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.