  even  the major stimulus to the development. Nor did Frenkel Topping, the intermediary responsible for over 80 per cent. of present structures, pla y a significant part at the very beginning. Instead this article notes as the main catal ysts other companies and individ uals, and in particular, it des­ cribes the active role taken by the Revenue in encouraging the reform.

The article also iden tifies the first cases to be structured in this country. It is again wrongly believed that the much pu blicised 1989 case of Kell y v. Dawes7 was the first. Instead the handful of cases privately pu t in place in the early years are all identified here. They are particularly interesting in so far as they expose the firms and individuals who were involved in structuring, and how they came to be so. An  attempt  is made here to trace the influences u pon the legal and insurance pro­ fessions which led to growth of structuring, although no detailed con­ sideration of the actual merits of the concept is discussed.

The article is of necessity socio-legal in nature. It deals with a rnajor reform oflaw which did not originate from new legislation or case law. There is still no official law report of any structured settlement case. Instead many of the sources upon which the author has relied are u npub­ lished. These comprise transcripts of cases, proceedings of conferences and files and case reports from. a variety of firms and organisa tions. In addition the author has interviewed many of those involved wi th the early development of structures. It is not possible to acknowledge the origins of all the informa tion used here: some of it has been gained from sources wishing to remain anonymous.

1. Structures in the United States of America

Structures were being used in North America at least a decade before they emerged in Britain.  However,  it is uncertain  when the first struc-


6 But see m y previous articles "Pensions Replace Lum p Sum Da mages"(1988)  1 5 journal  of Law and Society 392, "The Case For Structured Settlements" (1991) 141 N ew L.  J.  1419, "Structured Settlements In Practice" (1991) 10 C.].  Q. 212,  "Structured  Settlements  In  Britai n And  Canada"  (1993)  42 L C. L.Q.  780,  "Legal  Limits  U pon  Structural  Settlemen ts"  (1993)  52

C.L.J. 470,  and "The Merits Of A  Structured  Settlement: The Plain tiff s Perspective"  (1993)

O.J.L.S SJO. For other academic reviews of developments in  this country sec Allen, "Struc­ tured Settlements " (1988) 104 L. Q.R 448, and Scott (1988) 7 C.J.Q. 99. The articles by prac­ titioners are detail ed in later footnotes. In addition, two books ha ve now been published; L S. Gold rcin and M. de Haas (eds.), Stnictured S ettlements-A Prartical Gi1ide, and R. Lewis, Stnic­ turcd Settlements: The Law And Practice (1993).

7  Times Law Reports, September 29, 1990.




20   Civil Justice Quarterly


tured settlement as we now recognise it was put in place. Uncertainty arises partly because the basic concept behind the structure has been used in the United States for very many years; it lies at the heart  of  its workers compensation legislation. Employers have been able to provide the pensions required by this legislation by arranging  cover  from insurers, and this can involve the purchase of annuities. In  addition, similar tax benefits now exist for these workers compensation payments as for structures. 8 It may be that structuring was encouraged by certain insurance claims managers who had had experience of settling workers compensation cases. Bu t generally the use of the pension in these cases long pre-dated the development of structuring as we recognise it today, and seems to have had only an indirect connection with it.

A somewhat closer  precedent  for  the  development  of  structures invol ved the settlement in the 1960s of the few Thalidomide cases to affect North America. 9 Richardson Merrill,  the  defendant  drug  com­ pan y, exhausted its insurance coverage and eventually agreed to com­ pensa te the victims by paying them a pension for the rest of their lives. The pay ments were secured by annuities which were to increase by 2 per cent. a year. Use was also made of life insurance policies as vehicles for paying damages in several medical negligence cases in California. Because the plaintiffs had suffered severe brain injury, it was difficult to estimate ho w long they would live and therefore what sums would be needed to pay for their future care. Structures were used to diffuse these disputes. "The abilit y to provide benefits tied to very unpredicta ble life expectancies produced  settlements that were heralded  as breakthroughs by both parties to the litigation  .  . . a most unusual result. "10

In spite of these precedents, structures were rarely used in other cases. This was partly because the terms of these settlements were supposed to be confidential and therefore  they  were  not  widely  known.  More im portan t, however, was the fact that no particular tax advantage could be gained. This changed in the mid-1970s and it is from this date tha t structures really begin. The catalyst was the Internal Revenue Service


8  D.  W.  Hindert et al . ,  Strucftlred  Settlements  And  Periodic  Pa yment Juci.;ments (1992) pa ra.

1.03!3 ][ d].

9  According to J P. Weir, Structured Settlements (1984) p. 10 there were 6,000 cases in Ger·­

man y,  476 in Britain,  110 in Canada  a nd only  15 in the United  States. The American is described in  The Si111da y  Times Insight Team, Suffer  The Children: The Story of

(1979) Chap. 9. For account of the British litigation  see also H. Teff and C. Munro,  Thalido­ mide:  The Legal Aftermath  (1976). Belatedly  a trust was established to which the defendants, Distillers,  contributed.  The  fund  nude payments  to  the victims  over a  period  of years.  How- ever,  when  it was discovered  that these were subject  to  tax,  the  Government  were to  contri bute  to  the  fund  to                 the effects of taxation.  In  1993 several victims

litigation  to obtain             compensation be.ca use were alarmed about their finan cial future.  Although   the                                                                 trust  was  valued  at         million,  its director                 that it would only con tinue to meet victims' needs if it was managed very carefull y. He                                          "Clearly no su m can really last for 50 or 60 years and it's finite unless you are strict." Such strict fina ncial                       is not needed to preserve the value of indexed                                                  paid under an arn1unv-t)ac:Keo  structu re.

Insurance and Statistical Association, Periodic Pa yment Settlements: Joint Opport1.111ity j(ir

LUI' Propcrt y!Caszwlt y Compa11ies (1981).




Structured Settlements: An Emergent Study   21



when it issued the first of its private taxation rulings stating that the income from a structure could be free of tax in the plaintiff s hands. It began to publish these rulings pu blicly in 1977, and this led to a dramatic increase in the use of the concept. Whereas in 1977 annuity premiums amounted to only $15 million, they grew by 1980 to $350 million, by 1985 to $2.5 billion, and by 1990 to over $4 billion. 11 Over 70 firms act­ ing as intermediaries in structures established the National Structured Settlement Association in 1986. 12 Structures have thus developed into a very big business and are now used in most of the larger settlements.

However, the impetus for the growth of structures  in  the  United States differs in many respects from that now existing in Britain. Struc­ tures were a partial response to the United States liability insurance "cri­ sis" which, although reaching its height in 1986, had its origins in the 1970s. Concern for insurers and premium rates in Britain has never been on the same scale. Structures in the United States were seen as a means of reducing  the exposure of liability insrers to what were perceived as spiralling damages awards and a tort system running out of control. As another response to this crisis in the medical negligence field, California passed a statute in 1975 allowing a court to award da mages by means of a pension for future loss. Since that time there have been legislative attempts in many  states  to im pose,  or otherwise  encourage  structures vi a court judgmen ts. 13 These reforms continue to reflect concern about the high costs of an ever-expandin g tort system, and structures are still promoted as a limited response to the particular problems faced by the A merican system.

Overall any attempt to draw clear parallels between what has hap­ pened in the United States and in Britain is fraugh t with difficulty. However, the experience gained by certain firms and individuals of structures in the North American market proved to be an important sti­ m ulus to their development in this country. The key to this  develop­ ment was an agreement reached in 1987 on the taxation of structures.

  1. The Taxation Agreement between the Revenue and the Association of British Insurers

The most importan t factor in the development of structures in Britain was the same as that in North America: the acceptance by the Revenue that the annuity pay ments to a plaintiff could be free of tax. This was not made pu blic until 1987, although the subject was first raised with the Revenue as early as 1983. The A. B. I. became involved in 1984 when it was asked by the Revenue to draft standard documentation which might gain  Revenue  approval  and  result  in  the  annuity  payments  being  tax


1 1     Hindcrt,  op. cit. para.  1 .03.

Ibid . para. 6.02.

13 In 1990 the National Conference of Com missioners on Uniform State Laws approved the Uniform  Periodic  Payment  of Judgmen ts  Act  which  will  assist  state                                                  to further develop la ws for distributing damages by means of a pension. See Hindert, op. cit . cha ps. 9 and 10.



22  Civil Justice Quarterly


free. The A.B.I., in consultation with the Revenue,  then  devised  a model agreement to be used by the parties in a structured settlement. If followed, the model would enable the Revenue to approve structures without having to conduct a detailed investigation in each case. Even­ tually  in  1987,  after  three  years  of  protracted  negotiations  with  the

  1. B. I., the Revenue approved the use of the model agreement. 14

It would therefore be wrong to suggest that the tax agreement was initiated by the A. B. I. It is true that ever since the 1978 report of the Royal Commission favouring periodic payments 15 the Association had continued to monitor the potential for their development. In February

1983 it set up a working arty to consider again the advantages  of inflation-proofed pensions. 1 ) However, the A.B.I. recognised that sub­ jecting the annuity payments to income tax was a serious bar to their use. By 1984 it was considering approaching the Revenue to discuss the

matter, when the Revenue itself suggested a meeting. The Revenue initiative can1e because of the conclusions it had reached after negotiat­ ing privately for a year with the Structured Settlements Company Limited,  a United Kingdom subsidiary of an American company.

That company had been formed in the United Kingdom at the begin­ ning of the 1980s. Its early incorporation was not to enable it to be involved with structures immediately, but was primarily to protect the trading name. 17  The parent  company  is closely  connected  with  the

United states reinsurance brokers G. J. Sullivan and Associates. As early

as 1979 that firm had been prompted by other brokers at Lloyds  to inquire into the possibility of structures in the United Kingdom. How­ ever, the accountancy advice it received at that time was that the tax position prevented structures from getting off the ground. A few years later both the accountants and the advice given had changed. Tucsons, a small firm of taxa tion consultants, suggested that it might be possible to use Dott v. Brown 18  to argue that the periodic payments should be con­

sidered capital, and thus free of tax. Therefore in 1983, G. J. Sullivan,

via its United Kingdom Structured Settlements Compan y, decided to approach the Revenue with the intention of promoting structures in Britain and capitalising on its North American expertise. In  this  they were supported b y Manu Life, the Canadian based life insurer, who also saw that there was scope for u tilising its experience of structured settle­ ment annuities.

The specific fact sit·uation that was put forward to the Revenue for tax



14                        with guidance notes, it was circulated by the A.B. I. to its members on July 10, 1987,        to the press five da ys later.

1 5  "Heport  Of The Royal  Commission  On Civil Liability  And  Compensation  For  Personal

lnjury" (1978) cnmd. 7054, Vol.  1 Chap.  14.


<>    Copley,  "The lnsurers  Use Of Compensation,"  unpublished  paper  delivered  to a confer­

ence held by European  Study Conferences in London in January  1988.

17  The parent  company  had  previously  threatened  copyrigh t action  against  those  using  the words structured settlement  in the United  States.

18  [1936] 154 L.T. 484.



Structured Settlements: An Emergent Study   23



cleara nce involved a hypothetical case. 19 Although the Revenue is usually unwilling to comment on  fictional  transactions,  it  recognised that for various reasons structures were exceptional. A number of meet­ ings were held with the group of people led by Tucsons on behalf of the Structured Settlemen ts Company. The Revenue were discouraging a t times, but offered scope for optimism on other occasions. Michael Newstead, the senior principal tax inspector involved, recognised the social value of structures and was generally supportive of the concept. Withou t his individual contribution it is doubtful whether structures would ha ve succeeded . However, the taxation implications invol ved several departments within the Revenue, and not all welcomed the idea or were prepared to support it. However, eventually in Septem ber 1984 the Revenue agreed that the documentation presented to it in respect of the h ypothetical case would have avoided tax in the plaintiff's hands. 20

The Revenue recognised tha t the un.usual private clearance  it  had given raised wider public issues. It therefore requested a meeting with the A. B. I. to inform them of the possible clearance that migh t be given, and to  suggest that the Association devise standard documentation to ensure tha t structures could be treated consistently. Newstead descri bed his reasoning for approaching the A.B.I. as follows 21 :

"It seemed unlikely that structured settlements could be introduced into the United Kingdom in the face of considerable uncertain ty about their tax treatment . . . . On the other hand we were aware of the significant social and economic benefits which were being claimed for this form of settlement. I could also see substantial operational difficulties for the Reven ue in the event of structured settlements being made without any clear understanding of the tax consequences of the various forms such a settlemen t might take. Large numbers of tax settlement documents would possibly have been sub mitted to Tax Districts and uniformity of treatment woul d have been difficult to achieve, even if all agreements took the sam e fonn. That in itself seemed unlikely, so the incidence of tax would probably have been both uncertain an d capricious, contribu ting to the difficulty of in troducing structured settlemen ts into the Uni ted Kingdom."

Favou rable tax  treatment  for  structured  settlemen ts  can  thus  be  seen to ha ve originated from an approach to the Revenue by accountants act­ ing for a specialist  intermediary  company,  which  in  turn,  was  being prom pted to act by i ts North Am erican associa tes. Subsequent develop­ ments were very much the result of initiatives  taken  by  the  Revenue itself, and brought to fruition with the aid of the A.B.I. However, the Revenue  h as  been  keen  to  pla y  down  its  part  in  the  process.   It  has


This  was acknowledged                                                                                at the conference held by European Study                       in London in january

20  Private                          in the author's possession between the Revenue and Tusons.

21     Newstead,             View From Somerset House" (1989) 7 (10) The Litigation Letter 78.


24   Civil Justice Quarterly



emphasised that its views upon the model agreement were only pro­ visional, and were based on the existing legal authorities. No "con­ cession" was therefore involved. 22 It strongly denied "conniving at tax avoidance. "23 It deliberated long and hard, and changed  its  views, before reaching its final conclusion. However, it did make a creative decision guided by what its officials considered to be the public interest. It was not forced to arrive at its position by a court decision on a test case, or by a new piece oflegislation. Instead "on balance" it "could see significant economic and social advantages" in structures, and these policy reasons were strong enough for the agreement on taxation to be concluded. 24

Despite the efforts of all those involved in devising the taxation agree­ ment, it had no immediate impact on the damages system. The first case to make use of the model agreement was not settled until 1989, two years after the agreemen t had been concluded. In January 1990 an article could still be written entitled "Structured Settlements-An Unexploited Opportunity. "25 A t the beginning of 1991 there were still only half a dozen structures in place. One reason for this was that most lawyers and claims managers  remained  unaware of the concept. Only limited pub­ licity had been given to it.26 In addition, perhaps those who had some knowledge of it were unfamiliar with the details and were reluctant to

be the first to test the water. There were several areas where the pro­ cedure was uncertain and the tax and insurance posi tions in doubt. It was only after a long period of education and reflection that the legal and insuran ce professions embraced structures and began to use them in any nu m ber. Finally, in 1992, five years after the A.B. I. agreement, the total num ber of structures in place passed the figure of a 100, and the flood­ gates were indeed beginning to open.

3. The First Structures arranged in Britain


The first structure for an accident taking place in Britain was actuall y pu t in to place as Jong ago as 1981, six yea rs before the A. J3. I. agreement with the Revenue. However, it was an exceptional case. In Stachnick v. M itchell 27 a Canadian claimed for the injury she had sustained on holiday in England as a result of a road accident. She was able to benefit fron1 ta x-free annuity payrnents only because she was not subject to United


A concession technicaliy im plies that tax is payable but has been waived by the Revenue, as               occur if it were de minim is.

"Tax Aspt'.cts Of Structured Settlements, " paper delivered to the London con­ furcnce, above, n. 20.

24   Newstead,  op. cit .

25  Wi tcom b (1990) 140 New L. J. 88.

26  But  for           comments sec the academic a rticles  published  in  1988 by Lewis Allen,    Settlements" (1988) 104 L.Q. H. 448, and Scott (1988) 7 C. J. Q. 99.

were surprisingly few notes for practitioners in the first couple of years but they included Pitt, "Justice By Instalments" (1987)  148 Post and Insurance M onitor 18, and Miller  (1987)  131 S. J.


The Dail y  Telegraph, June 30,  1981.



Structured Settlements: An Emergent Study   25



Kingdom tax, and was able to take advantage of the Revenue Canada rulings which had recently been made to encourage structures there. The United Kingdom insurers bought an annuity from a Canadian life office. This was arranged with the assistance of Frank McKellar, the leading Canadian intermediary. Lawson ]. approved the settlement. The British solicitors involved for both the defendant and plain tiff recog­ nised the potential for such settlements and they published two of the earliest notes upon the concept. 28 However, nothing further developed from this case, although structures continued to be put in place for other North Americans injured in Britain. 29 In 1988, for example, the Struc­ tured Settlements Company arranged the first impaired life annuity placed with a British insurer in a structu red case when it settled the case of Bashir Al-Isla m.

The first structure for a British citizen  did not occu r un til April  1988. It was put in place by the Eagle Star Insurance Company. Because it did not require judicial approval it received no publicity, and even regional claims managers  for Eagle  Star itself were unaware  of it some time later. It involved  a road  accident victim  who,  because he had already received a J u m p sum from his own personal accident policy, was keen  to obtain part of his damages in the form of a pension. Instead of receiving 5::250,000,   the  plaintiff  accepted  £100,000  plus  instalments  of  around

£7,000 a year. These were to rise by a fixed percentage annually, and would continue to benefit the wife in the event of her husband's early death. The pension was arranged by the insurer without purchasing an annuity. Therefore, although the A. B. I. model agreement with the Revenue had been announced nine months earlier, this first structured settlement developed independently of it and did not follow its terms.

The next structured settlement did not take place until a year later when, in july 1989, Kelly v. Dawes 30 came before Potter ]. for approval. By contrast with the earlier cases this settlement eventually received considerable publicity, 31 and focused attention on what could be done. Save for the provisions  with  regard  to indexation,  it also kept  to  the


2H David Mcintosh of Davies Arnold who acted for the defendant wrote the first article on structures to appear in a British publication. It referred to Stachnic, and pressed for legislation to reform the tax position for Uni ted Kingdom residents. Sec S. Marshall and  D.  Mcin tosh, "Recent Developments In Structured Settlements: Do United Kingdom  Attitudes  Lag Behind The North American Approach?" (1982) 4 (4) Product Liabilit y International 50. Michael Edwards of Lawrence Graham who acted for the plaintiff gave early warning  of the potential l!\,,• 11"-u n '"' of solicitors if they failed to take note of the A.B.I.  taxation  agreement which had by          been concluded. Sec "Structured Settlemen ts" (1989) 86 (29) L. S. Gaz. 32.

29   For  example,   a  settlemen t  was  made  for  a  United   States  resident  in   1986.  This  was

reported  by the barristers in volved, Hunt and Waine,  "The Process of Structuring" (1992)  136 S . ]. 386. The solicitor involved confirmed to the author that the plaintiff was in fact an Indian citizen who was injured before obtainin g a United  States visa and emigrating to that country.

This did not preven t the United  Kingdom  insurers  (who had a sister company in the United from initiating and putting in place the structure.

Times,                      29,  1990. The case is considered in detail in Lewis,  "Structured

Settlcn1ents In                 (1991) 10 C. j. Q. 212.

31 A press release was issued by the plaintiff s solicitors, Gorna & Co., and most national newspapers carried accounts of the case.








26   Civil Justice Quarterly



A. B. I. 's model agreement, although ironically it was not an insurance company that took advantage of it, but a Lloyd's syndicate, K. G.M. Motor Policies. The syndicate was initially advised by the Structured Settlements Company who later secured a letter from the solicitor to the Corporation of Lloyd's which satisfied the court as to the security of the structure. Eiowever, the intermediary more involved with the case was Frenkel Topping: it was their reports that were relied upon by both par­ ties in the case and by the court, and they arranged the annuity. They were thus the major force in bringing about the first structure to follow the A. B. I.  model, and their importance has continued to grow. They were quick to identify the possible scope for structures, and they sought experience of how such arrangements were made in Canada. They have since been involved in over 80 per cent. of the structures put in place in this country.

Although the Kell y case attracted much needed publicity, it did not immediately open the floodgates to such settlements. Despite the con­ siderable efforts  of Frenkel  Topping  and others  to increase awareness  of

the potential for structures, 32 the next such settlement did not take place for almost a year,  and together with four others it comprised the total

for 1990. A nnual premium of only a million pounds was placed with life offices that year. The only structure of the five not to involve Frenkel Topping was completed in Scotland. It involved the solicitors who had assisted the A. B. I. in drafting the 1987 agreement. 33 The driving force behind the four other settlements was the General Accident Insurance Com pany whose  chief claims manager also sat on the A. B.I. 's struc­ tured settlement  committee.

In 1991 the flow of structures began to increase: in the first half of the year Frenkel Topping completed nine more structures, but by the year end  their  total  had  reached  35, 34  involving  premium  of around  £12


Most notably Frenkel wrote a new section for the leading text Kemp  and Kemp, The Quantum Of Dama5;cs, para. 6A-,001. He also wrote an article for The Times, July 17, 1990, and for various practitioner journals, e., . (1989) 5 P.M .I.L.L.  (April, May and  October),  and (1990) 6 P.M .I.L.L. (April and November).  The firm made presentations at many conferences. It began to issue press releases, and to circulate among various groups detailed booklets con­ uining advice as to the advantages  of structuring as well as precedents and copies  of judg­ rnents, etc.

Other parties  were announcing their interest in structures,  e.g. Leech (Sun Life)  (1990)  bwest- 111e11t Mana, cmcnt 11, and Hulls (Structured Compensation Ltd., another broker) (1990) 87 L. S. Gaz.          and lawyers  also        to write, e.g. Scurfield (1989) 150 Post and Insurance Monitor 42; (1989) 86 (29) L. S.      32; Cannar (1989) 150 (47) Post 35; Witcomb (1990) 140 New

L.J. 88, and Croxon (1990) A VMA Medical & Le, al Journal 4. Major conferences were held in London  in January  1990 (Henry  Stewart Conferences),  and June  1990 (European  Study Con­ and solicitors' continuing education  courses began to advertise that they were deal­

structures  as a  major  new  development  in  civil litigation.

Herbert Smith acted on behalf of the Sun Alliance group. The full details of the settlement a re discussed by the solicitor who acted for the plaintiff, Simon Pender, in "Structured Settle­ ments, " an unpublished  paper given in November  1991 for a course organised by the Univer-

of Strathclyde.

Ashcroft, "Structured Settlements-A Practitioner's Viewpoint" p. 2, an  unpublished paper presented to the Law Commission, June 1992.




Structured Settlements: An Emergent Study 


million. Also based in Manchester and acting  as an intermediary, Touche Ross completed its first two structures while, on the other side of the Pennines, Grant Thornton were involved with two more. 35 The Structured Settlement Company, having helped to instigate the model agreement approved by the Revenue, also completed its first structure for a British resident, bu t it was no longer at the forefront of develop­ ments. 36 Leading insurance companies became involved, including the Royal, Cornhill, the Prudential and the Norwich Union. A major semi­ nar was organised for insurers by the A. B.I. and Lloyd's, and John Fren­ kel was invited to speak a t the annual conference of the Bar. Furth er articles were pu blished. 37 In June the Lord Chancellor announced that he had specifically req uested the Law Comn1ission to consider structures as part of its overall review of dan1ages for personal injury. In that same mon th extensive newspaper coverage was given to the settlement arranged for Heidi Everett. This produced letters to The Times from leading Q. C.s in support of structures. 38 Eventually there was a tele­ vision documentary abou t the case in which the Master of the Rolls, Lord Donaldson, spoke of his desire to see structures considered in appropriate cases. 39 In October 1991 the first medical negligence case involving a Health A uthority was structured, 40 and this opened the door for a major new group of cases. Knowledge of the advantages of the new m ethod of settlement now grew rapidly.

By the middle of 1992 a director of Frenkel Topping was  able  to report that the firm had completed over 60 structures. It had also been involved in 30 other cases in which a structure was considered but not implemented, and was currently investigating a further 150 cases.41 Towards the end of the year the Law Commission pu blished its Consul­ tation Paper considering the reforms tha t might be necessary to develop structures  further.  It  stated  that . the  advantages  of  structures  clearly

outweighed  any disadvantages,  and that their availability as a remedy should not be seriously questioned. 42  By November  1992 Frenkel Top­ ping  had  arranged  i ts  lOOth  structure  overall,  and  perhaps  20 more involving  other intermediaries ha d been put in place since structurin g


Pa yne  v.  Thackray  (1991) 7 (8) P.M .I.L.L. 60, and Beck  v. Plasticers Ltd. (1992) 8 (6)

  1. 41.


  • Braybrooke v. Parker, unreported, October 22, 1991.

37 E.,r;. Hulls (1991) 152 Post and Insurance Monitor 17; Lewis (1991) 141 New L.J. 1419 and (1991) 10 C. J. Q. 212; Frenkel (1991) 5 Quantum 3; Ridgway (1991) 127 (3306) Taxation 272; Abramson (1991) 5(9) P & I International 7; Hollowa y (1991) 152 Post and Insurance Monitor; Hick [ 19911 British Ins. L. Assoc. J. 2; Mansfield (1991) 135 S. J. 1317, and Croxon (1991) Counsel 20.


' The Times, June 7 and 1.5, 1991.

39  "Heidi-Carin g For Life," broadcast by the B.B.C. on january  10, 1991.

4 ° Field v. Herfordshirc Health Authorit y, The Dail y Telecr;raph, November 1, 1991. The; first

self-funded case was ()'Toole v. Mersey Re,gional Health Authorit y com pleted in September 1991

and noted in (1991) 136 S. J. 880. See Lewis, "Health Authorities and the Payment of Damages Means of a Pension" (1993) 56 M. L. R. 844.

Ashcroft, op. cit .

42  Consultation Pa per No. 125 (1992) para. 3.22.


28    Civil Justice Quarterly


began.  The momentum  had  become  such that  no  lawyer or insurer could afford to ignore it.


Table: The growth of structures in the United Kingdom 43




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This article has sought to trace the history of structures in this country. It has revealed that experience of the market in the United States was of crucial importance, although there were particular factors which affec­ ted developments in that country. The origins of the tax agreement with the Revenue in Britain were shown not to lie exclusively with the Association of British Insurers. Instead structures can be seen to have resulted from a complex network of relationships in which particula r individuals and as well as firms played their part. Eventually the legal and insurance professions became aware of what structures could offer, and their importance as a means of settling cases was better acknow­ ledged. However, the official law reports and statutes, and the period­ ical literature for the period, reveal none of this history. It is nevertheless of great importance in understanding the factors that influence  the chan ges which are made to our common law system of compensation for personal injury.