Qualified Settlement Funds

The Settlement Law Group has extensive experience organizing and administering qualified settlement funds (QSFs). We began in 1997 with a $600,000,000 settlement for tainted blood with over 30,000 claimants. We have since handled funds in large class actions involving drugs, sex abuse against the Catholic church, and gender discrimination against commercial enterprises. We also handle smaller cases with as few as a single claimant, properly priced for the size.

What are QSFs? 

Qualified settlement funds are accounts or trusts that hold amounts received from settling defendants until liens are resolved, allocations among plaintiffs are made, decisions on structured settlements are finalized, or disputes are resolved. QSFs are creatures of the regulations that accompany section 468B of the Internal Revenue Code of 1986, as amended. 
To constitute a qualified settlement fund, three definitional elements must be preset. First, the fund must be approved by a Court, binding arbitrator (not a mediator), or governmental agency, and the approving entity must retain jurisdiction over the fund. Second, the claims being settled must be the proper type (any tort claim qualifies). Third, the amounts held by the fund must be segregated from the assets of the defendant. 
Advantages and Disadvantages
The use of qualified settlement funds has the following advantages: the fund can obtain possession of settlement funds, and the plaintiffs can get the benefit of interest earned on settlement funds until liens are resolved, allocations among plaintiffs are made, decisions on structured settlements are finalized, or disputes are resolved.
The advantages to defendants and their insurers to the use of a fund are that the defendants can be released and dismissed from the litigation upon payment of the settlement funds even if liens are not resolved, allocations among plaintiffs have not been made (although plaintiffs’ counsel must be careful to comply with aggregate settlement rules in such contexts), decisions on structured settlements are finalized (in which the defendants and insurer often seek not to participate), and disputes are resolved.
The disadvantage of a fund is that it costs money to create and administer. Often, that cost can be paid from the income earned by the fund rather than by the parties directly.