This post continues S2KM analysis and commentary about "settlement consulting" as an alternative business model for structured settlements introduced by Joseph DiGangi at the NSSTA 2009 Winter Meeting.
DiGangi characterized structured settlements as a fundamental settlement consulting product and featured structured settlements in a settlement consulting case example.
DiGangi's discussion identified four stages within the settlement consulting process:
- Analysis - including needs assessment;
- Implementation; and
DiGangi raised the issue of whether settlement consulting includes "litigation support" services.
Prior S2KM posts about settlement consulting have:
- Reviewed DiGangi's NSSTA presentation;
- Discussed business definitions and boundaries; and
- Outlined settlement consulting history - from a structured settlement perspective.
- Demonstrate the complexity of structured settlements:
- In the context of settlement consulting; and
- From the perspective of an injury victim.
- Provide an analytic framework to:
- Study the role of structured settlements in settlement consulting;
- Compare alternative structured settlement business models:
- Settlement consulting (or planning); and
- Traditional claim management.
- Discuss the roles, expertise and work product of various settlement consulting stakeholders;
- Define "due diligence" and discuss potential professional liabilities;
- Identify settlement consulting legal entities and improve legal documentation;
- Improve settlement consulting business standards and performance metrics;
- Highlight the importance of IRC 468B QSFs;
- Demonstrate linkage between various settlement consulting components: including
- Primary and secondary structured settlement annuity markets;
- Structured settlement annuities and settlement trusts;
- Settlement trusts and the secondary annuity and life markets.
- Prioritize legislative and regulatory issues and develop lobbying strategies.
In comparison with 468B QSF settlement consulting, traditional structured settlement analysis (the claim management model):
- Focuses more narrowly on the IRC 130 qualified assignment transaction;
- Assumes structured settlement payees are injury victims - as opposed to trustees and custodians;
- IRC 468B qualified settlement funds (QSFs);
- The secondary structured settlement market;
- Non-qualified structured settlements.
- Attempts to construct planning strategies and solutions as part of the litigation and negotiation process;
- Encourages "early involvement" by plaintiff and defense structured settlement agents who:
- Represent the same annuity providers;
- Collaborate to maximize shared annuity sales;
- Provide similar "value-added" services (including litigation support) to justify commissions;
- Lack licensing and training to sell non-annuity products;
- Fail to disclose their conflicts of interest or their compensation-sharing arrangements.
- Assume, but fail to address, the "best interests" of injury victims and other structured settlement stakeholders.
Settlement consulting occurs, and will continue to occur, in both the claim management (defense) structured settlement model and the settlement planning (468B QSF) structured settlement model.
- S2KM believes the 468B QSF settlement consulting (and/or planning) model is "vastly superior" to the claim management model for the vast number of settlement consulting stakeholders.
- Settlement Consulting Stakeholders:
- Injury victims and their families;
- Federal and state governments including regulators;
- Defendants and their insurers and re-insurers;
- Plaintiff trial attorneys;
- Special needs attorneys;
- Medicare set-aside professionals;
- Financial and insurance advisers and intermediaries;
- Life care planners; and
- "Vastly superior" should be (and hopefully will be) defined and demonstrated by industry metrics (including time and money metrics) comparing the claim management and settlement planning models and developing the best alternative with continuing improvements.
- S2KM further believes the 468B QSF settlement consulting model will substantially grow the structured settlement market.
For additional S2KM analysis: