Quick Answer
Premium finance insurance fraud happens when brokers sell high-net-worth individuals life insurance policies under the false promise that borrowed premiums will pay for themselves. The loan never self-liquidates from the policy’s cash value alone — and if there is no independent plan to pay off the loan in three to seven years, it is almost certainly a scam.
- Quantum Law Group is a Beverly Hills boutique practice combining insurance industry expertise with aggressive trial litigation.
- Jonathan Deer has over 30 years of trial experience and is a 2026 Daily Journal Top Points attorney.
- Steven Morris has tried hundreds of matters over nearly four decades and is a certified mediator and arbitrator.
- Peyman Cohan holds a California insurance license for nearly two decades alongside his law license — rare insider knowledge.
- The firm has won in every single case they have taken on and recovered millions for defrauded clients.
- Brokers are incentivized by enormous commissions tied to oversized policy amounts premium finance requires.
- Two fraud red flags: (1) no genuine need for insurance now, and (2) no credible exit strategy within three to seven years.
- Dying is never an exit strategy — the loan will never pay itself off from a policy’s cash value alone.
“If it’s not possible for the policy to pay for itself, everybody would do it. It’s just not possible. So if you’re sold on anything like that, it’s almost certainly a scam.”
— Steven Morris, Founding Partner, Quantum Law Group
Episode Summary
Show: The Litigator’s Path | Platform: Legion
Guests: Jonathan Deer, Steven Morris, Peyman Cohan — Founding Partners, Quantum Law Group, Beverly Hills CA
Published: February 27, 2026 | Duration: ~49 minutes
Firm: quantumlawgroup.com
The three founding partners of Quantum Law Group sit down with The Litigator’s Path to dissect one of the most legally complex fraud schemes targeting wealthy Americans: premium finance life insurance fraud. Peyman Cohan brings something most litigators don’t have — a California insurance license held for nearly two decades, giving him the ability to read policy illustrations that make even veteran attorneys’ eyes glaze over.
Key Topics:
- How Quantum Law Group formed from a shared sublease space
- What premium finance life insurance is and why it’s marketed as “free”
- Why high-net-worth, intelligent clients are the most common victims
- The two primary red flags for fraudulent vs. legitimate arrangements
- How brokers obscure disclosures through distraction tactics at signing
- Why the firm goes after the broker and carrier, but rarely the lender
- Jonathan Deer on communicating fraud to a jury through human experience
- Steven Morris on managing client stress through litigation
- Fee structures: hourly, contingency, and hybrid
- How the partners use AI — and the dangers of using it for work product
Full Episode Transcript
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Jonathan: In the middle of our first trial, I I lean over and whisper to him, you gotta ask the guy about this so we get the elements of the case in. And he looks at me, and not not mean at all, but he looks at me very seriously, he says, I don’t give a shit about the elements. I want the emotion. And in that moment I said I’ve got a lot to learn and here’s a place I can make my living and try cases with them for the rest of my life.
Arthur: Today on the litigator’s path, we’re joined by the three founding partners of the Quonson Law Group, Eamon Cohen, John Deere, and Stephen Morris. These Beverly Hills trial lawyers have built something unusual, a boutique practice that combines deep insurance industry expertise with aggressive courtroom litigation. John Deere is a 2026 Daily Journal top point of attorney with over thirty years of trial experience. He started his career clerking with judge Ralph Nimmin on Florida’s first district court of appeal before stints at New Line Cinema and Real Estate Development. Stephen Morris has nearly four decades in courtrooms, has tried hundreds of matters, and is also a mediator and arbitrator. Him and Cohen brings a perspective most litigators don’t have. He’s maintained a California insurance license for nearly two decades alongside his law practice, giving him insider knowledge of how these products actually work. Together, they’ve recovered millions for clients to fraud in what they call premium finance schemes, sophisticated life insurance arrangements that promise wealthy clients coverage to borrow premiums that are supposed to pay for themselves. If you’ve seen the recent headlines about NASCAR champion Kyle Busch suing Pacific Life for 8,500,000.0 over an allegedly disastrous life insurance scheme you’re seeing similar to the kind of cases these attorneys handle. We’ll talk about how they built their specialized practice, what experienced trial lawyers have learned about connecting with juries on complex fraud cases, and why they think this area of litigation is about to explode. I’m Arthur Rothrock, and this is The Litigator’s Tap. John, Steven, Peyman, thank you so much for being here. Thank you. Good to be Thank you for having us. No problem. I I wanna start with a pretty open ended question. You know, you three have worked together for over twenty years before founding Quantum Law Group. Can you give us the short version? You know, how did a Florida appellate clerk, an insurance industry insider, and a business litigator end up in the same orbit? Well, Steve worked for a long time litigation firm, and I came and joined that firm. Around the same time, Pingamon became a subtenant there. He just leased an office there. And we began working together and got to know each other and realized we definitely see the law the same way, see how to take care of clients the same way. And we just grew closer over time and wanted to form our own firm. We realized there was a synergy between us because of the expertise that we all had independent of one another. When you put those things together, it was more than the sum of the parts. Yep. And I’ve seen that happen a lot with, you’ll have your estate planner and then maybe a trusted estate litigator, or you’ll have someone that does your real property sort of contracts, and then you have the litigator that has to fight about it and does the UDs and everything for the, is that sort of similar to what your arrangement is? Like, how does it differ maybe from those more traditional models that we think of? Well, rather than that, it’s more like a rope where you have three twines that are put together. And when you have those three twines put together, it is stronger than all three
Introduction and Guest Backgrounds
Steven: twines independently. So it’s not as if we’re complementing each other, but we’re actually building a synergy by the expertise that we all have that is weaved together. Not, you you do a trust and then there’s a problem with the trust and another guy takes over. The way we would do it is there would never be a problem with the trust in the first place because the litigator would be involved to help the transactional attorney make sure there was not a problem.
Jonathan: And we work, you know, we work very closely on everything. So a case that I might be the lead on or Steve might be the lead on, we’re still always all communicating on everything going on. We enjoy being around each other, so we’re always popping into each other’s office discussing everything we do, and it works out really well. It’s definitely built a strong effective way to deliver good services.
Arthur: Certainly works out really well for clients when they’re getting the expertise of three attorneys essentially at all times. John, you started your career clerking with Judge Nimminz in Florida, then went in house at New Line Cinema. What made you pivot from sort of entertainment and real estate into trial work? So I actually, after I got done clerking, I actually did litigate, and I always planned to litigate, and then I got drawn into the entertainment industry out here, and I did that for a while. I
Jonathan: actually the personalities in entertainment are insane, and so it’s not driven always by rational processes, and I’m a rational guy. And so I pivoted back to litigation, and when went back to litigation I was lucky to get to work with Steve actually and one of my first trials back I co tried a case with Steve and he tries cases completely different than I’d ever seen them tried. And it was you know, he in the middle of our first trial, I I lean over and whisper to him, you gotta ask the guy about this so we get the elements of the case in. And he looks at me and not not mean at all, but he looks at me very seriously and he says, I don’t give a shit about the elements. I want the emotion. And in that moment, said, I have got a lot to learn, and here’s a place I can make my living and try cases with him for the rest of my life. And and and I have, and it’s been great. Sounds like if the emotions are there, they will find the elements themselves just fine. Exactly.
Steven: Great, because I want to ask that, Steven, you you’ve been trying cases for forty years, so at what point did you decide to sort of also get involved as a mediator and arbitrator, And how has that sort of changed how you approach litigation, if at all? Well, I like to help people and I like to help bring people together. So even in litigation, when we’re adverse, I’m still trying to get things resolved for people and not make the situation worse. There was a time before there was some budget crisis where the court was allowing attorneys to mediate cases for free for various litigants that were in the court system. And I volunteered my time for that. And I took training at Pepperdine about being a mediator.
Steven: And it gives you a different perspective. And I enjoyed the aspect of mediation and bringing people together. And of course, it’s a learning experience myself for when I’m on one side of the table and the other to have that experience being in the middle of the table and seeing what the perspectives are from other sides. In part, it was a desire to help people. In part, it was an educational experience of sabbatical of sorts. Yes, a more holistic view of how to run a case rather than just straight adversarial. I try to really work on bringing people together instead of tearing them apart.
Jonathan: And I can tell you, just to build on what he said, one of the things that Steve brings to us is that desire to look at the case from how can everybody win, you know, and that’s an important perspective that lawyers often don’t have. We can get the other side to do what we need for our client if there’s also a plus for them. That’s something Steve’s always brought to the table. I love that that sort of litigation philosophy. It works well, especially if the other side’s willing to have that same view as you and isn’t just there to win. They don’t always have that. And when they don’t, we kick them in the teeth or whatever we need to do in in the courtroom. Then kick in the teeth. Very important. Absolutely.
Peyman: Alright. I’ve been talking to John and Steven too much. Heyman, you ran a solo practice for, like, twenty five years before joining forces with these guys. So what made you decide to sort of give up the independence of solo practice for for this new partnership? When I sublease space from the firm where both John and Steve were at, I started collaborating with them a lot. And I didn’t do any litigation work. I did only transactional work. And a lot of my clients, because of my relationship with them, they trusted me and they would always come to me, ask me questions if they have any issues, if I know any litigators, anyone that can help them. So it was a very natural transition because I was collaborating with Steve and John all the time. We decided to join forces because this way my clients are feeling a lot more comfortable knowing that I’m together with a couple of litigators who can really do what needs to be done for the client and what’s best for the client with the same approach as John and Steve have been talking about. So for our listeners who’ve sort of never encountered the types of cases that you handle, what is a premium finance fraud, and who are your typical victims?
What Is Premium Finance Fraud?
Steven: So typically these are high net worth individuals, and the approach of these individuals by the insurance agent usually comes from the idea that they can get a large amount of life insurance more than they would ever think that they needed, and they could get it without taking any money out of their pocket. And there’s a premium finance angle to this where money is borrowed from an institution that specializes in financing insurance premiums. And then the policy itself is used to collateralize the loan. These illustrations are presented with very rosy numbers that make it look like somehow this insurance policy is going to pay for itself, so that the insured just has to make some interest payments for some period of time, and after a while, the policy will grow so big and will have so much cash value that it will then be able to pay back the loan. It’s never the case. It’s not possible because if that was possible, everybody would do it. It’s just not possible. So if you’re sold on anything like that, it’s almost certainly a scam. The other problem with these types of arrangements is that firstly, you have to need it. In other words, it comes up in a situation where you need life insurance right now, and you’re going to be coming into money in the future, like in the next three, five, seven years maybe, and then you’re going to use that to pay off the loan. If you don’t have a need because you have to have insurance now that you can’t afford, and you will be able to afford it shortly, That’s really the only circumstance, of the only, the major circumstance where this is appropriate. Dying to pay off your loan and using the insurance premiums is not an exit strategy. So if there is no exit strategy, if there’s no way to pay off that loan from something that the insured is going to receive in the next few years, three at the shortest, maybe seven at the longest, it’s probably almost certainly a scam. There has to be a way to pay off the loan. The loan will never pay itself off using the life insurance premium by its the life insurance cash value by itself. And and by the way, when you hear about these scams, you think, who would fall for that? Our clients are typically very intelligent people. They’ve built successful businesses. They’re high net worth people. They just don’t know life insurance. Life insurance is not intuitive. Payment had to train the two of us in it when we started doing these cases, and we’ve been learning, you know, over the whole time we learn more and more about insurance. The average person is a sitting duck. It doesn’t matter how smart you are, you don’t know life insurance. When those clients come to us, they’re getting educated by this. They know something’s gone terribly wrong. They don’t know how they’ve been really just taken. And then one of the things that they’re handed a stack of documents that no one reads, no one could read. And even if you did read it, you wouldn’t understand it. I mean, it’s like reading a book on brain surgery. If you’re not involved in this, you’re just not going to get it. The agent brings to the insurer, the client, and says, Here it is, it’s what I described, sign here. And they actually initial all of these things that basically say this is a fraud. I mean, the insurance, the lenders know what they’re doing, and they have the insurance sign off initial, all of these disclosures that kind of say, you you’re doing this, the interest rate changes, you’re going to owe a lot of money, We could, you’re gonna, even if you stop making payments, we’re gonna take your policy and you’re still gonna owe us money. So people put all this money into these policies, find out that it’s not for them, and they can’t even get out of it, because now they have prepayment penalties and they have a deficiency because the cash value is not enough to secure the loan. So they lose all their insurance, they lose all the money that they’ve already put in, and they gotta pay more money to get out of the deal. Right. And we’ve seen I mean, we’ve seen every crazy permutation of this. We one of our clients came in. The broker was saying, take a loan out on your house to pay these to to continue yeah. Get a mortgage on your house to continue to pay these premiums on this totally failing plan. And if you don’t, you’re going to lose everything, you know, so you know, you see, and by the way, most life insurance agents, they want to provide a product for their client, they don’t want to rip off their client. But the people who do this are unscrupulous and merciless, and we find our clients trapped and they need our help. Sounds like they get stuck in leaky boat and they can’t shovel out the or, you know, toss out the water fast enough to sort of stay above water and sort of creeps up on them. So I think both did a really good job of sort of explaining from a high level how this sort of stuff works out. But I wanted to hear from Peyman if maybe there’s anything else that they missed in terms of how these sort of premium finance insurance policies work and where they go wrong? Maybe if there’s anything in addition to what John and Steve and I have already covered. What they covered was actually perfect. There are times that there is a need for
Peyman: substantial amount of life insurance, let’s assume someone is in a taxable estate for estate planning purposes, and they need to get the insurance and they want to lock in their insurability, which is always a good thing because they’re healthy, they’re young, or they’re healthy, could be a little bit older, and they need to have the coverage, but they can make better use of premium dollars investing in their own business. So they finance the premium from a lender, and as Stephen said, maybe in two, three years they’re gonna have a liquidity event, whether it’s sale of an asset or an inheritance, then they can actually pay off the loan that’s encumbering against the property because against the policy because the lender is gonna take the policy as collateral and it’s going to be assigned. And a lot of times agents always say, Oh, you’re not going to have any personal exposure. That is not correct. What they do is you have to own the policy in a bankruptcy remote entity, let’s assume it’s an insurance trust or an LLC,
Peyman: and they will have the insured personally guarantee the loan. So if things go the wrong way or go sideways, they are going to be personally on the hook. That’s why when they say that they’re going to give you a stack of papers to sign, obviously there is a lot of provisions in there that a normal person, if they had an opportunity to go consult with their advisor, they would actually never get into it. Their advisor would say, absolutely not. And one of the reasons why I actually decided to get my insurance license to begin with almost twenty years ago was I used to get a lot of introductions from this insurance adviser who wanted me to assist with doing estate planning for his clients, which I did. Then he would want me to say, oh, this plan that he’s offering them is legitimate and kosher. And when I started looking at this, I’m like, no, this does not, and I cannot risk my law license just because he is giving me introductions and referrals. I can’t do that. So that was the time that I said, you know what, maybe it’s a good idea for me to go into the insurance business because I will not rip off my clients. I’m a fiduciary, I’m a licensed lawyer, and the clients will get a licensed lawyer as well as an insurance advisor. And it was around that time that I obviously was subleasing space where John and Steve were at, and a case came up. And I came to John and Steve and I said this is an opportunity, I would like to talk to you guys since you guys are the litigators, this is the problem with this particular client, we need to help them. Sure enough, we got involved and we were able to help the client. Great. I think it’s a very complicated area that it’s hard for someone to break into that maybe doesn’t have twenty years of experience and a law degree like you do. Is there you know, whenever you look at sort of these policy illustrations,
Arthur: you know, with your insurance industry eyes, what do you see that sort of other lawyers miss other than maybe it’s just a wall of text that, you know, a litigator’s eyes we don’t do contracts. Our eyes glaze over already. So what are some of the things that maybe if we do dive in, you know, they should be looking for? So a lot of times the illustrations that are presented to the client, there’s pages and pages full of numbers. And a lot of times, unfortunately, and maybe this is also an issue with the agent, the agent also sometimes doesn’t understand.
Peyman: And a lot of times we have actually seen that a lot of these premium finance schemes are brought in and introduced to the proposed insured by their financial advisor or by the insurance guide because they were approached by someone else, by another insurance advisor, who says, Hey, you have a great relationship with your client, and they listen to you. This is the best thing, and unfortunately the agent is naive. All they see is he’s going to probably compensate me for me to introduce my client. Let me go ahead and pitch this plan through this agent to my client who trusts me implicitly for so many years, and that’s how all of these transactions that we have dealt with majority of the time there has been another agent who’s been involved
Steven: that has known the insured before and then someone else steps in. Let me just make an additional comment because you mentioned that the policy illustrations, I don’t know if you’ve ever looked at one, but I’ve done maybe twenty, twenty five of these cases already. They all involve policy illustrations. I look at them and my eyes glaze over. I still don’t understand them, even though I’ve been involved in this so deeply for so long. I got to go next door to payments office and say, What does this mean? Because it’s impossible to understand, so the agent can sit down with his client and go over this policy illustration. It’s easy to sort of mislead them because no normal person, even a lawyer reading a policy illustration will understand it without an expert in the insurance agency who knows how to read these things to explain it. It’s opaque A lawyer by couldn’t
Steven: litigate one of these cases by themselves. They would have to have an insurance professional advising them. Want to That
Arthur: makes a lot of sense. Mean, know when to call in the expert is always good advice to follow, I think. And, you know but I think one of the big signposts, it sounds like, for for these things being problematic is the amount of extensive sort of disclosures that they end up having to sign. So my question for you, John, is, you know, how do you prove fraud when the defendant could sort of point to a stack of documents where the, you know, the client signed every single page and term in there that pretty much gave up their firstborn child and and anything else? How do you sort of unwind that knot for them? Yeah. And so and that’s a big sticky point always in these cases. And there’s there’s, you know, there’s two lines of attack. The first is if it what if they did understand it, if it was presented in way they’d understand it, they would go running for the hills. No rational person would ever enter into this deal if they understood those disclosures. And the second is we have to drill into how are these forms presented?
Proving Fraud in Court
Jonathan: What were the specific circumstances? You know, we get very granular. What happened the day they signed it? How did they come to sign a form that says you’re going to lose your shirt if you go in with this deal? And we always find that it’s presented, you know, the unscrupulous agent who’s presenting it to them always puts it in a context where they can’t really pay attention. And there are a number of different variations on it that we’ve seen, but it’s always, always the case. So for example, in one case they met, they met our client at a restaurant and just opened the page to sign here, sign here where they’re talking about a football game, keep you misdirected, keep you off balance with food on the table, right? And it’s so many documents that you know it’s like we all do when you go to rent a car do you actually read the car rental agreement? You can’t. You do that.
Jonathan: So they get you off balance, they get you in their confidence that’s why it’s called a con and they present the documents in a way where you’re not gonna pay attention. You’re gonna pay attention to your french fries or whatever they do. We’ve had a million versions of it. Oh, this is only gonna this is gonna expire today. You gotta sign right now. Here’s this giant stack of paper. But I reviewed it. It all says what I told you it says. Go ahead. Initial here. Here. Here. You know, it’s whatever they do to get you through the documents without paying attention to them. And so we have to zero in on that moment, and we do. And we present that moment factually and show how it’s just a big fraud. Know? And you know it’s a fraud if you’re being pulled away from the disclosures and you’re signing. You know? It’s it’s a fraud. You really focus on the context surrounding the signing, like a bad timeshare rather than maybe the substance of the actual disclosures themselves because you can really sort of trot out how bad the situation is and get everyone focused on that rather than a bunch of boring legalese going to trial. Is that sort of about what you’re saying? And and and you, you know, you show the jury the disclosure. Would you sign this and then go with this deal if you actually read it? And they know they know the person didn’t read it because nobody would. Nobody would. It’d be irrational to do it. So we know it was slipped under. Steven, what what are some red flags that lawyers should watch out for, you know, when a potential client starts describing their life insurance situation? You know, right now, I’m hearing lots of disclosures that no rational person would ever sign and probably like a a timeshare esque, you know, sales tactic where they were wine and dined before they signed the thing. Any anything else? Well, two very important things that I I mentioned before. Number one is there has to be a genuine need. This isn’t like something where you do because it’s an investment where you’re going to make a lot of money or get free life insurance. I mean, it is marketed and it is presented as free life insurance, but the insurance companies are not hip to that. And they actually make you disclose that your agent didn’t say this was free life insurance or cheap life insurance. I mean, because that’s how it was done before. So number one, if you think it’s going to be free or cheap, it isn’t for sure. It isn’t because if it was, everybody would do it. Second thing is the exit strategy. There needs to be a way to pay off that loan in the next few years. You need to have a liquidity event. Something’s gonna happen for you to pay off that loan. It cannot go on indefinitely. You can’t keep renewing it, And dying is never an exit strategy. That’s not the way the loan is going to be paid off. So if there isn’t upfront a way where that loan is going get paid off in the next few years, it’s a scam. And there are things that the client won’t understand that we can analyze once we look at it. The illustrations that are presented when you when you analyze them carefully, they always show you that the loan’s not gonna liquidate as as it’s represented. You know? They always show us that. And so we can prove that this plan would not work. You know? The client’s putting in more and more money, and there are traps in that we haven’t even gotten into yet. But there are traps in this plan where, although it’s not supposed to cost you out of pocket, every year you’re shoveling more and more money into it. And then after you put in enough, the picture on the agent is, I know it’s a lot more expensive than you expected, but if you quit now you lose everything, so keep paying more.
Red Flags for Attorneys
Peyman: It’s a plan that will never ever work. And also one of the other red flags is a lot of times the agent, they put a spreadsheet together themselves using Excel spreadsheets, and they show the money that you’re borrowing from the bank. For the next twenty years, the interest rate is gonna be exactly the same. There’ll never be an increase in interest rate, and they don’t tell them that the majority of the time the loans will probably adjust. The rate will adjust on an annual basis. We have this case right now where the loan adjusts on a monthly basis.
Peyman: And what they do is they actually show this rate of interest going forward, but the term of the loan is for actually five years a lot of times. So they have to refinance in five years. So they’re looking at this spreadsheet that technically is really not complying also with the insurance industry standards because they put the spreadsheet together, then they take some numbers from the actual insurance illustration. And life insurance illustration is actually like 20 pages, sometimes 30 pages, sometimes 15 pages, depending on the product and depending on the age of the insured. So they present this on a single page, and they show this single page and they say look we’ve put in this much money in of so many years look I’m taking the money out that we borrowed from the bank, we are paying that loan off, look how much more cash you still have left in the policy and guess what We can’t call it free insurance, it’s cashless insurance.
Steven: One of the things that’s worth you mention about why this is going on and why it seems to be so pervasive is the commissions that the insurance company pays to the brokers for selling these particular deals. And then what is inevitable with premium finance is that the size of the life insurance is huge. It’s much larger than anyone would really need if they were paying for their own life insurance. So that inflates the amount of the premium or the commission even more. And so the brokers are incentivized to do these massive life insurance policies. I mean, we have a client now, got a $100,000,000 life insurance policy. He got life insurance policies on his infant kids for millions of dollars, infant kids. 20,000,000 to be exact on each 20,000,000. And that’s because the commissions are, you can tell them more about the commissions. Yeah, I mean, huge. And they actually pitched this to this gentleman when he actually got this coverage, he was not even 30 years old. And they told him that this is the best thing you could actually do for your family. I think between him, his wife, and his children, and his parents, and his in laws, I think it was a total of $250,000,000
Peyman: of insurance. And he, at one point in time, he was paying a substantial sum of interest on the loan every month. And it kept on going up and up because people don’t realize, let’s assume for a second the premium year one is $10,000 which obviously premium is significantly more than that. So you’re borrowing $10,000 and let’s assume they say your rate of interest is 3%, so then you pay $300 Year two, you borrow another 10,000, and now your rate of interest, they’re gonna say it’s 3%, so $600 Technically, no, the interest rate probably is 4%. Year three, you borrow another $10,000 Now the interest rate has gone up to 4%. So you can see how after starting year one and on, things keep on escalating and the amount keeps on going up very, very high. All of a sudden,
Arthur: it blows up. And one more thing, the insurance companies love it because these almost always lapse at some point. So they’ve made all this money and they’ve gotten all these premiums. And because the insurance lapse, because this will never see the end of the day when someone actually dies, or at least very rarely, they’ve gotten all this money, all these premiums, and they’re never gonna pay it out. Then death by a thousand cuts until it implodes and then they get to walk away. I mean, I I wonder, this, like who who do you go after for this? I mean, is this something where the insurance companies, like, are sorta insulated from it because they’re like, oh, no. It wasn’t us. It was the broker who completely misrepresented all this stuff. You know, had they actually given them everything and explained it properly, like, we’re not to be blamed for this situation that we’ve definitely orchestrated, you know, by virtue of this whole system that they’ve they’ve put in place. And this is sort of a an open question forever has an answer to that. Yeah. So we go after we definitely go after the agent and the broker, and we go after the carrier. The carriers
Jonathan: understand how to interpret these deals. The insurance carrier knows what’s really happening. They have a lot of paperwork to
Steven: give lip service to, oh we didn’t know, but they know. Their own internal guidelines usually say you can’t do sell policies under these conditions and they’re always making exceptions and selling it. And so we go after we go after them all in a proper case. We get we actually even go after the lender, but for the most part, we don’t for a number of reasons. It’s not gonna be productive for the client, but once in a while, do go after the lender as well if they’re really in cahoots on this. It’s really a conspiracy among the three, the lender, the insurance company, and the brokers. But the reason we don’t go after the lender is the lender has a position that, you know, we just made a loan. We don’t even know you because your broker just came to us and said, we want a loan. And then they have an attorney fees clause in this thing so that if they do prevail, now you gotta pay for their attorney fees. The insurance company is a deep enough pocket. So you’re always gonna be able to collect from the insurance company. You don’t need to have another front on your battle, and you don’t need to have somebody that has a pretty good excuse to say, I just made you a loan that you asked for. I didn’t come to you. I didn’t push this. I didn’t you know, your broker came to me and said, Len, here are the paperwork. Here was the money. What do want us to do? So they’re the money guy. Mean, you know, go away. They know what they’re doing because they have the disclosures too that says, you’re gonna lose all your money and here, just initial this. Well, at least they’re not you know, it sounds like typically they’re not doing the high pressure sales tactics. It’s like, if you wanna hang yourself, I mean, sure, I guess. Our hands are dirty as far as we’re concerned, but it just doesn’t there’s no extra benefit for the client in most of these cases. I mean, one of the cases that we had, there was a huge prepayment penalty on on the loan that they had borrowed to do the premium finance, and we had to negotiate with the lender to reduce the prepayment penalty because this was going sideways. So I think everyone
Arthur: knows it’s just different levels of dirty and booze worth evolving in the case to go after. It sounds like, you know, if your client gets paid, pick the most efficient route in order to, you know, get them justice. Don’t overcomplicate it with too many defendants if you don’t have to. That is correct. But but just just to add something,
Jonathan: there is definitely time where premium finance does work if it’s done the correct way, if it’s done the legitimate way, and I have seen it work. And a lot of times it benefits a lot of people if it’s done the correct way. And we turn down a lot of cases, know, we have a lot of people coming to us who think they have a case and maybe they don’t. It’s the premium finances placed in a proper circumstance, and just because they’ve changed their minds later, or something’s going on where you don’t have somebody being defrauded and there’s not misuse of the product, then that’s not a case for us. I mean it certainly sounds like it’s sort of becoming more at the forefront of people’s thoughts. I mean, these things seem to be more common. We have NASCAR champion Kyle Busch
Arthur: filing his $8,500,000 lawsuit against Pacific Life because of this life
Jonathan: insurance plan. So, you know, you’re not involved in that case, but what, what is sort of a high profile lawsuit like that really signal about where this litigation area is heading? Are you seeing more of it or less of it? We’re seeing more for sure. And that case is based on what’s publicly reported. That’s a that’s kind of a paradigm, except it does not have actual financing in it because he had a lot of cash that it convinced him to put up his own cash to do the same deal that’s that doesn’t work. So we’re seeing more of it. And part of that is because we’ve done so many of them successfully that now they’re coming to us. Also based on economic conditions and things happening, like the interest rates increased considerably.
Steven: So a lot of the plants collapsed earlier than they might have. Otherwise, they would have collapsed anyway, but they collapsed earlier. So we we definitely are seeing a lot more. Steve, what are what’s your feeling on that? I I think it’s growing as a a field for litigation. It’s also growing as a field for the brokers and insurance companies to promote these deals. You know, a lot of people get involved in this. They lose their money. We’re dealing with with high net worth individuals almost always. We did have one case with just a regular hairdresser, you know, normal person that was sold. I mean, what was it? $810 12,000,000 worth of $20,000,000 worth of life insurance that they totally couldn’t afford. And they, those were the people that were told to mortgage their house to keep paying the premiums. And of course, it caused a huge amount of discord in the family between him and his wife. And they almost lost everything they had because they thought they were making a buying free life insurance. So I think that a lot of people lose their money or lose some money and then just don’t don’t sue. I mean, everybody who loses their money doesn’t come to a law and doesn’t know what to do. So I think that as long as the insurance companies and the brokers are net making money, you know, litigation for them is a cost of doing business. So, Peyman, you sort of mentioned that, you know, premium finance can work in some pretty limited, legitimate circumstances.
When Premium Finance Is Legitimate
Peyman: Can you give us some quick hitters on what what that exactly looks like so that, you know, folks can distinguish between our hairdresser getting millions of dollars of life insurance and someone maybe that’s more legitimate, that’s more of a gray area, like a doctor or something? Sure. So like, for example, you have a client where they’re in a major taxable estate, meaning if they pass away, their heirs have to pay a lot of taxes to IRS for estate taxes, and they don’t have the liquidity to pay the taxes because when they pass away, nine months from date of death, they have to pay the taxes and then they have to file certain tax returns, and they’re not going to have the liquidity. But they need to have the insurance, and they think that right now if they take their own premium dollars and invest it in their own business, they can get a higher and better rate of return. So they get premium finance, they finance the premium from a lender, and they keep the insurance, lock in the insurability knowing that in three years or five years whether they’re going to sell a substantial asset to pay the lender off, or if they’re going to receive a very big inheritance from a family member who’s terminally ill and they’re on the verge of passing away, they do that. And I have seen that happen because they need to have the insurance, but they just don’t have the liquidity right now to pay for it.
Jonathan: When payment talks about locking in the insurability, so when you’re younger insurance costs a lot less because if you’re healthy and then every year that goes by there’s more of a risk that your insurance is going to be a lot more expensive because you have some health complications or you’ll have a complication that makes you uninsurable, so you can’t get life insurance. So if you have the ability to get it earlier, some people prefer to do it. They lock it in at that low premium, and then they have insurance for life, and over a lifetime it saves them a lot of money. And so that’s where premium financing can come in if you’re in that category. Now one thing you mentioned before I wanted to comment, you said it could be a doctor as opposed to a hairdresser. Most of these people that get taken are actually quite wealthy. The hairdresser is the exception, know. So they’re wealthy. As I said before, they’re very smart and sophisticated, but not in life insurance. So it’s not how much money you have. How much at risk are you if you go into a crazy plan like this and how much will you lose? That’s what we look. And by the way, we’re not talking about temporary or term insurance, we’re talking about permanent insurance for the uses here. It’s not going to be temporary insurance, that’s why the premium is significantly higher than temporary insurance. Going back to the comment that you made, we actually did have a doctor client, a surgeon, who was taken for a ride exactly similar to what John just described, doing a premium finance transaction that
Jonathan: he came and sought for help. No one’s safe. If you’re successful, you’re less safe, arguably. Yeah, exactly. And I’ll tell you, these are very complicated cases. You’ve
Arthur: got to fight hard, and we’ve recovered in every single one. Recovered very well in every single one. I’m happy to say. Yeah. That’s a great that’s a great record. And I don’t think anyone will be assuming that these are easy cases after just our initial run through for this. There’s a there’s a lot of info and subject matter expertise being thrown at me, and I’m like, I’m also struggling to keep up with it. So, I mean, I can’t imagine getting a giant policy and having to try to figure that one out, you know, on my own thing. It makes a lot of sense that you folks have carved a a good niche for yourselves and have found a lot of success because it really does seem like you need your subject matter expert, and you need your litigators that are willing to sort of dive in with them to sort of get a handle on, you know, what went wrong and why and how the hell do we explain this to a jury. And so related to that, John, you know, I you’ve you’ve gotten $5,000,000
Trial Strategy and Jury Communication
Jonathan: jury verdicts, successfully defended $12,000,000 property cases. You know, in complex financial fraud cases, you know, what what do you feel jurors actually respond to? Because it’s probably not gonna be a boring recitation of, you know, these transillas Yeah. So it goes back so that 5,000,000 case co tried with Steve. Steve was actually more of the lead counsel than I was, although we both handled big portions of the case. But what we, you know, what we look at is how to communicate the human experience that’s happening. Know you have to communicate
Jonathan: the human experience. What is that client going through? And it’s always in a personal human way very difficult on them, very harmful. It changes who they are, it challenges their own identity, it creates strife in their families, and we want to communicate that actual experience that this person visited on them out of greed in these in these premium finance cases, out of pure greed, because these agents know it won’t work. I mean, as Peyman said, sometimes there’s somebody involved in the mix who’s just naive, but the person at the core of it knows that they’re ruining someone’s life and they do it for money. And so we have to communicate to the jury, what is that really like? Because you take a rich person and sit them down and go, they got ripped off. You have to make the jury care about the fact that even a rich person is going through horrendous stuff because of this. Do you use a lot of, like, you know, sort of comparisons or try to simplify it? You know, use, think a mentor of mine, he really likes to use Aesop fables as a way to sort of convey
Steven: what would normally be a very complex, sort of messy financial situation. You can usually boil it down to some sort of easy parable that you can get across to the jury. Steve, I’ll let you Well, actually, haven’t heard of that, but I’m going to look up some ESOP cables, the safe tables for my next trial and see how many of those I might be able to employ. I think it’s a great idea. There’s usually some kind of foil or some kind of theme that we want to just keep repeating and pounding in to the jury. But, you know, one thing I got to say is that we only represent the good guys and that makes it a lot easier is because, you know, we’re always right. And so there’s a lot of obstacles in any kind of litigation, and we’re dealing with people that have a lot of money and unlimited resources to fight us back. But
Steven: the most important thing in litigation is perseverance, and we’re very good at keeping the client comfortable and allowing them to go through the experience and let us do our jobs. You know, like 95 of the time we come through on the winning end and get them what they need and what they can get. But, you know, having the right clients and, you know, cause we’re not an insurance defense firm, we can pick our cases. We don’t take the ugly ones with people that are not right. So it’s much more enjoyable to be a lawyer when you’re helping somebody who has been cheated and is the right
Managing Client Stress
Steven: It’s energizing when you have the moral high ground. And I think those are the fun cases where, you know, your long nights can be pretty justified. And when you get a good result, you get to feel pretty damn good about it. But I think, you know, a lot of clients, if this is their first foray with litigation, probably are not having the best time. And, you know, Steven, your bio mentioned that you sort of help clients handle the stress that litigation brings. You know, how does their sort of emotional state affect trial preparation and maybe their testimony and how do insulate them or involve them? How much, what does that sort of look like for you? Well, it involves some insulation and it involves some coddling and it involves perspective and building their confidence in what’s happening. Because like I said earlier, perseverance in litigation is one of the most important aspects of actually seeing it through. A lot of people, especially when you’re dealing with individuals and not large companies, and we mostly represent people, individuals and not big companies. We’re usually against the big companies, and there is a lot more stress on those people. Sometimes the stress gets to them and they want to settle the case, they want to fold, or they want to just give up because of the emotional toll. So it is very important for us as a firm to both insulate, coddle, protect, support them emotionally,
Steven: not like, you know, just tell them whatever’s happening. We couch it in terms that is realistic, but one that is supportive. It always seems to work to keep the client, we haven’t had that I can even think of right now offhand a client that said, you know, I can’t take this anymore. So we do focus on keeping them content and satisfied and relaxed as they go through this process. What I’ve always, always say is, litigation is like cancer. Even if you beat it, you would rather not have had it. So one approach, of course, is to try to resolve their cases early on. And what we generally do is like we were talking about earlier, we start cooperative, we try to make a deal, we try to make it better for everyone, and then we just escalate. So if they’re not going to cooperate and it’s not going to be easy, then we know we’ll take the next step. We’ll file a lawsuit. We’ll say, come on, this is going be real. If they don’t respond, then we start the discovery process. And if we start pressuring there, we’ll get them into a mediation, try to get the mediator to help us. And if that doesn’t work, we’ll take them to the gavel. Very involved process. Think one thing I forgot is this like a, do you do hourly? Is this like a contingency fee thing? How do you normally structure how the bills are going to get paid for these? It depends. And sometimes it’s contingency, sometimes it’s hourly, and sometimes it’s hybrid where we’ll reduce our hourly rate for a piece of the case. So it really just depends. We’ve explained to the client that generally
Steven: they’ll do better or they’ll pay less in the end if they’re paying hourly because there is a premium for us carrying them through contingency.
Arthur: But we’re open to all ideas depending on the nature of the case, but we’ve done all three. Cost management’s a pretty important aspect of practice. But, you know, I I think we’re we’re getting close to time, so I I I do have only maybe a few more questions for you before we can wrap up, and I can give you folks a platform to to tell everyone how they can get ahold of you. But, you know, one of the things that we had talked about in our sort of initial meeting call was how AI hasn’t really necessarily shortened the time to do things in order to reduce fees for clients, but what it has done is sort of deepen what you can do. Can you sort of expand on that and maybe how each of you are actually using AI in your practice, if at all? Yeah, I’ll
AI in Legal Practice
Steven: start, but we’re all, we actually are all using it and we use it a little bit differently for each of us. But so AI is an incredibly powerful tool, but it’s not what it’s represented to be. So where we, you know, when we first started integrating AI tools into our practice, we were hoping it would just shorten the time that we have to do things, which would just save money for clients. Know, if we could turn a four hour task into thirty seconds saves the client a lot of money. But it hasn’t panned out that way. But nevertheless it has incredibly powerful uses. And one of the great uses is as a brainstorming tool. It’s wonderful for that. We feed it a factual scenario and it comes back and it gives us all sorts of ideas and maybe half of them are crap. But if you get one idea in there for a half hour of work that you didn’t have before that’s going to help the client, really useful. And then there’s other places where it also generates a lot of ideas. The thing we don’t do, and that we keep running into other attorneys doing and getting burned for it, is we don’t use it to put out work product. It’s not a tool that can put out work right. You can’t tell AI to write your brief and then go send that into court. It makes up stuff, And it’s also just not persuasive the way a human being is. It’s, you know, so we use it, we use it for a lot of tasks in the office that help us and just help deepen what we can bring to client. And Steve, you know, I was going to say a similar thing. So I use it all the time, but you can’t trust AI and you cannot rely on AI and you definitely can’t cut and paste from AI into your brief. And like John said, you know, you can’t just use it to generate your brief, but it is incredible in terms of what it will do in giving you ideas. So we generate what it’s going to generate, and then we look it over and it gives us ideas, sometimes things that we didn’t think of, or angles that we didn’t think of, then we develop those things from AI. But, you know, I try to incorporate it into virtually everything I do to make sure that I’ve thought of everything that can be thought of. Invariably, comes up with some angle or some idea that I did not think of, and then I can add to it. So you could take a letter, for example, run it through there. It’ll give you suggestions and I think, oh yeah, that’s a nicer way to put it, or give you an idea about another argument that you could make. And, you know, we can then develop that. But you can’t just, like John said, there’s no cutting and pasting, which a lot of attorneys are doing, because when you get the output, it looks really good. I mean, it looks like something that is all thoughtful, but then you look at the cases, like, for example, chat GPT, it’s almost never right when it cites a case. It’s almost never right. In fact, like maybe twice out of hundreds of times. So you got to check every site. Most of the time it’s wrong, which is why I say you can just use it for ideas. You cannot use it for authorities. How are you, Peyman? Same thing, just to go through it and just get ideas from it, but not really use it as output. We said, we actually have a case in the office where opposing counsel actually used
Peyman: this, used AI, and did her brief. The judge actually was really, really mad at her. And he actually, he reported her state bar. And it was pervasive. She did it over and over again. He
Arthur: reported her to the bar and she’s facing a lot of problems now. Makes sense. I mean, we just had a recent California appellate decision where, you know, a a lawyer had the book thrown at him. I think judges are are kinda sick of it. I mean, they need to trust the things that you file, and that usually means that when you put your name on it, that means you’ve read it and read the cases that you’re citing to. And that’s sort of like, you know, putting your word that this is something that they can trust. And when that doesn’t exactly align, then, yeah, I mean, you erode the entire sort of foundation of of how this legal process works in some respects. I think there’s a a great concept of, you know, rubber duck debugging where you sort of just talk through a problem with a with a rubber duck to sort of figure out why your program isn’t working. And I feel like, you know, there is rubber duck lawyering. I mean, you go to AI, and you can sort of run through a problem. The effect patterns I mean, I love to throw motions at it and say, here’s my motion. Like, what do you think’s weak? What do you think the other side’s gonna say? You know, what what can I shore up? And just sort of, you know, think through it because not everyone you know, even if you’re at an office, like you guys get busy. You don’t wanna be constantly bugging someone about a brief rewriting. So it’s just have know, an easy thing to bounce ideas off of. I I agree. I think it’s a pretty pretty powerful tool in that respect. Well, I’ll tell you what, you guys have been wonderful. You have broke down a very complex problem as as simple as we could possibly do in a, like forty five minute podcast. So thank you all for the effort on doing that. For the end of this, this is for your opportunity to tell people who you are. What’s your email address, website? How can people get ahold of you? When should they get ahold of you? I’ve had people give their, their cell phone numbers to call them for help on cases if they want. But I leave that judgment call up to you. You can find our firm and learn more about it at quantumlawgroup.com.
Jonathan: We actually just launched another website, which we’re, which we like a lot. We had the first one from when we formed and it talks about a lot of the different services we provide. So this premium finance is just one little area of the litigation we do and of the transactional work we do. So we cover a broad spectrum of services. And if you go there, it’s also gonna have our contact number to call into the office, and it’s got numbers for each of us and email addresses for each of us. And we have a we have a strong law firm. We’re growing, and we’re really excited about what we’re up to in the world. Hey, Joel. John, Steven, amen. Thank you so much for for being guests. Thank you, Arthur. I enjoyed it.
