Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews

Structured Settlement "Standard of Care" in Bronx New York

by John Darer® CLU ChFC MSSC RSP

 New York State Supreme Court for Bronx County's required "Structure Broker's Affidavit", introduces a new "standard of care" for structured settlements, apparently due to the Court's concerns concerning structured settlement broker participation in factoring.

"11. Neither I nor (Insert name of company) will, without the express consent of the

plaintiff and the prior written approval of this court:

(a) provide any information about this settlement to any

factoring company for any purpose; or

(b) solicit the plaintiff or plaintiff’s family on behalf of any

factoring company for any purpose, including, but not

limited to, the proposed sale of plaintiff’s future periodic

payments, nor will I or (Insert name of company) participate,

assist, promote, or aid in such solicitation by any person, firm,

corporation or entity; or

(c) seek or accept any consideration, financial or otherwise, directly

or indirectly from a factoring company."

If there was no problem why would  there be a need for the Supreme Court of the State of New York to introduce this new "standard of care"?  Alas, the Court has spoken. If you are an attorney and do business in Bronx County, come into knowledge of "the problem" do you now owe your client, as part of your obligation to protect them, any less "standard of care" because you are prosecuting your client's case in Queens, Kings, Staten Island, New York County, Nassau or Erie County, or elsewhere in New York State?

Points for Plaintiff Lawyers To Consider

1. Consider that the overwhelming majority of the structured settlement industry has not subscribed to a Structured Settlement Transparency Initiative specifically addressing many of the points that are in item #11 of the Bronx County Structure Broker's Affidavit.

2. Consider that the National Structured Settlements Trade Association publicly rejected a Structured Settlement Transparency Initiative in a written memorandum to its members.  Despite having knowledge of the business practice, the National Structured Settlements Trade Association (NSSTA) failed to come up with an alternative solution. The majority of the structured settlement brokers and settlement planners you encounter will be members of NSSTA. 

3. Consider that it is known within the industry that many structured settlement brokers seek or accept financial consideration for structured settlement factoring transactions. 

4. Consider that some structured settlement brokers and settlement planners, including members of the National Structured Settlement Trade Association and Society of Settlement Planners are even disseminating propaganda that "factoring improves the structured settlement product" to members of the elder law and special needs community who you may call upon to assist you in your clients' special needs planning.

As part of the recent change to the "standard of care", plaintiff lawyers should consider screening current and prospective structured settlement relationships for their business practices on structured settlement factoring and then draw their own conclusions.

 

Structured Settlement Transparency Initiative Reflects Brandeis' Adage

With only a few weeks to go before the structured settlement transparency initiative moves to the next stage it is worthwhile to harken back to the statement of late Associate Supreme Court Justice Louis D. Brandeis who said "sunlight is the best of disinfectants".

In the absence of any dissenting comments from those who wish excessive secrecy it appears that someone in the factoring industry speaks for the structured settlement industry, or at least that portion of the structured settlement industry that are clients of Rhonda Bentzen.

In March 2007, the Society of Settlement Planners held its annual meeting in Washington DC. Ms. Bentzen is actively involved in the Society of Settlement Planners (as are a number of settlement planners) and organizing its meetings. On March 7, 2007 at that SSP meeting, appeared Arthur H. Bryant, the Executive Director of Public Justice (formerly Trial Lawyers for Public Justice) as the Featured Opening Presentation. I am grateful that I was able to obtain a copy of the Bryant's Power Unchecked: Access to Justice At Risk" (Product Safety & Liability Reporter Vo. 33, No.25 June 27 2005),presumably contained in each and every binder of those attending the meeting which included Rhonda Bentzen.

At page 640 (2nd page of the SSP handout to Bryant's presentation), Bryant states " excessive secrecy is the key weapon to the attack on access to justice. The reason is simple, Those abusing power know that, as Justice Brandeis said, sunlight is the best of disinfectants. If people do not know about in-justice, they may not care whether the courts can be used to correct it. If people don't know what's taking place in the courts, they can't tell whether justice is being done. And if people can't learn that others rights were violated, they may not know their rights were violated too"

It seems appropriate to expose the hypocrisy in Bentzen's and certain others' actions and writings. If the SSP invited Arthur H. Bryant to address its members about "excessive secrecy" (among other things) then what objection do those SSP members who have not already subscribed to the structured settlement transparency intiative (or declared their practices) have to the sunlight being shone on the problem?

Bentzen suggests that "associations deal with issues and grievances internally, following specified protocols", yet offers no solution when such protocols neither exist nor are enforced.

Structured Settlement Industry Now Turning to Cash Now Pushers Like JG Wentworth For Advice?

by Structured Settlement Watchdog®

Evidence continues to mount that a segment of the structured settlement industry, led by former NSSTA Executive Director Patrick Hindert IS teaming up with the cash now pushers.

• First, Patrick Hindert has long yakked that the growth of the structured settlement industry is through the factoring industry without being able to articulate any justification.
• Second, Patrick Hindert has demonstrated through his writings and actions that he promoter of cash now pusher JG Wentworth
• Third, few structured settlement firms have made any statement one way or another about how they handle factoring of structured settlements. As this author will soon inform every trial lawyer association in the United states, 95% of the industry HAS NOT made a written disclosure, on their website or through the structured settlement transparency initiative declaration. The 95% statistic falls coincidentally in lock step witha published report, by a factoring representative that 90% of structured settlement brokers take referral fees (disclosed or undisclosed?)
• Fourth, a certain number of structured settlement brokers have relied on a factoring broker to speak for them and justify their actions.
• Fifth, given Hindert's writings and JG Wentworth's summary of the Cash Now Pushers Thought Leadership Conference-mislabeled by JG Wentworth and Patrick Hindert as the "structured settlement industry thought leadership conference",it appears that the factoring industry is being prostituted to help push through Treasury guidance on single claimant qualified settlement funds 468B due to 6 years of utter failure and exhaustion of funds of its previous proponents.

Consider some of the points from JG Wentworth's VP Marketing Kenneth Murray taken from the JG Wentworth web site

Note: This author does not recognize the Patrick Hindert delusion of primary and secondary market for structured settlements. The structured settlement industry (what Hindert classifies as the primary market) involves a professional licensing requirement. The factoring industry has no licensing requirement. The only thing in common between the two is that neither primary trade association enforces the code of ethics it and its members use to solicit your business. This author neither subscribes to nor incorporates the ideals of a company that leads its own industry in proven fraudulent cash now advertising. Why should he? WHY SHOULD YOU?

Selected points from the "Cash Now Pushers Thought Leadership Conference"

Education
The ability for the cash now pushers to educate the structured settlement industry on how to grow the structured settlement industry?

The ability for structured settlement industry to capitalizes on lessons learned and competence developed by the cash now pushers (SEO, etc.)

The ability for the structured settlement industry to sell the positive features of the cash now pushers. Should we simply ignore the fraudulent advertising?

Growth

The ability of (cash now pushers) to educate plaintiff attorneys about the resource available through and with settlement planners. Who needs JG Wentworth for that?

The ability to generate market penetration in excess of 7%

The ability of Treasury to approve 468B funds <---------------

The ability of the cash now pushers to co-develop the structured settlement brand with the structured settlement industry

The ability to develop and finance the growth across the entire continuum of the structured settlement industry

Download SSTLC From JG Wentworth website Ken Murray CMO

NSSTA Response to Structured Settlement Transparency Initiative

Mark Wahlstrom does a nice write up on the structured settlement transparency initiative over on The Settlement Channel.

Mark states that what he really believes is "the focus of this initiative is this author's belief that a lot of settlement professionals talk out of both sides of their mouths on this issue, declaring their animus toward factoring, but willfully accepting undisclosed compensation at the expense of annuitants when no one is looking".

Mark and I agree with "the principal that any broker who refers a client to a factoring firm, and who then accepts compensation for that referral, owes a duty to that client to inform them that they are being compensated and to further disclose how that compensation impacts their pricing on the factoring transaction".

Mark does not address two points which are equally important and have been part of the Declaration Concerning Business Practices on Structured Settlement Factoring since the beginning Download StructuredSettlementDeclarationonFactoringPractice :

1. The possibility that certain NSSTA members are selling structured settlement payee names and protected information to factoring companies or brokers.
2. The unilateral providing of confidential settlement documents by settlement professionals to factoring companies

I further assert that any structured settlement broker or settlement planner owes a duty to the source of their referral to the plaintiff to disclose that they engage in this activity and the extent and circumstances of their involvement.  In my opinion, plaintiff attorneys are entitled to this information be able to thoroughly evaluate the vendor. Similarly am insurer, claims adjuster, annuity issuer, which typically makes written representations to the annuitant concerning privacy, will not want one of their agents dishing information to cash now pushers. This author HAS received calls from upset annuitants who have been contacted by factoring companies even though the settlement was subject to a confidentiality clause. What liability does an annuity issuer have if the source of the confidentiality breach is one of THEIR agents?

Furthermore be aware, if you are not already, that the lists and an educational white paper ARE going to be distributed to every state trial lawyer association in the United States and the American Association for Justice in early 2009 for further distribution to their members, if THEY so choose. The lists will also be maintained on Structured Settlements 4Real.

Mark states "I believe John's initiative is a worthy voluntary endeavor to bring some level of accountability to the profession that NSSTA simply can't provide. I personally will fall into the "other" category as I am not closing the door to compensation from factoring transactions, but as stated above believe disclosure and court supervision is the best possible answer to these abuses. I think it is up to each professional member to decide if they want to participate in this initiative, but whether or not they do, they have an obligation to have a clearly stated policy when dealing with factoring issues with their clients".

Here is my company's published statement, where's yours?

What's in A Structured Settlement Vig? A Glossary of Essential Vig Terms

Veni Vidi Vigi 
Latin for "I came- I saw- I took

Vig-nette

A little but memorable vig

Vig-Itation Rights          
The right to vig movement promoted by the earthy crunchy settlement planner Mack Phillistine 

VigStock
An annual gathering of the disciples of Mack Phillistine in "The Vig Easy",  where the vig topics of the day are discussed. Often featuring acts such as rock star Peter Vigreal singing "Vig Time..I'm on my way I'm makin' it, Vig Time". Attendees are guaranteed to have a vigtastic time.

American Vig-olo
A hustler across different industries.

Vigger

He or she who asks for and/or takes financial compensation for simply giving a factoring company a lead that results in the complete destruction of a structured settlement.

Getting Viggy With it
those who get overly aroused when defending the act of taking structured settlement factoring vig   

Vig-Omatic
Direct deposit of vigs.

Vig-lets
Receiving vigs on minors’ structured settlements.

Vig-ilante              
The name given to a competitor who steals your clients with a side of vig.

Vigs in a Blanket
Multiple claimants all within the same claim choosing to destroy their structured settlements.

Vig-arette  
A vig that goes up in smoke.

Vig-Normous  
Exceptionally large vig.

Vig-Kong      
The mother of vigs.

Vig’s Ear
Description used to describe a broker considering giving the
claimant’s name or confidential paperwork to a factoring company.

Can You Vig It?
Question asked by structured settlement broker to factoring rep. Also on the banner ads for VigStock

VigNette
An excuse that a vig-taking structured settlement broker and settlement planner uses to justify taking the vig

Vig-enar
The bitter taste in a claimant's mouth after factoring their structure and finding out that vig was paid but undisclosed.

Shame
Something vig takers don't have

 

 

An "Arc" CANNOT List | Structured Settlement Transparency

by Structured Settlement Watchdog®

 

When all is said and done, this is the point -

if Penelope Plaintiff calls a broker that is on the Structured Settlement Clean Vendor List ("vig free") to factor her structured settlement annuity, then hangs up the phone and calls a broker that not on the Clean Vendor List ( who is a vig taker) to factor the exact same cash flow with same funding source, which will get her the better price assuming, for sake of discussion, all other alternative sources of funds have been exhausted?

X------------------------------------------------

And that is the Bottom-Line point.

If can't see yourself seeing this as a pro bono task, meaning you (or if you are a lawyer-your broker) wish to make money off the transaction, that's your choice. But in the end it can only come from the transaction itself, and one dime taken reduces Penelope Plaintiff's recovery by ten cents.

X--------------------------------------------------

Using an illustrative example:  Let's say two brokers refer business to the same structured settlement  factoring vendor. One, who is on the Clean Vendor List communicates to the factoring vendor that he or she is referring pro bono and the other, not on the Clean Vendor List, is taking a fee equal to 50% of the fee that vendor makes. Broker A insists and has the factoring vendor's word that he or she she will not take more for his  or her personal fee than the net to him or her if she had split her fee with Broker B. The end result, assuming the vendor keeps its word, is that Broker A has done better for the tort victim's bottom line. To the factoring vendor it's revenue neutral. Were the factoring vendor to disagree with this logic then he or she will have admitted that he or she is not playing fair with brokers and call his or her business ethics into question.

X----------------------------------------------------

 

Long Time Leading Plaintiff Advocate Voices Support For Structured Settlement Transparency Initiative

by John Darer® CLU ChFC CSSC 

Long Time leading plaintiff advocate, Richard Halpern, President of Springfield, NJ based The Halpern Group has voiced his support for the Structured Settlement Transparency Initiative.

Halpern writes "I am writing to you to commend you on your ongoing effort to clean up the structured settlement industry. I have been following your ongoing commentary concerning the aftermarket annuity buyers with great interest. I applaud your call for all structured settlement brokers to sign your affidavit and to refrain from helping plaintiffs squander their money".

While Halpern's company offers an alternative periodic payment mechanism and various other alternatives utilizing institutional trustees he offers a similar pledge to our Structured Settlements Business Practices Declaration Concerning Factoring Compensation. His trusts have strong built-in anti factoring safeguards.

Halpern continues " I cannot fathom how anybody who is truly dedicated to the welfare of injured people could accept payment to further injure those people (tort victims). I wish you well in this endeavor and will do my utmost to steer conscientious plaintiff attorneys to your blog so that they may learn the truth about this practice."

Covert operators who were skeptical about how far this project will go and hoped it would die on the vine, are going to be sorely disappointed. This is only just ramping up.They can be certain that Richard Halpern is a man of his word. The best move for your business just may not be to continue to slither in the tall grass. Those with any trepidation about signing the declaration perhaps ought to reflect on a day when:

(1)One factoring company President, publicly declared that 90% of the company's referral sources are on the take. The factoring broker gets the majority of its factoring business from structured settlement industry referrals.

(2)Leading plaintiff advocate Richard Halpern recognizes and applauds the efforts to clean up the structured settlement industry through the Structured Settlement Transparency Initiative and states that he will do his utmost to steer attorneys to learn the truth about the "structured settlement factoring vig" via the information provided on Structured Settlements 4Real®.

MORE TO COME!

Below is a copy of December 13, 2007 letter from Richard Halpern to John Darer in support of the Structured Settlement Transparency Initiative.

Download halpern_12132007_letter_in_support_of_factoring_disclosure_project.pdf

The Great Tort Victim Snow Job of 2007 Part 2-AAJ Are You Paying Attention?

Excerpt of an emailed response this author received from one of the named factoring companies to my post The Great Tort Victim Snow Job of 2007:

"Wentworth offers double what I do (but don’t advertise that), Strategic Capital pays, Settlement Capital has offered 5% to one of my clients!  All factoring companies pay a referral fee".

In my opinion, The Great Tort Victim Snow Job of 2007 is looking more like the Great Tort Victim Robbery. At a time of year when people are supposed to be season of giving, sadly the outlook appears to be that of the season of taking and "greed overules". Any money paid in commissions to structured settlement firms, settlement planners, personal injury lawyers, bankruptcy lawyers and financial planners comes right out of the tort victim's bottom line.

If this is not a wake up call to the members of the American Association For Justice, the New York State Trial Lawyers Association, The Florida Justice Association, The Consumer Attorneys of Los Angeles and other trial lawyer associations and consumer advocacy groups what is?

Think about it, an essentially unregulated industry is falling all over themselves to pay off sources of access to tort victims. The highest bidder wins. Think your client wins? Don't bet on it! Where does that put you?

Many of you are already backing a Presidential candidate who appears to have made a professional testimonial about a structured settlement firm that (1) he couldn't have done business with and (2) its President turns out to be a bundler (3) has given large amounts of money to AAJ and to various state TLAs.

Now how is it going to look after it is discovered that the structured settlement firm that YOU recommended to your client, or one of the sponsors of your association, is "on the take" from these factoring companies? One of my sources has told me that more than 85% of the referrals it receives from structured settlement brokers involves the payment of an undisclosed fee or commission (that comes right out of the tort victim's pocket). Some industry lemmings try to justify it by saying "everyone else is doing it".

This problem is an easy fix.

Work ONLY with structured settlement brokers and settlement planners who do NOT take a fee for these types of transactions. MAKE THEM SWEAR TO IT IN WRITING!