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Some pro bono lawyers representing New Jersey heirs of Sept. 11, 2001, attack victims say they are concerned that the federal government’s hands-off policy on how compensation is invested could dissipate some minors’ funds. They also say lawyers risk exposure to negligence suits if they do not treat the compensation as though it were a wrongful death award and obtain court orders requiring conservative investments of minors’ money. “My concern is that what a lot of these families are doing is placing their funds with brokers,” says Ronald Grayzel, a partner at Edison’s Levinson Axelrod who represents the families of seven victims of the World Trade Center attacks. “You give minors’ money to brokers without restrictions and the money is going to be at risk. I think it’s rather shaky.” Drew Britcher of Glen Rock’s Britcher, Leone & Roth says he is concerned about the malpractice element. “What happens if 20 years from now, the mother has dissipated the money and spent it on a boyfriend or whatever and the kid comes back and says you, Mr. Lawyer, you didn’t protect my interest?” Grayzel and Britcher are among Sept. 11 lawyers in New Jersey who are convincing their clients to volunteer for safe investment plans that require surviving spouses to put their kids’ money into government bonds and other fixed-income securities. And they are having the plans codified by court orders. Other lawyers – taking their cue from federal authorities who champion a no-strings, no red-tape approach – disagree with Grayzel and Britcher and are not bothering with court-approved investment plans. The state Administrative Office of the Courts seems to side with them. Director Richard Williams told assignment judges in an Oct. 2, 2003, letter that court oversight is not required. “I consider that letter controlling,” says Christopher Placitella, a partner at Woodbridge’s Wilentz, Goldman & Spitzer, who says he represents 50 claimants to the Sept. 11 fund. He says he raised the question of court approval with federal authorities last year and is satisfied that their response and the AOC letter make liability for not having a friendly hearing unlikely. Placitella says he always makes sure the client is getting good financial advice. Accountants and investment counselors, like pro bono lawyers, have been providing free advice to Sept. 11 families. Getting court-approved investment plans is an extra step that is not needed. The issue arises now because the deadline for claims against the multibillion-dollar September 11th Victim Compensation Fund passed in December. The fund plans to dispense all money due by June 15. About 98 percent of the families of people who died in the attacks, including 700 in New Jersey, have resorted to the fund rather than bring suit. About 40 of the New Jersey claimants have arranged with the fund for periodic payments to minors, an arrangement similar to obtaining a structured settlement from a defendant in a tort case. But the majority of recipients are being granted status as “representative payees” and are assuming full responsibility for ensuring that portions of awards going to children are spent properly or saved for the children’s future needs. Most representative payees are surviving spouses. The fund’s Office of Special Master, headed by Washington lawyer Kenneth Fineberg, had surrogate courts around the country vet the representative payees. Minors’ money must be kept in separate accounts and representative payees are made aware that they have fiduciary duties to minors to whom funds are paid. Because Congress established the fund as an entitlement program akin to Social Security, additional state court proceedings are not necessary, Fineberg and his staff have concluded. But Grayzel, Britcher and Gerald Baker of Hoboken’s Baker Garber Duffy & Pedersen say they believe lawyers who do not get a court-approved plan are opening themselves to malpractice suits from children whose funds were dissipated. “I don’t care what Ken Fineberg says,” Britcher declares. “The idea that my responsibility is limited because this is a federal program is wrong.” State court judges apparently expressed similar concerns last year but the Oct. 2 letter to assignment judges told them, in effect, not to worry. The AOC quoted the Office of Special Master as saying the intent of the federal rules was to allow payments to minor children directly and without court oversight or approval. “In fact, the ‘representative payee’ option was developed to implement the Congressional intent that non-economic awards to minors need not be treated as a nest egg to be maintained until the minor reaches majority,” Williams wrote. “Based on that advice, it does not appear that court approval in the nature of a friendly hearing is warranted when the ‘representative payee’ option is chosen, nor is court supervision of the disbursement of the monies required in this instance,” Williams concluded. At the same time, the letter does not prohibit judges from holding such hearings or signing investment plan orders requested by representative payees at the suggestion of lawyers like Grayzel. Middlesex County Assignment Judge Robert Longhi, for example, said on Friday that if lawyers want him to review the plans and have him sign orders effecting them he will do so. Surrogate Concerns New Jersey’s surrogates also raised concerns about whether hearings were necessary. They were told by Deputy Special Master Jacqueline Zins at a meeting in February that their post-award involvement was not required when money was paid to representative payees. But like the assignment judges, surrogates apparently are processing requests for friendly hearings when lawyers request them, even though, as Union County Surrogate James LaCorte put it, “the 9-11 administrators wanted to bypass all the relevant jurisdictions.” “My view is it shouldn’t have been made payable to representative payees without a provision for the protection for the minors,” says LaCorte, who, along with Bergen County Surrogate Michael Dressler, studied the issue for the 21 surrogates. Not that the surrogates have any interest in holding the money. While they and the lawyers agree that safe investments are necessary, funds placed with surrogates must by law be deposited in federally insured banks and are receiving certificate-of-deposit interest these days. In addition, each account can contain only $100,000. A $1 million award to a minor would require a surrogate to find 10 banks just for the one account. Of the lawyers representing Sept. 11 families in New Jersey, 164 are in a group called Trial Lawyers Care, a national pro bono effort organized by the Association of Trial Lawyers of America, says John Jeannopoulos, a former assistant U.S. attorney in Newark who is director of attorney services for TLC. The presence of so many ATLA-NJ lawyers in the mix may explain why there is concern about the need for “friendlies” in these cases. They are so used to arranging them in their tort cases it is hard for them to break the habit. “New Jersey has been especially protective when it comes to minors getting their money,” says Jeannopoulos, noting that the concerns raised by Grayzel have not surfaced in other states. Unlike laws in New York and most other states, which permit minors to gain control of all their money when they reach 18 years, New Jersey law requires staggered payments over time at various stages after the recipient turns 18. Jeannopoulos says the special master’s view that court supervision is not necessary appears to spring from the federal government’s eagerness to dispense all funds quickly without red tape. And the use of traditional tort law mechanisms has been eschewed for what is, essentially, a federal entitlement rather than a settlement of tort claims.

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