Structured Settlements - Plaintiff Loyal Structured Settlement Company

Darer’s “Ark”? What A Hypocrite!

Rick Bishop and I (and we assume most of the structured settlement brokers and settlement planners in the country) received the most incredible email from John Darer of 4 Structures.com two weeks ago.

In case you haven’t seen it, here’s a copy of the email:

From: Structures@aol.com [mailto:Structures@aol.com]
Sent: Thursday, November 29, 2007 4:56 PM
To: rbishop@structurepro.com
Cc: Meligan@settlepro.com
Subject: Greetings
 
 
http://structuredsettlements.typepad.com/structured_settlements_4r/
2007/11/cleaning-up-the.html
 
Rick/Jack,
 
Sadly I’ve learned that a number of brokers in our industry are taking money from referrals to factoring companies. Sometimes a flat fee sometimes a %. Such behavior serves to add to the already deeply discounted bottom line that the tort victim receives on such deals. More importantly it sends the wrong message about our industry to the trial bar. While I would hope the behavior is in the minority it has come to my attention that the overwhelming majority of those referring such cases (at least to one particular vendor) have their hands out.  There is a sense of “follow the leader” among some.Plus the factoring companies are falling all over themselves with incentives.
 
I am starting a grass roots “Noah’s Ark” of brokers and settlement planners who DO NOT participate financially in such deals. This will be a published list to help differentiate for the lawyers and insurers those brokers/planners who DONT from those that DO. To get on the list each person will have to make a declaration a la the DOJ. A copy of the declaration is downloadable  in the blog post linked above for your review.
 
I hope I can count on your participation.
 
Kind regards, 
 

John D. Darer, CLU ChFC CSSC
43 Harbor Drive, Unit 309
Stamford, CT 06902

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So, what’s my problem with this seemingly noble and altruistic attempt by the man who fancies himself a modern day Noah?  Actually, I have several.

John’s first sentence says “Sadly I’ve learned that a number of brokers in our industry are taking money from referrals to factoring companies.” 

To the casual reader of this statement, it might appear that John Darer JUST NOW learned of brokers taking money for referrals AND that same casual reader would probably assume that there IS NO WAY that John D. Darer has EVER taken money for a factoring referral, because no one in his RIGHT MIND would have the COJONES to write this first sentence in this manner and with this tone and inflection IF HE HAD EVER TAKEN MONEY FOR A REFERRAL TO FACTORING COMPANY!!  WOULD HE?? 

Dear readers, I am here to tell you THAT I HAVE FIRST HAND KNOWLEDGE AND CONFIRMATION THAT JOHN D. DARER HAS HIMSELF TAKEN MONEY FOR FACTORING REFERRALS.  LOTS OF MONEY.

John is probably not happy right now with my exposing his dirty little secret.  But men who live in glass houses….shouldn’t write emails that are designed to decieve.  Too many people living in the neighborhood know the truth.

John, as my 94 year old grandfather likes to say, you must have STONES THE SIZE OF BUICKS !  What, when you hatched this latest self-promotion stunt, you didn’t think that any of us here in this industry would have the courage to CALL YOU OUT on this?   You DIDN”T?    Well, wrongo buddy boy.   We all know the truth, and the truth is YOU HAVE ACCEPTED FEES ON FACTORING REFERRALS,  AND LOTS OF THEM!  AS NEAR AS WE CAN ALL TELL, YOU PROBABLY STARTED TAKING THESE FEES AS FAR BACK AS 3 TO 4 YEARS AGO!  (To be fair, industry sources believe that John has not taken any referral fees since the date of the above email).  That means, John, that you were taking money AT THE SAME TIME YOU WERE CRITICIZING THE FACTORING INDUSTRY and CRUSADING AS THE MAN WHO WOULD CLEAN UP OUR INDUSTRY!  What a GIGANTIC HYPOCRITE! 

Now let’s look at John’s third sentence: ”Such behavior serves to add to the already deeply discounted bottom line that the tort victim receives on such deals.”  WELL JOHN, YOU SHOULD KNOW, YOU HAVE DONE A LOT OF THESE DEALS IN YOUR NOT TO DISTANT PAST, HAVEN’T YOU?

You know, John, now that you have gone back to working on the Defense side of the Structured Settlement Market (Oh, I know, I know, you take cases from both sides now with no specific allegiance to either, except whomever you happen to be working with today) isn’t your job to HELP and ASSIST the defendant’s Casualty Company, or the Self-Insured Defendant, to CHISEL DOWN the TORT VICTIM’s claim, and spend the least amount possible?  That IS the job of any expert working for the defendant’s, isn’t it? 

So let me get this straight.  You think (now, because it is clear that at least up to 11/29/07 you didn’t think this way) that it is wrong for a financial professional to take a fee for referring someone to a factoring company because that adds “to the already deeply discounted bottom line” while at the same time (but obviously on separate cases) you are working to help defendants DEEPLY DISCOUNT tort victim’s settlements.  THE DEPTH OF YOUR HUBRIS KNOWS NO BOTTOM!

Fourth sentence: “More importantly it sends the wrong message about our industry to the trial bar.”  John, you are the one sending the wrong message.  Your email would have been accurate if it had started out by saying “For years I have accepted referral fees from factoring companies, while at the same time conducting a campaign against them.  This was HYPOCRITICAL of me.  I am hereby starting a sign-up sheet declaring that I will never again accept referral fees from factoring companies, and then turn and bite the hands that feed me.  Will you join me and sign my sheet?”  I can’t help but think that the trial bar also gets the wrong message about you and people like you who attempt to walk both sides of the street, that message being “money is green and my services are available to the highest bidder.”  This means an attorney can have you working for him on a case today, but tomorrow you may show up working against him on a different case.  I bet they love that.

Ok, enough about John and his ridiculous email and “Noah’s Ark” sign-up sheet.  What is my position on this topic?

I DO NOT take referral fees from factoring companies FROM MY PERSONAL CLIENTS.  If one of them should call requesting a referral, I consider it “post-settlement” planning, and I would try to help them find a way to solve their financial problem without resorting to selling all or part of their payments.  I have had exactly one of my client’s call me for help in this regard.  A 12-year old girl that developed inoperable brain cancer just 6 months after we had structured her claim for injuries suffered on her school’s playground equiptment.  Her parents sought and received court approval to cash in her annuity and take her to Disneyland.  I specifically asked the factoring company to quote this case with no referral fee.  We then refunded the commission earned on the placement of the original structured settlement annuity to help this poor family further.  (I don’t reveal that point here because I want anyone’s praise or thanks.  I am just preparing for what I expect will be John Darer’s response to my entire post, and I can see him asking that question.  So I have hopefully avoided his sanctimonius and accusatory finger on that one).

I DO take referral fees from factoring companies from OTHER PEOPLE’S clients, like John’s.  When a defense broker like John forces a structure on tort victim, using the financial power of the casualty company (which retained him) and promoting their agenda of approved annuity carrier(s), OR when that same tort victim hasn’t had the benefit of their own settlement planner helping them financially plan their settlement because the DOJ has forbidden plaintiff settlement planner participation in compensation (another of John’s illustrious clients), tort victims sometimes end up a few years down the road in a financial position that looks bleak due to a lack of liquidity.  If one of those OTHER PEOPLE’S clients ends up calling me, I engage in the same post-settlement planning mentioned above.  I approach the liquidity problem from the angle that we first need to exhaust all other remedies before the last resort of factoring and the permanent effect that has on a tort victim’s future payments.  BUT I DON’T WORK FOR FREE.  Why should I, when I am cleaning up some OTHER PEOPLE’S mess created by some other broker, like John?  So when appropriate and when there is no other viable solution, I will refer people to factoring companies.  In many of these cases, we have also had to assist these folks with obtaining replacement documents or doing other helpful tasks, so that they can even begin the process.  The point is, these cases can consume time for me and my staff, and I don’t apologize for getting paid a fee that, in most cases, does NOT cover the resources expended.

My good friend and associate Michele Whitmore said it very well in the following email response to another broker in our industry:

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From: Michele [mailto:michele@settlementstrategies.com]
Sent: Wednesday, December 05, 2007 11:20 AM
Subject: RE: Factoring problem
 
David:
 
Thank you for forwarding JD’s message.
 
 It is my position that a responsible planner advisor should be a resource for the client in any and all transactions for which s/he is educated.  Cashing out an established structured annuity contract requires oversight by a financial professional in both the evaluation of the transaction’s details as well as other implications of such a decision in order to make a proper proposal before the court.  While I certainly won’t participate in any marketing to my clients, I will encourage them to call if they are considering a change to their policy.  Being paid for my services with the proper disclosures is business between myself and my clients. 
 
As far as the issue of factoring an annuity contract, I feel that liquidity in any financial position is good given the future is unpredictable.  My planning and advice always incorporates adequate cash reserves throughout the client’s life span, but there will always be circumstances that can occur that were not anticipated.  The right contract buy out under appropriate circumstances is a good thing.
 
I also know that there has been a lot of “over structuring” by this industry  by brokers who were inclined to consider their commission over the needs of the injured party.  Factoring with court approval may provide relief to some (albeit at a cost) whose settlements were mishandled.
 
John Darer has a very different position on the issue, but I don’t lose any sleep over it. 
 
Michele Whitmore
Settlement Strategies, Inc.
19412A E. Mann Creek Drive
Parker CO  80134
phone: (303) 841-0420
fax:     (303) 841-2910

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I suspect Michele’s professionally stated opinion is common amongst others in our industry.   And I concur with her when she says that she won’t participate in any marketing to her clients.  I will not do that either. 

And one final thing.  From late 1988 to late 1993, I was affiliated with a national Structured Settlement firm, SFA, that was predominately a defense oriented firm.  This was necessary as plaintiff specialist’s like me, were routinely denied access to the annuity markets, and suffered from an inability to fully serve tort victims.  During that time period, I handled cases for defendants and plaintiffs.  Fortunately, that was before exclusive rebate deals and approved annuity issuer lists became prevalent in this industry, and I never had to participate in either(to my knowledge) when working for a defendant.  My experiences from that side of the table were invaluable, however.  When I left in 1993 and resumed promoting my services to tort victims exclusively (the aforementioned denial of access having evaporated over the ensuing 5 years), my background assisted many of my client’s in obtaining a fairer settlement, and one where my client’s needs were met instead of the defendant’s, when it came to the financial aspects of their settlement.  I make no apologies for this, as it has shaped and formed me into the professional that I am today.  I consider it the “silver lining” to a dark time in our industry’s history.

So John, we are all expecting one of your classic responses to my post.  Go ahead, take your best shot.  We will be disapointed if you don’t try to make this personal by calling me a water buffalo, or pointing out my generous use of yellow highlights on my web page, or mimicking Roger Ebert and offering a critique of my latest video recordings.  Go ahead, try and change the subject and make this about me and not your email. 

 Just remember, you wrote it.  And everybody that reads this now knows the truth about you.  And they, like the rest of us, now can see you as someone who would rather polish his own ego, than engage in a civil discussion about substantive issues.