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.