Beyond Structured Settlements

The King of Torts Addresses Structured Settlements

The keynote address by esteemed trial attorney Joseph Jamail (aka "The King of Torts") was one of the highlights of the NSSTA 2008 Winter Meeting.

Jamail and Jay Harvey, the immediate past-president of the Texas Trial Lawyers Association (TTLA), who also spoke at the NSSTA meeting in Austin, represent the most recent plaintiff attorneys to appear at NSSTA meetings to endorse structured settlements.

Among other endorsements from plaintiff attorneys, the King of Torts' structured settlement proclamations now appear on NSSTA's website :

• "Structured settlements provide the ultimate safeguard for settlement funds."
• "Structured settlements help lawyers protect the needy from the greedy."

The message and choreography of NSSTA's plaintiff attorney appearances and endorsements are strikingly similar. Escorted and introduced by, or featured with, their NSSTA-member structured settlement advisors (Robin Young for Joe Jamail), these trial attorneys announce their support for structured settlements and make positive, uplifting comments about the structured settlement industry. The NSSTA audience applauds - with enthusiastic standing ovations for celebrity attorneys such as the King of Torts. NSSTA allocates little or no time for questions. No controversial issues are addressed. Everyone walks away happy. NSSTA posts the positive sound bites on its website and declares a public relations victory.

NSSTA's continuing strategy to feature plaintiff attorney endorsements is understandable in the context of results from NSSTA's recent marketing study titled "A Study of the Structured Settlement Process Conducted on behalf of the National Structured Settlement Trade Association". This survey "of attorneys involved in structured settlements and structured settlement recipients" was conducted for NSSTA during 2006 and 2007 by the University of Georgia Research Center. The purpose of the study, as reported by Joseph M. Costello at the NSSTA 2007 Annual Meeting, was "to better understand the perceptions these stakeholders have of structured settlements".

Some of NSSTA's announced findings based upon research including telephone interviews with 43 plaintiff attorneys:

• 95 percent of the plaintiff attorneys surveyed said they were proponents of structured settlements;
• 75 percent said they would recommend a structured settlement in an appropriate case;
• 70 percent said they retain a structured settlement consultant;
• And yet, according to NSSTA:
  • Only 7% of personal injury settlements between $75,000 to $100,000 involve structured settlements; and only 30% of personal injury settlements over $1 million;
  • Plaintiff attorneys prefer (and presumably recommend) the following financial planning resources for their clients:
    • Trust company/department - 30%
    • Financial planner - 28%
    • Structured settlement consultant - 23%
    • No response - 19%

Among NSSTA's "lessons learned" from the survey: plaintiff attorneys are a critical point of contact for structured settlement education and marketing.

Based upon these findings, NSSTA's public relations strategy with plaintiff attorneys makes a lot of sense as a critical priority for the growth of structured settlements. Endorsements by prominent plaintiff attorneys (including especially "The King of Torts") are positive and valuable for the structured settlement industry.

To grow the structured settlement market, however, current industry stakeholders (including NSSTA, SSP, NASP and their members) need to engage attorneys in a more well-defined educational conversation about structured settlements. Targeted attorneys should include judges, mediators, special needs attorneys, trustees, guardians, defense attorneys, legislators and regulators - as well as plaintiff trial attorneys.

For plaintiff attorneys, this recommended educational conversation should address priorities S2KM previously identified in a blog post criticizing the lack of structured settlement education at the AAJ 2007 Annual Convention.

On a positive note for AAJ and structured settlements, the December 2007 issue of "Trial" magazine (the "Journal of the American Association for Justice") provides a small, but timely and related, educational step forward. The issue is titled "Find Your Way to Settlement - Smart Strategies for Your Next Case". Among many settlement articles and structured settlement advertisements, one article addresses structured settlements - Dov Apel's article: "Settling the Cerebral Palsy Case". In his article, Apel summarizes some (but far from all) of the most important structured settlement issues for plaintiff attorneys including: protecting the confidentiality of injury victims' personal medical information; and 468B qualified settlement funds.

In addition to Joseph Jamail's valuable endorsement and public relations sound bites (plus considerable annuity premium), what is the structured settlement legacy of The King of Torts? This author hopes Joseph Jamail's most important and lasting structured settlement contribution will result from his advice in Austin:

"Advocacy should be part of the practice and training of structured settlement professionals".

S2KM endorses the King of Torts' advice and further encourages:

• Continued structured settlement research and advocacy focused on injured and disabled persons;
• Continued education about structured settlement public policy and laws - including how to improve the laws and related legal processes;
• Respectful and open discussion about issues related to such research, advocacy, education and improvement.

For additional information about the role and responsibility of plaintiff attorneys in structured settlements, see Chapter 5 of "Structured Settlements and Periodic Payment Judgments".

Addendum 01282008

Since writing and publishing this post, the author has received comments from NSSTA representatives pointing out some of NSSTA's efforts and successes in engaging plaintiff attorneys in educational dialogue about structured settlements - including what needs to improve and change.  S2KM acknowledges NSSTA's efforts to engage some of its plaintiff attorney speakers in meaningful educational dialogue. President Henry Strong, in particular, should be recognized and thanked for his questions to plaintiff attorney Webb Brennan at the NSSTA 2007 Fall Meeting.  Although this author did not attend that presentation, Strong's questions apparently resulted in valuable and frank discussion about structured settlements including problems.  That type of discussion represents a positive step in refocusing and growing the structured settlement market and should be encouraged and continued. S2KM apologizes for missing the Webb Brennan discussion and for failing to sufficiently credit NSSTA in the above post for its efforts to develop meaningful educational dialogue with plaintiff attorneys.

Structured Settlements in 2007

Happy holidays from S2KM Limited. Thank you for reading S2KM's blog during 2007. This final 2007 S2KM blog post highlights some of this year's important structured settlement developments and issues.  For additional background information, see:

• S2KM Mid-2007 Structured Settlement Report
• Structured Settlements in 2006

Industry Growth and Development

• Industry insiders are predicting final 2007 structured settlement annuity sales (qualified and non-qualified) will match or slightly exceed total 2006 production of $6.1 billion.
• Membership growth in 2007 for the National Structured Settlement Trade Association (NSSTA) and the Society of Settlement Planners (SSP), the primary structured settlement trade associations, also appears flat. Neither of these associations has articulated a strategy for growing the structured settlement industry.
• NSSTA replaced long-time Executive Director Randy Dyer in 2007 with association management company Smith Bucklin. NSSTA has announced it will continue a business relationship with Dyer. However, NSSTA has not yet announced Dyer's new role or responsibilities.
• Annuity provider Mass Mutual exited the structured settlement industry in 2007 joining other recent industry departures such as Genworth, Travelers and Aegon. No new annuity providers entered the structured settlement market in 2007.
• The secondary life and annuity markets continued to be controversial within the structured settlement industry in 2007. Semetra resigned from NSSTA in 2007 based in part on their disagreement with NSSTA's Bylaw Amendments related to structured settlement factoring. Neither NSSTA nor SSP allows factoring companies to join their associations.
• Although the secondary structured settlement market continues to grow in 2007, the overall pace of its growth appears to have leveled off for many, but not all, participants.
• Preliminary strategic recognition and some consolidation continued during 2007 within these overlapping markets:
  
  • Structured settlements;
  • Personal injury settlement planning;
  • Litigation funding;
  • Special needs planning;
  • Secondary insurance and annuity markets.

Legislation and Regulations    

• New York Governor Eliot Spitzer announced a $750 million "agreement in principle" for Executive Life of New York in 2007. The agreement is designed to continue paying all ELNY annuitants 100% of their benefits. The announcement represents a public relations victory for the structured settlement industry. Many questions about the agreement, however, remain unanswered. For example: the amount of contributions from indemnity (casualty) insurers who own or have assigned structured settlement annuities.
• State Medicaid Agencies are continuing to adopt annuity provisions from the Deficit Reduction Act into their state Medicaid Plans. Interpretations and applications of these new annuity rules remain inconsistent creating process bottlenecks and denials. The impact of the secondary annuity markets on Medicaid qualification remains unclear in 2007. The Social Security Administration (SSA) announced in 2007 that it will draft POMS for annuities in 2008. For additional information about the Deficit Reduction Act, see:
  • Release 41 of "Structured Settlements and Periodic Payment Judgments";
  • Inconvenient Questions; and
  • NAELA Annuity Policy White Paper.
• 48 states have enacted structured settlement protection statutes. Overall, these statutes appear to be accomplishing their purposes and functioning with increasing certainty and efficiency. Pennsylvania's judiciary adopted Pennsyvania Rule 229.2 in 2007 tightening some rules and processes within that state's protection statute.
• The U.S. Treasury has not ruled on single claimant 468B funds in 2007.

Case Law - some of the significant 2007 cases:    

• DOJ Sovereign Immunity Defense - see "Drinker Biddle's Structured Settlement Update" for analysis of two DOJ sovereign immunity cases: Transamerica v. Settlement Capital and Continental Casualty v. United States.
• Primary Market Disclosure Case - "Pullman & Comley's Structured Settlement Insights" provided the first Internet analysis of Joseph v. The City of New York which Pullman & Comley characterizes as ""the first court opinion to analyze the requirements in structured settlement protection acts that disclosures be made when negotiating a structured settlement."
• Rapid Settlements cases challenging secondary market laws and business practices including:
  
  • Rapid v. Symetra; and
  • CNA v. Rapid Settlements

• Murphy v. IRS - Eleven months after ruling that taxing damage awards for nonphysical compensatory damages violated the United States Constitution, the United States Court of Appeals for the District of Columbia Circuit has reversed itself in Murphy v. IRS by holding that the United States can tax awards for emotional distress and injury to reputation.
• Macomber v. Travelers - the parties agreed to a confidential settlement in 2007.  It is unclear what legal precedents, if any, the earlier Connecticut State Supreme Court rulings in this case will hold for current or future structured settlement litigation.
  

Educational Programs and Resources

• Both NSSTA and SSP offered certification programs in 2007.    
• S2KM attended educational programs for the following trade associations in 2007 and wrote blog posts (see links) evaluating their structured settlement educational programs:          
  
  • National Structured Settlement Trade Association (NSSTA).          
  • Society of Settlement Planners (SSP)          
  • American Association for Justice (AAJ)          
  • National Academy of Elder Law Attorneys (NAELA)          
  • Academy of Special Needs Planners (ASNP)          
  • National Association of Settlement Purchasers (NASP)    
• The structured settlement industry continued to offer various additional educational resources in 2007:          
  
  • Blogs, podcasts, wikis and concept maps;          
    
  • Digital and hardcopy newsletters;          
    
  • Hardcopy legal textbooks.

Business Standards and Practices

• 2007 developments
  
  • Broker Relations Initiative - status report provided in this S2KM blog post.
  • SSP Ethics Project - status report provided in this S2KM blog post.
• 2007 issues:
  
  • Structured settlement public policy
  • Claim management vs. settlement planning
  • Consumer and investor protection including:
    
    • Compensation disclosure;
    • Informed consent;
    • Single claimant 468B funds;
    • Unfair claim practice legislation;
    • Fiduciary responsibilities for professional advisors.

• Additional compensation issues:
  • Rebating
  • Affinity programs
  • Secondary market transactions
• Unauthorized practice of law.

Secondary Life and Annuity Markets - 1

Recent developments related to the secondary life insurance and annuity markets should encourage several professional associations to learn more about these markets - and to provide improved education in 2008 for their members about these markets.

Responsible professional associations include:

• The National Structured Settlement Trade Association (NSSTA)
• The Society of Settlement Planners (SSP)
• The National Academy of Elder Law Attorneys (NAELA)
• The American Association for Justice (AAJ)
• The Academy of Special Needs Planners (ASNP)
• The Special Needs Alliance (SNA)

Recent secondary market developments include:

• Mealey's Conference: "Life Insurance in the Secondary Market" - Mealey's in-person conference, developed in collaboration with Drinker Biddle, is occuring December 11-12, 2007 at the Harvard Club of New York City.
• Deal Flow Media (DFM) - DFM, a publisher and educator focusing on specialty financial markets including life settlements, has announced it will enter the structured settlement market in 2008.
• A.M. Best - A.M. Best recently introduced "Best's Structured Finance Center", a web portal for the insurance-linked securities market.
• NCOIL - The National Conference of Insurance Legislators (NCOIL) adopted a Model Life Settlements Act at its most recent meeting.
  

For additional information about life settlements, see:

• Wikipedia's "life settlement" entry
  
• New York Insurance Department's "Life Settlements: Top Ten Questions".
• Deal Flow Media's "The Life Settlements Report"

For additional and related S2KM commentary, see:

• Structured Settlement Secondary Market
  • Structured Settlement Transfers
  • Settlement Transfer Update
  • Settlement Transfers - Release 39
  • How the Primary Market Views Factoring
  • NSSTA Bylaw Amendments
  • J.G. Wentworth v. Peachtree Settlement Funding
  • Settlement Transfers: Wentworth and Symetra
  • Rapid v. Symetra
  • Review of Robert Wood's article: "Structured Settlements: Factor vs.Commute".
  • See also: Chapter 16 in hardcopy "Structured Settlements and Periodic Payment Judgments" written by Daniel Hindert, Joseph Dehner and Patrick Hindert.
• National Association of Settlement Purchasers (NASP)
  
  • 2007 Annual Meeting
  • 2006 Annual Meeting
  • NASP Wiki
• Deal Flow Media
  • Deal Flow Media structured settlement webinar
• Drinker Biddle
  • Drinker Biddle's "Structured Settlement Update"

Unauthorized Practice of Law - 1

Mark Wahlstrom has written a blog post titled "Structured settlement brokers drafting settlement documents. Are you guys nuts?" that highlights an important and controversial industry issue.

Mark's question: does a routine structured settlement business practice (life insurance agents drafting personal injury settlement documents) represent the unauthorized practice of law?

Mark, a life insurance agent and structured settlement commentator, answers yes: 

• Current structured settlement business practices promote the unauthorized practice of law including non-lawyers drafting structured settlement legal documents. 

• Some structured settlement intermediaries (aka "brokers" or "agents") regularly provide such legal services without appropriate licenses or qualifications for:
  • Plaintiff attorneys;
  • Liability insurers;
  • Defense attorneys.

Mark's blog post:

• Describes how some liability insurer claim managers pressure structured settlement brokers to provide unauthorized legal services;
• Does not address this corollary question: do these same structured settlement legal practices also represent malpractice by plaintiff and defense attorneys?

For additional information about structured settlements and the unauthorized practice of law, see:

• Related S2KM blog posts:
  • NSSTA - NSSTA's 2007 Fall Meeting featured an educational program for NSSTA members about structured settlement documentation (subtitled: "an analysis of the legal and practical issues and problems") without any discussion concerning the unauthorized practice of law by life insurance agents and their employees.
  • AAJ - This author believes the American Association for Justice (plaintiff attorneys) has been negligent for not providing its members with updated education about:
    • Structured settlement laws and legal issues;
    • Related professional responsibilities and potential liabilities.
• ASNP - This author also believes structured settlement recipients will benefit if and when special needs attorneys expand their professional knowledge to address structured settlement legal issues including the proper drafting of personal injury settlement documents.
• Related S2KM wikis:
  • Structured Settlement Law - part of S2KM's coverage of the Academy of Special Needs Planners (ASNP) 2007 Annual Meeting;
  • Structured Settlement Resources - part of S2KM's 2007 presentation to the National Association of Settlement Purchasers (NASP).
• Related hardcopy resources - "Structured Settlements and Periodic Payment Judgments" including separate chapters for plaintiff and defense attorneys as well as updated information about structured settlements and:
  • The secondary annuity market - including IRC section 5891 and the state structured settlement protection statutes;
  • Government benefits and structured settlements - including the Medicare Secondary Payor statute; special needs trusts; and the Deficit Reduction Act of 2005.
• John Darer's defense and explanation of traditional structured settlement business practices related to the unauthorized practice of law titled: "Nuts, Protein, Cholesterol, Fiber and your Settlement Documents." 

Postscript - October 30, 2007

This post was originally published Sunday evening October 28, 2007.  Additional edits were added Monday morning October 29, 2007. The original post appeared unedited for approximately eight hours Sunday night. S2KM's edits included changing S2KM’s interpretation of John Darer’s October 27, 2007 blog post titled “Nuts..Protein, Cholesterol, Fiber and Your Settlement Documents”.  S2KM’s original post characterized John’s post as promoting and condoning current structured settlement business practices.   S2KM’s edited post (above) substitutes the words “defense and explanation”.  Both the original and final versions include links to John Darer’s blog post and recommend that readers of S2KM's blog review Mark Wahlstrom's original post as well as John Darer's post.  

Structured Settlement Educational Programs - Fall 2007

Fall of 2007 features many association meetings and educational events that should interest structured settlement attorneys, other structured settlement professionals and stakeholders.

This S2KM blog post:

• Highlights these Fall 2007 meetings and educational events; and
• Features related commentary and analysis from S2KM and structured settlement knowledge leaders.

National Structured Settlement Trade Association (NSSTA)

• 2007 Certified Structured Settlement Consultant (CSSC) Seminar - October 3-7 at the University of Notre Dame.
• 2007 NSSTA Fall Regional Meeting - October 10-12 in Tampa, FL.
• Prior S2KM coverage of NSSTA
  • NSSTA 2007 Winter Meeting
  • NSSTA Bylaw Amendments
  • NSSTA 2006 Fall Regional Meeting
  • NSSTA 2006 Annual Meeting

Society of Settlement Planners (SSP)

• 2007 SSP Fall Meeting - September 7-8 in Scottsdale, AZ
• 2007 SSP Registered Settlement Planner (RSP) Program: First Course - September 10 to December 12 at Texas Tech University.
• Prior S2KM coverage of SSP
  • SSP 2007 Annual Meeting
  • SSP's 2007 Educational Seminar
  • SSP to Create Professional Designation
  • SSP 2006 Annual Meeting
  • SSP's 2005 Annual Meeting

National Association of Settlement Purchasers (NASP)

• 2007 NASP Annual Meeting - October 18-19 in Washington, D.C.
• Prior S2KM coverage of NASP
  • NASP 2006 Annual Meeting
  • How the Primary Market Views Factoring

National Academy of Elder Law Attorneys (NAELA)

• 2007 NAELA Advanced Elder Law Institute - November 2-4 in Memphis, TN
• Prior S2KM coverage of NAELA
  • NAELA Annuity Policy White Paper
  • NAELA 2006 Advanced Institute

Special Needs Planners

• Special Needs Planning associations and educational institutions include:
  • Academy of Special Needs Planners (ASNP): Ask2007 Program - October 18 in Clearwater, FL
  • Special Needs Alliance (SNA): Fall 2007 Meeting - October 20 in Clearwater, FL
  • Stetson Law School - Special Needs Trust Program: October 18-19 in Clearwater, FL
• Prior S2KM blog posts about special needs planning
  • Academy of Special Needs Planners
  • Structured Settlements and Government Benefits
  • The Deficit Reduction Act of 2005
  • Inconvenient Questions
  • Selecting a Settlement Trustee
  • Special Needs Trusts
  • Settlement Trusts
• S2KM wiki for special needs planners
  • Structured Settlement Law

National Alliance of Medicare Set-Aside Professionals (NAMSAP)

• NAMSAP's 2007 Annual Meeting - November 2 in San Diego
• Prior S2KM coverage of NAMSAP
  • NAMSAP
  • Medicare Set-Aside Arrangements

American Association for Justice (AAJ)

• AAJ's two annual conventions for 2007 have already occurred.
• Prior S2KM coverage of AAJ
  • AAJ 2007 Annual Conference
  • AAJ 2007 Winter Meeting
  • AAJ 2006 Annual Meeting

Additional Educational Resources - for structured settlement attorneys, other professionals and stakeholders:

• Attorney Joseph J. Dehner addresses:
  • Structured Settlement Public Policy;
  • The DOJ's Structured Settlement Program
• Attorney Robert W. Wood addresses:
  • Structured Attorney Fees
  • Single Claimant 468B Fund
  • Structured Settlements: Factor vs. Commute?
• Additional S2KM blog posts, podcasts, wikis and concept maps:
  
  • Web 2.0 for Lawyers
• Social Network Technologies
• Introduction to Podcasting
• Knowledge Management and Structured Settlements
• Concept Maps
• Overview of the Structured Settlement Markets
• Structured Settlement Public Policy
• The Future of Structured Settlements
• Structured Settlement Transfers - aka factoring
• Structured Settlements and Government Benefits

• Hardcopy legal textbooks:
  • "Negotiating and Settling Tort Cases" - by Matt Garretson and Guy O. Kornblum
  • "Structured Settlements and Periodic Payment Judgments" - by Daniel W. Hindert, Joseph J. Dehner and Patrick J. Hindert
  • "Taxation of Damage Awards and Settlement Payments" - by Robert W. Wood

S2KM Podcast Review - 1

This blog post highlights and summarizes S2KM's first six audio podcasts which can be subscribed to and are accessible from the upper left corner of S2KM's blog: "Beyond Structured Settlements". Future S2KM reviews will also highlight podcasts from other structured settlement podcast sites including Ringler Radio, The Settlement Channel and The Factoring Channel.

Truffle Media Networks - S2KM initiated its own podcast channel (S2KM Podcast Channel) June 10, 2007 in collaboration with Truffle Media Networks.  Ned Arthur of Truffle Media hosts S2KM's podcasts. During the past six weeks, S2KM and Truffle Media have begun to develop a collaborative public podcast library.  We intend to continue this collaboration throughout 2007.

Preliminary S2KM podcasts focus on these topics and people:

Participant introductions

• Ned Arthur - S2KM Podcast Tape 1 introduces S2KM Podcast host Ned Arthur and Ned's company, Truffle Media Networks. In Tape 1, Ned and Patrick Hindert, S2KM's Managing Director and blog editor, discuss Ned's background and provide an overview of Truffle Media Networks. They also discuss the application of podcasting to the following industries:
  • Structured settlements - including the primary and secondary United States markets
  • Personal injury settlement planning
  • Special needs planning
  • Secondary insurance markets for annuities and life insurance
• Barbara Bowen - S2KM Podcast Tape 4 introduces Dr. Barbara Bowen, Managing Director of Sound Knowledge Strategies. Barbara is a knowledge management (KM) expert who specializes in eliciting and visually representing tacit knowledge to achieve shared mental models. In Tape 4, Ned and Barbara discuss Barbara's educational and professional background and introduce concept maps. In subsequent S2KM podcasts, Barbara and Ned will discuss specific S2KM concept maps including "How does Web 2.0 Impact Lawyers".
• Joseph Dehner - S2KM Tape 5 introduces Joseph Dehner, a partner in the law firm Frost Brown Todd and co-author of "Structured Settlements and Periodic Payment Judgments". Ned and Joe discuss Joe's historical study of, and role within, the structured settlement industry beginning in 1977. Ned also elicits Joe's preliminary S2KM podcast analysis of structured settlement public policy. Joe will be providing additional podcast commentary about structured settlement public policy for S2KM during the next couple of weeks.

Supplemental S2KM reporting - The following S2KM podcasts supplement prior S2KM blog reporting:

• Special Needs Attorneys - In S2KM Podcast Tape 2, Ned and Patrick discuss the relationship between structured settlements and special needs attorneys. Related S2KM commentary and analysis includes:
  • Structured Settlement Law - a public wiki S2KM developed for a June 12, 2007 presentation to the Academy of Special Needs Planners.
  • Academy of Special Needs Planners - an S2KM blog post reviewing the Academy's March 2007 Annual Conference.
  • Inconvenient Questions - S2KM's three-part series about the Deficit Reduction Act of 2005 and its potential impact on structured settlements.
• Structured Settlement Mid-2007 Report - In S2KM Podcast Tape 3, Ned and Patrick identify and review important mid-2007 structured settlement industry developments as highlighted in a prior S2KM blog post. They also review June 2007 structured settlement newsletters from the law firms Drinker Biddle and Pullman & Comley.
• AAJ 2007 Annual Conference - In S2KM Podcast Tape 6, Ned and Patrick review the American Association for Justice (AAJ) 2007 Annual Meeting which occurred in July 2007. S2KM's blog coverage of the AAJ meeting included three posts. S2KM and Truffle Media will be publishing additional AAJ Conference podcast reviews in August featuring other structured settlement stakeholder attendees.

For additional information about podcasting, see S2KM's prior blog post "Introduction to Podcasting" which features an embedded concept map developed by Barbara Bowen.

AAJ 2007 Annual Convention - 3

Today is the final day of the American Association for Justice (AAJ) 2007 Annual Conference. This blog post supplements two prior S2KM blog posts about the AAJ conference:

• AAJ-1: which highlights the need to improve structured settlement education for AAJ members;
• AAJ-2: which identifies structured settlement companies and associations that participated at the AAJ conference as exhibitors, advertisers or sponsors.

The purpose of this third and final S2KM post about the 2007 Annual AAJ conference is to summarize without personal attribution:

• Private comments by individual structured settlement stakeholders who exhibited at the AAJ conference about selected industry issues; and
• Handout materials from exhibiting stakeholders related to these same structured settlement industry issues.

AAJ's Structured Settlement Role

• Several AAJ exhibitors identified "plaintiff attorneys' lack of structured settlement knowledge" as a strategic industry issue and AAJ priority.  As one exhibitor stated: "we must retrain plaintiff attorneys to correct the misinformation defense brokers have been communicating for the past 25 years."   
• Other exhibitors urged AAJ to proactively support and advance a pro-plaintiff structured settlement public policy including: 
  
  • A plaintiff "Bill of Rights" for structured settlements beginning with the right of every plaintiff to his own structured settlement advisor; as well as   
    
  • AAJ political support for single claimant 468B funds.

Structured Settlement Business Practices

• The most common complaints from consultants who exhibited at the AAJ conference about structured settlement business practices included:
  • Commission rebating;   
    
  • Defendants' "approved lists" of annuity providers;
  • Settlement documentation providing a full release for defense consultants who receive annuity commissions.   
    
• Although many of the exhibiting structured settlement consultants favored compensation disclosure, only one consultant interviewed by this author at the AAJ conference recommended written informed consent by plaintiffs of structured settlement compensation arrangements.
• Several consultants criticized structured settlement annuity providers who refuse to accept premiums from single claimant 468B funds - a business practice they characterized as a "conflict of interest" as well as a "fabricated political issue".  According to one consultant, "the threat of single claimant 468B funds is the primary reason defense brokers have organized the Broker Relationship Initiative."
  
• Another consultant highlighted the need for an "unbiased product perspective." He characterized as a "conflict of interest" those "settlement planners" who sell structured settlement annuities but are not licensed or trained to sell other financial products.  According to this consultant, "the greatest threat to structured settlements is the industry's failure to adapt to change."
  

The Structured Settlement Secondary Market

• Despite frequent references to IRC sections 104(a)(2), 130 and 468B, not a single handout from any structured settlement consultant or annuity provider at the AAJ conference mentioned IRC section 5891 - which includes the federal income tax definition for "structured settlement"

• This omission is consistent with the educational programs of the National Structured Settlement Trade Association (NSSTA)and the Society of Settlement Planners (SSP)- neither of which has provided its general membership with any educational programs about the statutory language of IRC 5891(enacted in 2002) or the 46 state structured settlement protection statutes.
• Several of the exhibiting consultants said they never voluntarily or proactively discuss structured settlement factoring laws, issues or options with plaintiffs or plaintiff attorneys.
• Addendum (added July 22, 2007): Follow-up factoring questions this author should have asked AAJ structured settlement exhibitors:
  
  • What about existing structured settlement recipients?
  • How many structured settlement stakeholders, besides factoring companies, have informed these recipients (clients, customers) about the enactment of IRC section 5891 and their options under relevant state structured settlement protection statutes?
  • How have IRC section 5891 and state structured settlement protection statutes changed structured settlement public policy?
  • Does a "conspiracy of silence" exist within the primary structured settlement market - relating specifically to current and prospective structured settlement recipients, IRC section 5891 and the state structured settlement protection statutes?
  • If yes:
    • Does the conspiracy (failure to communicate with clients and customers about factoring legislation) represent a good business practice and structured settlement industry strategy?
  • How does this business practice and industry strategy positively impact the future of structured settlements?

The AAJ 2008 Winter Convention will take place January 26-28 at the El Conquistador Resort in San Juan, Puerto Rico.

S2KM Mid-2007 Structured Settlement Report

As Fourth of July 2007 quickly approaches, structured settlement stakeholder associations are re-organizing under their 2007 leadership.  These stakeholder associations include:

• National Structured Settlement Trade Association (NSSTA).
• Society of Settlement Planners (SSP)
• American Association for Justice (AAJ)
• National Association of Trial Lawyer Executives (NATLE)
• National Academy of Elder Law Attorneys (NAELA)
• Academy of Special Needs Planners (ASNP)
• Special Needs Alliance (SNA)
• National Alliance of Medicare Set-aside Professionals (NAMSAP)
• National Association of Settlement Purchasers (NASP)

As  unsollicited input to these associations, S2KM offers this mid-year 2007 summary of important structured settlement legal developments. 

S2KM's Podcast 3 (accessible from S2KM's blog courtesy of Truffle Media Networks) provides a related audio summary.

Mid-2007 Structured Settlement Legal Developments

• Potential $600 Million Shortfall at Executive Life of New York - "Drinker Biddle's Structured Settlement Update" provided an early Internet analysis of this story.  NSSTA has reacted swiftly by announcing an "ELNY Task Force".  In a June 29, 2007 written message to NSSTA members, President Henry Strong also announced:
  • Two-time NSSTA President Len Blonder will Chair NSSTA's ELNY Task Force;   
    
  • NSSTA has already met directly with the New York Liquidation Bureau; and   
    
  • NSSTA has initiated "productive discussions" with the American Counsel of Life Insurers (ACLI).
• Social Security POMS to Address Structured Settlements - S2KM first reported this announcement by the SSA's Ken Brown in an April 9, 2007 blog post titled: "Academy of Special Needs Planners".  See these S2KM blog posts for additional background and analysis:
  • Structured Settlements and Government Benefits
  • Deficit Reduction Act of 2005 (DRA) - S2KM's 3-part blog series titled "Inconvenient Questions" reviews Sylvius von Saucken's 2007 article about the DRA and structured settlements.
  • Release 41 of "Structured Settlements and Periodic Payment Judgments" includes a new Chapter 15 titled "Government Benefits and Structured Settlements".
• First Primary Market Disclosure Case - "Pullman & Comley's Structured Settlement Insights" provided the first Internet analysis of Joseph v. The City of New York which Pullman & Comley characterizes as ""the first court opinion to analyze the requirements in structured settlement protection acts that disclosures be made when negotiating a structured settlement."  
• DOJ Sovereign Immunity Defense Voids Transfers - see "Drinker Biddle's Structured Settlement Update" for analysis of two DOJ sovereign immunity cases: Transamerica v. Settlement Capital and Continental Casualty v. United States.
  
• New Pennsylvania Rule 229.2 - S2KM reported and analyzed this change to the Pennsylvania Structured Settlement Protection Act in a June 27, 2007 blog post.
• Rapid v. Symetra - S2KM reported this case in a June 19, 2007 blog post.  The case confirms the general rule that, even following the enactment of IRC Section 5891, courts will enforce a clear and explicit anti-assignment provision in structured settlement agreements provided the interested parties timely object after having been given notice and an opportunity to be heard. For additional S2KM reporting about Rapid, see: CNA v. Rapid Settlements.

Check back for continuing S2KM blog and podcast reports and commentary covering important structured settlement issues and events - including exclusive S2KM reports from the 2007 AAJ Annual Convention July 13-18, 2007 in Chicago. 

For previous S2KM analysis of the structured settlement industry, see:

• Structured Settlement History
• Structured Settlements in 2006
• Structured Settlement Transaction Diagram
• Overview of the Structured Settlement Market
• Structured Settlement Transfers: Good or Bad?
• How the Primary Market Views Factoring
• The Future of Structured Settlements

AAJ 2007 Winter Meeting

The American Association for Justice (AAJ) hosted its 2007 Winter Conference in Miami Beach February 10-13. Here are the highlights from a structured settlement perspective:

Affinity Programs

• Affinity programs represent controversial developments within the structured settlement industry. See, for example, this analysis on the Society of Settlement Planners (SSP) website titled: "Issues Trial Lawyer Associations May Consider When Contemplating a Structured Settlement Affinity Program".  The SSP analysis challenges affinity programs organized by trial lawyer associations based upon consumer protection and public policy concerns.

• What is an "affinity program"? For the structured settlement industry, affinity programs constitute exclusive business relationships where product and service providers pay money or share commissions with organizations in exchange for case referrals and/or other marketing advantages.

• On the defense side, affinity programs include:

• Exclusive (and exclusionary) relationships among structured settlement brokers, defendants, liability insurers; and/or reinsurers whose affiliates may include: annuity providers; assignment companies; factoring companies; and trust companies.

• Lawsuits such as Macomber v. Travelers and Spencer v. Hartford attack these types of defendant affinity programs.

• On the plaintiff side, affinity programs include exclusive (and exclusionary) relationships among product and service providers, AAJ, the National Association of Trial Lawyer Executives (NATLE) and state trial attorney associations. These product providers may include: structured settlement brokers and settlement transfer (factoring) companies.

• At the AAJ Conference in Miami Beach, the following affinity program developments were reported:

• Primary market: representatives of Forge Consulting and the Halpren Group , two leading AAJ sponsors, confirmed:

• No "affinity programs" exist between individual structured settlement companies and AAJ; and

• Such "affinity programs", according to these spokespersons, are unlikely to develop.

• This does not prevent structured settlement companies from exhibiting at AAJ meetings or sponsoring AAJ events.
• AAJ, however, does not currently designate specific structured settlement companies or settlement transfer (factoring) companies and grant them exclusive endorsements.

• Secondary Market - Unlike AAJ, it appears that NATLE does enter into affinity programs including a new program with Strategic Capital, a factoring company based in Toronto.
  
  • This factoring affinity relationship was confirmed by a Strategic Capital sales executive during the AAJ meeting in Miami Beach.
  • According to this Strategic Capital sales executive, the NATLE factoring affinity program is still being developed and will include recommended best business practices for factoring companies.

Educational Programs

• Content - The AAJ 2007 Winter Conference omitted any educational programs related to: structured settlements; settlement planning; settlement trusts including special needs trusts, Medicare set-aside trusts, or 468B trusts; settlement transfers (factoring); Medicaid; Medicare; the Deficit Reduction Act of 2005; or the impact of the ABA Model Rules of Professional Conduct upon plaintiff attorneys specific to structured settlements.
• Competency - AAJ's continuing educational neglect of structured settlement and settlement transfer issues  raises serious questions about whether plaintiff attorneys, in general, are competent to identify and address increasingly complex settlement planning and special needs planning issues. If not, from whom should claimants (and plaintiff attorneys) obtain such professional advice?  Should a claimant be expected to pay additional professional fees for settlement planning advice and expertise?  Or should these professional fees be deducted from the plaintiff attorney's compensation?

Product Developments

• The Halpren Group introduced a new settlement planning product at the 2007 AAJ Winter Regional.The new product is a patent-protected settlement trust investment program that allegedly forces "liquidations when the investment value exceeds a target amount" and forces "additional investment when the investment falls below the target amount".
• The Halpren Group, which has historically refused to join and/or participate in structured settlement trade associations such as NSSTA and SSP, advocates and offers non-annuity "Exempt Structured Settlements" including settlement trusts funded with governmental obligations.
• The Halpren Group markets directly to plaintiff attorneys and for many years has sponsored  AAJ programs and events.

• At the 2006 AAJ Winter Conference, Rich Halpren debated then SSP President Paul Lesti about the relative advantages of trusts vs. annuities.
• At that same AAJ meeting, Halpren introduced and distributed to AAJ members the now-famous Saltzburg and Chemerinsky legal memoranda.  These memoranda challenge plaintiff attorneys to investigate structured settlement compensation arrangements, educate their clients and obtain their clients "informed consent" for any such compensation arrangements.

Exhibitors

Every year, an increasing number of structured settlement stakeholders exhibit at AAJ meetings.

Structured settlement companies which exhibited at the 2007 AAJ Winter Conference included:

• Forge Consulting;

• The Halpren Group;

• Creative Capital;

• Ferlisi Jolley Associates;

• Lesti Structured Settlements;

• Mass Mutual Structured Settlements;

• Millennium Settlements;

• Robert Johnson & Associates; and

• Strategic Capital.

For a prior S2KM blog post about AAJ (formerly ATLA), see the "ATLA 2006 Annual Meeting".

Postscript 2/15/2007: John Darer has written a blog post which mischaracterizes this post in a selective and careless manner.  John takes issue with my including (above) Strategic Capital among the "structured settlement companies" that exhibited at the AAJ 2007 Meeting.  John believes structured settlement transfer (aka factoring) companies should not be permitted to call themselves structured settlement companies.  I disagree with John's analysis and conclusions about structured settlements and factoring. 

My purpose here is to point out:

• My listing above of Strategic Capital as a "structured settlement" exhibitor is what appears in the official AAJ Conference Program;
• John failed to reference this post's earlier characterization (above) of Settlement Capital as a "factoring company" within the "secondary structured settlement market".   
• During a subsequent telephone conversation with John, I communicated these observations.
• John and I agreed we disagree about the value and role of factoring in structured settlements, settlement planning and special needs planning.