Dear Clients, Colleagues, and Friends,
In 2012, Dr. Brenda severed ties with her problematic business partner, Dr. Smith. Two years later, when Dr. Smith was sued for medical malpractice by eleven former patients on extremely damaging charges, Dr. Brenda was named as co-defendant solely by virtue of her former partnership.
Because Dr. Smith was bankrupt and had no personal assets, naming Dr. Brenda as co-defendant was a ploy to dig for deeper pockets. Although nine of the patients suing were never actually patients of her practice, they refused to dismiss Dr. Brenda from the case. Demanding millions in damages, Dr. Brenda discovered that the lawsuit was essentially a vehicle for legal extortion in the hope she would nevertheless settle to protect her name and reputation.
Luckily, several years earlier, Brenda’s estate planning attorney had implemented an asset protection plan when he updated her estate planning. When he informed plaintiff’s counsel that even if they won their lawsuit, collecting on it would be almost impossible, plaintiffs realized continuing suing would be both cost-prohibitive and time intensive — with no certainty of recovery. In the end, the two plaintiffs who were actually patients at Dr. Brenda’s practice reluctantly accepted simple malpractice insurance — at cents on the dollar — to settle the case, and the other plaintiffs dismissed Brenda as a co-defendant altogether.
In 1997, Harvard Business School professor Clayton M. Christensen published The Innovator’s Dilemma, in which he coined the term “Disruptive Innovation.” Disruptive Innovation describes a new technology that unexpectedly displaces an established technology.
The theory illustrates how many corporations dismiss the value of a disruptive technology because it fails to reinforce current company goals. However, as the technology matures, gaining a larger audience and market share, the corporation is blindsided as the once-nascent technology ultimately threatens the status quo.
A perfect example of disruptive technology is the Internet. When it was new technology, no one expected the Internet to become a primary communication tool or consumer resource experience. Yet, in just over 20 years, the Internet has replaced hand-delivered mail as the preferred method of written communication. It has also become the primary resource for consumer research, shopping, news, content delivery and entertainment. Although the disruptive event took decades to develop, technology arising out of the Internet innovation has put entire industries out of business (i.e., music/music stores and book publishing/book stores, just to name a few high-profile examples).
Of course, there are hundreds of examples of disruptive innovation, from the invention of the steam engine that replaced the sailboat, to the invention of the “office in the cloud” that is currently replacing many brick-and-mortar businesses.
In business — and in law — disruptive innovation also disrupts the traditional methods and practices of an entire industry. Such innovations help create new markets and value networks, eventually disrupting existing markets and value networks. Innovations improve a product or service in ways that the market does not expect and for which it cannot prepare, ultimately displacing an earlier business model. These disruptive innovations create new markets by applying different sets of values which ultimately and unexpectedly overtake existing markets.
As illustrated in the case above, asset protection planning is a “disruptive innovation.”
Traditional legal practice mandates that when a wronged party successfully sues for damages and wins, the person sued must pay the damages — often at great expense. Asset protection planning disrupts that business model by forcing the plaintiff to perform a “cost/benefit” analysis before launching the “missiles”. It forces a plaintiff who is trying to separate the individual or business from its money to try a totally different approach or to accept an early and cheap settlement, or just not pursue the claim at all.
Asset protection planning is a disruptive innovation because it can actually and permanently disrupt the traditional litigation model. For the 25 years that our firm has been offering asset protection services, the legal profession has been struggling with whether this “disruptive innovation” has a place in the mainstream practice of law and, if so, where? Without the option of asset protection planning, surely there would be those who would not offer their unique skills, knowledge or know-how to the determent of society as a whole. So, as the legal profession struggles with what place “asset protection planning” should serve, clearly the “disruptive innovation” of protecting one’s assets from unforeseen or unknown lawsuits continues to grow in popularity, and for those who have had to use it, they are grateful for the technology having been developed.
We are committed to providing the highest level of service and protection to our clients, and the “disruptive innovation” of asset protection planning can help stop a lawsuit before it ever starts. If you would like to hear more about how this disruptive innovation can protect you, please call us for a consultation.