The National Structured Settlement Trade Association (NSSTA) has previously announced an "Industry Growth Initiative" - "designed to identify opportunities to expand the use of structured settlements and bring those opportunities to the structured settlement marketplace" - which appears to focus multiple growth-oriented goals NSSTA president Michael Goodman identified during NSSTA's 2015 Annual Meeting.
Although the first progress report for its Growth Initiative will not occur until NSSTA's 2015 Fall Educational Meeting, expanded use by traditional stakeholders represents one logical priority - a priority which NSSTA highlighted during 2014 by commissioning CLM Advisors to conduct a three-part survey of senior claims executives (Part 1); front line claims professionals (Part 2); and plaintiff attorneys (Part 3).
S2KM has previously reviewed Part 1 and Part 2 of NSSTA's structured settlement survey - the results of which NSSTA has made available to its members, including S2KM. NSSTA and CLM Advisor representatives have also provided their own interpretive analyses of these surveys during prior NSSTA educational conferences.
This blog post discusses selected portions of Part 3 (Titled: "Plaintiff Attorney Survey of Structured Settlements") the results of which: 1) NSSTA has made available to its members, including S2KM; 2) neither NSSTA nor CLM Advisors has yet to discuss or analyze during a NSSTA educational conference. 130 attorneys participated in the Part 3 survey. Not every attorney responded to every question.
Until the Weil lawsuit settled in 1996, defendants retained exclusive control of structured settlements. Many defense brokers, as well as their liability insurance company clients, historically have referred to unsuccessful sales as "cash outs". As a general rule, their professional interests in structured settlements have been narrowly defined and focused upon their own product to the exclusion of other settlement related financial and insurance products.
To a much greater extent than defense brokers, plaintiff structured settlement brokers (and settlement planners, their evolutionary progeny) face direct competition from other product and service providers who market to plaintiff attorneys. These settlement planning product and service providers include: tax attorneys, special needs attorneys, settlement trustees, financial planners, life care planners, case managers, economists, Medicare set-aside (MSA) specialists and damage allocators - as well as structured settlement consultants. In response, many plaintiff structured settlement brokers and settlement planners increasingly offer financial and insurance products and services which extend beyond structured settlements.
Regardless of case complexity, or the involvement of other settlement planning professionals, plaintiff attorneys continue to perform the following essential settlement planning roles:
- Recognizing settlement planning issues which impact their clients;
- Recommending appropriate settlement planning professional resources to their clients; and
- Retaining ultimate responsibility for effectuating settlements.
For these reasons, plaintiff attorneys represent the primary marketing target for companies and professionals offering settlement planning services - as well as a logical priority marketing target for growing the structured settlement market.
To effectively analyze the growth opportunities and obstacles for structured settlements and structured settlement brokers from the plaintiff attorney's perspective, therefore, both need to be viewed (and surveyed) in a broader context - as subsets of, and participants in, the larger and more complex personal injury settlement planning market. Although the results of NSSTA's Part 3 Survey provide valuable marketing information, the survey questions neither attempt nor accomplish this more comprehensive objective.
This shortcoming is understandable - even predictable. CLM Advisors, which conducted all three of the NSSTA surveys, is an affiliate of Claims and Litigation Management (CLM) Alliance - "the only national organization created to meet the needs of professionals in the claims and litigation management industries". Perhaps as a result, NSSTA's Part 3 Survey has a defense-oriented, historic quality. Some of their survey questions use awkward or unfamiliar language ("ancillary products to structures"). Some important issues (fiduciary responsibilities) are only addressed obliquely. Other important topics (Non-Qualified Assignments; Qualified Settlement Funds; Affordable Care Act) are not addressed at all.
Borrowing a phrase from an excellent presentation titled "Marketing Attorney Fees", delivered by Spooner Phillips and Rebecca Metzger at NSSTA's inaugural Structures 202 Conference, and applying it more broadly, perhaps it's time for proponents of structured settlements to "change the conversation" when marketing to plaintiff attorneys.
NSSTA SURVEY PART 3 SELECTED RESPONSES WITH S2KM COMMENTS
- 40% of respondents stated low interest rates have not negatively affected their perception of structured settlements.
- 67% said factoring has no impact on their willingness to consider a structured settlement or that they are indifferent to the factoring industry.
S2KM Comment: These findings should encourage NSSTA members to re-think standard explanations for recent lackluster industry sales results. They also support two of the seven goals Michael Goodman has identified for NSSTA during his term as president.
- 89% believe they "have adequate knowledge of structured settlements so that [they are] able to recognize when they would be in the best interest of an injured party..."
- Only 28% said they suggest a structured settlement for cases involving Medicare set-asides (MSAs).
S2KM Comment: Similar to NSSTA surveys Parts 1 and 2, Part 3 identifies a need and opportunity to educate all structured settlement stakeholders to the advantages of funding MSAs with structured settlements including their inherent cost advantage compared with lump sums resulting from current CMS regulations for calculating present values.
- Less than 25% are likely to have a client sign a letter acknowledging that they were exposed to the opportunity to structure a portion of their settlement before opting for an all cash settlement.
S2KM Comment: Every plaintiff structured settlement broker and settlement planner who sells structured settlements should be familiar with the Grillo case and use it help educate plaintiff attorneys about their potential liability for not advising their clients about structured settlements.
- 40% said they felt obligated to introduce the idea of a structured settlement to a client if a case has a value between $101,000 and $500,000.
- An additional 32% felt obligated for cases having a value in excess of $500,000.
S2KM Comment: Although there is nothing inherently wrong with utilizing case values to identify potential structured settlement cases, this approach represents a more traditional, defense-oriented methodology rather than a plaintiff-oriented, comprehensive planning methodology that attempts to match products to needs.
- 48% stated the most significant drawback of a structured settlement is lack of liquidity.
S2KM Comment: NSSTA and its members should carefully consider how to improve primary market sales by proactively addressing this finding based upon the following, previously highlighted finding: 67% said factoring has no impact on their willingness to consider a structured settlement or that they are indifferent to the factoring industry.
- Only 4% view structured settlement consultants as adding value for negotiations and/or case evaluations separate from, or in addition to, their knowledge of structured settlements.
- 35% stated that structured settlement consultants fail to deliver value because they are concerned with structuring as much of a settlement as possible.
- 52% contact a structured settlement broker one week (possibly less) prior to a mediation.
- 38% make contact only after a case settles.
- 40% said they would use the defendant's structured settlement consultant.
- Only 20% assume a defendant will be offering more money if a defense structured settlement consultant is present.
- 38% work with financial planners instead of structured settlement consultants - at least on some cases.
S2KM Comment: This feedback provide an excellent starting point for NSSTA and its members to think strategically about how to increase structured settlements sales within the larger, more complex personal injury settlement planning market.
- Only 26% have ever structured their fees.
S2KM Comment: Similar to MSAs, structured attorney fees appear to represent an underdeveloped opportunity to grow the structured settlement market. Among the significant takeaways from the Structures 202 "Marketing Attorneys Fees" presentation referenced above: 1) the presenters were a settlement planner, who sells multiple products including structured settlement annuities, and a tax attorney; 2) their recommended sale encompasses tax, business, retirement and estate planning.
Although somewhat circumscribed by a traditional, defense perspective, NSSTA's Part 3 Survey of plaintiff attorneys provides valuable information for re-positioning the structured settlement industry for additional growth within the personal injury settlement market. The findings support and supplement the goals for growth previously identified by NSSTA president Michael Goodman and should assist NSSTA's Growth Initiative Committee in formulating its strategic priorities.