I keep hearing stories about John Bair:

Bair (or Forge) purportedly is taking on qualified assignments and dealing with state and national trial lawyer organizations to create affinity programs?

What does anyone know about any of these things?

Teddy,

Check out my new post in the Gossip and rumors blog section. I'm going to edit down this post simply because if something is alledged or purported to be true or occuring isn't the same as it actually occuring. Lets restructure this post with commentary about what we know to be true, as opposed to what we are told is occuring.

A Bair/Genworth partnership for the trial lawyers? Check out the Arkansas trial lawyers site at http://www.arktla.org/ar/. It reads "ATLA Members are being sent the latest information on the Life Insurance product this week. The Arkansas Trial Lawyers Association (in partnership with Forge Consulting and GE/Genworth Financial) is adding insurance to its list of member benfits."

He must've tossed money to the ATLA New Lawyers Division. From ATLA's website (www.atla.net): "The Executive Committee of the ATLA New Lawyers Division would like to thank Forge Consulting, LLC for sponsoring our group dinner during the Annual Convention in Toronto, Canada. The company has exhibited its dedication to the Trial Bar and the fight for plaintiffs' rights through generous personal and financial donations to various trial lawyer associations."

And here we didn't think the lawyers would appreciate cold hard cash. I've heard some grousing in ATLA about the Affinity program, but I don't see them letting up on it.

Did he or did he not lose a major market appointment?

Hadn't heard that, but there isn't really any way to find out unless he was terminated for cause...then (I think), the state insurance commissioner is notified. I hear stories, but its just that, stories.

There are a few stories floating around, but nothing anyone can or will step up and verify. I think the larger issue of the affinity programs and partnering with trial lawyers should be addressed at some point, and we will be having a top legal ethics professor on in June to discuss these types of issues.

John Bair moving to Canada?

Certainly hadn't heard that one. Not much of a drive across the Peace Bridge outside of Buffalo to get to Ontario.

Bair is advertising in print that Forge offers no-cost qualified settlement funds. How can that be? Can a trustee work for free?

Obviously no one works for free, and if it's no cost to the trial lawyer or plaintiff, then my guess, and it is just a guess, would be that Forge is probably subsidizing the legal, trustee and custodial costs out of their own cash flow. Nothing illegal about it to my knowledge and would simply appear to be a shrewd marketing ploy, although i'm dubious as to the economic wisdom. I've done quite a few QSF's and you do have real costs for drafting, filing, court appearances, custodial fee's, etc. They aren't free, but if the broker is willing to cover the costs in order to capture the commission thats their call.

It is my understanding that an opinion letter has been sought with several state insurance departments on the subject. It will be interesting to see if the payment of the expenses "of the QSF" amounts to a "consideration of any kind" that would violate the states anti-rebating laws. What's the difference between what Bair is advertising that he/Forge isdoing reducing an insurer's cost in some way in exchange for structured annuity business? I can see supplying a alwyer to draft the QSF docs as part of your service but actually paying the cost of the QSF, the trustee fees, the cost of the trust's tax return. In my mind that's dangerous stuff. We'll see what these state insurance department say. Stay tuned.

(continued) The payment of the expenses of the QSF has the effect of putting extra cash in the plaintiff's hands,a seemingly noble cause, but does it violate the law?. If the plaintiff is deemed to be the consumer as Rick Bishop is trying to define in SB410 then it could be construed as a rebate.

N.Y. Ins. Law § 2324(a) (McKinney Supp. 2004) provides:

No authorized insurer, no licensed insurance agent, no licensed insurance broker, and no employee or other representative of any such insurer, agent or broker shall make, procure or negotiate any contract of insurance other than as plainly expressed in the policy or other written contract issued or to be issued as evidence thereof, or shall directly or indirectly, by giving or sharing a commission or in any manner whatsoever, pay or allow or offer to pay or allow to the insured or to any employee of the insured, either as an inducement to the making of insurance or after insurance has been effected, any rebate from the premium which is specified in the policy, or any special favor or advantage in the dividends or other benefit to accrue thereon, or shall give or offer to give any valuable consideration or inducement of any kind, directly or indirectly, which is not specified in such policy or contract, other than any article of merchandise not exceeding fifteen dollars in value which shall have conspicuously stamped or printed thereon the advertisement of the insurer, agent or broker, or shall give, sell or purchase, or offer to give, sell or purchase, as an inducement to the making of such insurance or in connection therewith, any stock, bond or other securities or any dividends or profits accrued thereon, nor shall the insured, his agent or representative knowingly receive directly or indirectly, any such rebate or special favor or advantage, provided, however, a licensed insurance agent or a licensed insurance broker may retain the usual commission or underwriting fee on insurance placed on his own property or risks, if the aggregate of such commissions or underwriting fees will not exceed five percent of the total net commissions or underwriting fees received by such licensed insurance agent or insurance broker during the calendar year.

Readers can draw their own conclusions, but as stated opinion letters are forthcoming!

Waldo,

Thanks for the clarification. Great stuff in providing the foundational arguement behind the payment of the QSF costs. My larger concern on this is that by doing the QSF at no cost, advertising it as such, all we are doing is validating the concerns of those on the defense side, and in Treasury, that if the QSF becomes a no cost, pass through, boiler plate item, such as you get when you sign up at Fidelity or Charles Schwab for a qualified pension plan, that we are going to see the entrance of players into this market that will dwarf the current settlement firms, i.e. banks, brokerage houses that don't necessarily want to place settlement annuities, but rather just want to find a way to gather these assets. I still believe the maxim of "that which you don't pay for is ultimately the item you have little value for". The QSF is rarely prudent on single claimant cases, occasionally useful on multiple claimant cases and mandatory on mass tort claims. Those who look to turn it into a vehicle to merely divert dollars from traditional channels might bring regulatory and tax changes on all of us who work to benefit plaintiffs.

It will be interesting to see what happens with the opinions. Between this an the "pro-bono 9-11" work, Forge seem to want you to think that they are the Mother Teresa of structured settlements.

And in addition to Rick Bishop,the SSP may have set the table in its 1/2005 press release in its press release written by Richard B. Risk, Esq and Anthony Alfieri, Esq.intended to go after alleged rebating to casualty companies, In the press release found on the SSP website at www.settlementplanners.org

"SSP also urges the NAIC to expand its definition of “customer” to include injury victims, “who are the ultimate consumers of structured settlement annuities,” as the intended payee or measuring life of any structured settlement annuity. The SSP points out “this amendment is of particular importance because, unlike a traditional insurance contract purchase, the purchaser/owner of this type of insurance is the defendant or casualty company, with the intended consumer or recipient of the future periodic payment being the injury victim.”

This supports Waldo's argument

Not sure on the QSF thing. I've seen trust companies reduce the cost to nearly zero up front costs if there is enough back end for them (in other words, assets under management for a long time). Use boilerplate docs and you've got a nearly free, though probably flawe/dangerous, QSF.

I wonder when the whole house of cards comes crashing down. He owes a ton of money to the trial lawyers, tried to use his own company as an assignment company (for what reason I can't figure out), and is rumored to have driven one or more companies out of the single plaintiff QSF business. Can someone tell me why its rebating when the broker sends the money to the defendant, but millions in kickbacks to trial lawyers is okay?

By the way, he's pretty proud of all the loot he's dropping on the trial lawyers. From his website:

FORGE is a partner in advocacy with the Trial Bar, and a regular contributor to its causes:

FORGE is a "Friend of ATLA," and the only structured settlement company to be designated a board member of the ATLA Endowment.

FORGE is a Champion Level donor to The TLPJ Foundation, helping to further the organization's quest to create a more just society.
The 2003 Trial Lawyers Care Golf Classic in Maui, Hawaii, was sponsored by FORGE, and raised $25,000 for Trial Lawyers Care, Inc., a non-profit organization providing free legal services to the victims of September 11, 2001.
Sponsor of the Georgia Trial Lawyers Association's (GTLA) 2003 Annual Convention and Leadership Retreat, as well as GTLA Young Lawyers Division events.
The Massachusetts Academy of Trial Attorneys (MATA) awarded FORGE president John Bair with its 2003 Humanitarian Award, in honor of the company's 9/11 pro bono work.
A founding member of MATA's Civil Justice Institute.
An Affinity Partner of the Mississippi Trial Lawyers Association (MTLA).
A founding member of the New York State Trial Lawyers Association's (NYSTLA) Partnership For Justice fund.
FORGE made a donation to the South Carolina Trial Lawyers Association (SCTLA), to assist with its headquarters mortgage. The association's Executive Director and President identified this as their greatest area of need.
Sponsor of the 2003 Annual Convention of the Tennessee Trial Lawyers Association (TTLA) and its Board of Governors functions.

And that's just 2003 Jack! Not to mention the advertising abuse cited on Structured Settlements
4Real.

Not to take the spotlight off the topic of the thread, but I'd like to shift to the larger issue of payments to trial lawyers directly, or in proxy to state or national associations. I don't think there is a great deal of difference IF, and it's a big IF, the contributions come with a direct or implied understanding that they will result in exclusivity, preferred treatment or effectively exclude other brokers from a market.

No one is going to tell me I can't make contributions to state or local trial lawyer associations, or work cooperatively with them in furthering causes I might happen to believe in. Where the line gets crossed is when that contribution means the broker gets exclusive mention on trial lawyer list serves, exclusive right to present or talk to a group on structures, or other firms as prohibited from exhibiting or advertising favorably at events or in publications. I know a lot of members of ATLA at the state and local levels are livid about the affinity programs and things like it because they believe it is akin to rebating and is no better then what has been done to plaintiff brokers for decades. Eventually those voices will be heard, but at the moment a lot of the states and most of the national organizations are busy sucking up cash and contributions and are more then happy to take broker's money.

It's a classic Faustian bargain thats being made to gain short term market share, and in my opinion isn't worth the cost as few if any trial lawyers are going to stop using their own broker on their own cases just to reward a firm that pays huge money to a trial lawyer organization.

Mark, I agree with you there is nothing wrong with donating or buying ad space from lawyers. Forge is promising money based on structured settlement sales derived from the trial lawyers. That's rebating, plain and simple. I just find it the ridiculous that the SSP and others throw grenades at the defense industry for similar practices, but when it comes to plaintiff brokers, you don't hear a peep from them. They issue a press release on Macomber, but I've yet to hear them say a word on the ATLA affinity program.