The National Association of Settlement Purchasers (NASP) hosted an “Affiliate Member Conference” at the MGM Grand Hotel in Las Vegas on October 19-20, 2006. Approximately 75 persons attended including factoring company representatives and 50 transfer attorneys. Patrick Hindert, S2KM's Managing Director and author of S2KM's blog, participated in the NASP Conference as a guest speaker.
NASP is a trade association whose members are structured settlement factoring companies. Factoring companies (aka transfer companies) purchase payment rights from structured settlement recipients according to rules enacted in IRC Section 5891 and state protection statutes. Because a structured settlement transfer (purchase) requires a court order, factoring companies hire attorneys (transfer attorneys) to represent structured settlement recipients when those recipients file a transfer application seeking court approval.
Guest speakers at the NASP Conference included:
- Michigan State Senator Alan Sanborn - Senator Sanborn is President-elect of the National Conference of Insurance Legislators (NCOIL). He was honored as the first recipient of NASP's Alexander Hamilton award. Senator Sanborn led the successful legislative initiative in 2006 to amend Michigan's structured settlement protection statute.
- Andrew C. Richner - a Uniform Law Commissioner from Michigan, as well as a Regent at the University of Michigan, Mr. Richner attended the NASP conference as a guest speaker. Mr. Richner summarized Michigan's original structured settlement protection statute and the reasons why that statute was amended in 2006.
- Professor Adam Scales - Professor Scales, who teaches insurance, tort and product liability law at Washington and Lee University's School of Law, spoke about “New Issues Facing the Settlement Purchasing Industry”. Professor Scales is the author of an important and provocative 2002 Wisconsin Law Review article titled "Against Settlement Factoring? The Market in Tort Claims has Arrived". Professor Scales reviewed settlement transfer case law trends and results. His comments highlighted problems facing factoring companies including their business practices and complex legal documentation.
- Bruce W. Akerly - a specialist in bankruptcy law, Mr. Akerly provided a detailed look at the impact of The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 on structured settlement transfers.
- Patrick J. Hindert - author of S2KM’s blog, Hindert provided his analysis of “How the Primary Market Views Factoring”. The presentation featured the following two concept maps developed by S2KM with assistance from Barbara Bowen of See What You Know as hardcopy handouts.
- Overview of the primary and secondary structured settlement markets;
- How the primary market views factoring.
S2KM will publish both concept maps in a blog post sometime next week.
Conference Highlights and Observations
- Education - All settlement planners and structured settlement professionals need to understand how structured settlement transfers work - and how to advise other structured settlement stakeholders, including claimants, about structured settlement transfers. IRC Section 5891 was enacted more than four years ago. 46 states have enacted structured settlement protection statutes. NSSTA and SSP have not provided adequate education about settlement transfers - either for their members or for other structured settlement stakeholders. If NASP decides to expand its educational program to a wider audience, their programs will represent a valuable additional learning resource for structured settlement and settlement planning professionals.
- Perspective - As a structured settlement professional, it was valuable for me to hear about structured settlements and settlement transfers from different perspectives - including the President-elect of NCOIL, a Uniform Law Commissioner, a law professor, and a bankruptcy specialist as well as from attorneys who represent factoring companies and transfer petitioners. All structured settlement professionals should seek out and consider multiple perspectives about their complex and transitioning business as well as about important and controversial structured settlement subjects like factoring.
- Self-criticism - NASP's educational program included plenty of criticism about the business practices of some factoring companies. Willingness to invite and consider criticism, especially about important issues, represents a healthy attitude for every professional, organization and association. NASP now has an opportunity and a challenge to address the issues and business conduct resulting in this criticism and work toward improving settlement transfer business standards and practices.
- Attendance - The number of attorneys attending the NASP conference was surprising and positive. Their questions and observations about settlement transfers and structured settlements were interesting and varied. As the structured settlement market becomes increasingly integrated with both personal injury legal processes and settlement planning, participating professionals (including lawyers, judges, legislators, regulators, mediators, guardians, care planners, allocators, trustees and custodians) need updated and improved educational programs about structured settlements, payment rights and payment transfers.
Thanks to NASP for inviting me to speak at NASP's 2006 Affiliate Member Conference.
For additional information about structured settlement transfers, see and/or listen to:
- This earlier S2KM blog post;
- Chapter 16 of hardcopy "Structured Settlements and Periodic Payment Judgments", co-authored by Daniel W. Hindert, Joseph J. Dehner and Patrick J. Hindert;
- 2005 ABA article, co-authored by Daniel W. Hindert and Craig H. Ulman;
- Wisconsin Law Review article, by Adam F. Scales;
- Podcasts interviews and blog posts by Mark Wahlstrom, John Darer and Matt Bracy accessible on The Settlement Channel.
For all of S2KM's blog posts about NSSTA, click here.
For all of S2KM's blog posts about SSP, click here.
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