In the last month I had the opportunity to present twice on the idea of internet marketing and how lawyers and settlement professionals can start to get in the game. These video podcasts of my talk given back on June 6th, 2008 cover the basics of internet marketing and i'm providing the links here for those of you who want to view them.

Part one of Mark Wahlstrom's talk on Internet Marketing.

Part two of Mark Wahlstrom's talk on internet Marketing.

However, in today's blog post I want to talk about social and professional networks for attorneys and what they are. As many people who are on the cutting edge of marketing are aware, or if you have a child under the age of 24 who has a MySpace account, the explosion of social networks has turned into a tidal wave of activity for those of us interested in internet marketing. No other area of what is often called Web 2.0 has shown more growth, attracted more venture capital money and is of such keen interest to advertisers then social and professional networks. However, I also realize that most lawyers have no clue as to what a professional network is or why it is essential that they join one if they want to be viable on the internet.

The most familiar networks that people can join, such as MySpace, Facebook, Linkedin and Bebo, have drawn all the big boys of the media and internet world, with Rupport Murdoch buying MySpace as the signature example. Why are they attracting so much money and what are the implications for lawyers, financial experts and legal marketing firms who are spending their current money on Search Engine Optimization (SEO), buying banner ads, Google clicks or utilizing email campaigns? It's simple, the money goes where the people go and right now the audience is moving strongly to social and professional networking sites. The bottom line is that the world is moving in this direction and that it won't be long before having a professional networking profile will be as essential as an email address and web site are today.

What is social/professional networking you might ask? In it's simplest, and crudest form, just go over to Myspace.com and check out the biggest social network. Essentially it is the creation of a personal profile by opening up a free membership with Myspace, putting your photo on it and then filling out a questionnaire, putting links to your content and basically letting the world know who you are and what you are about. Simple, right? Well, the simplicity is the value of the network and the fact that it allows you to find "friends" with common interests or common social circles allows you to expand your network and raise your profile. Of course in the Myspace world that often means finding dates, activity partners and others, not necessarily professional clients.

Now in the social world that "raised profile" means more potential dates and friends, but in the professional world it means that people who are looking for someone with your expertise and talents, would be able to locate you through the network or search engine results, and therefore could potentially be a source of future business. The issue up until now has been whether or not  the average lawyer, financial guy or legal marketer wants to put themselves out on MySpace or Facebook which are generally seen more as dating and pop culture sites for the general public and therefore risk diminishing their professional image by being seen in "that club".

So how does a legal professional obtain the massive benefits and exposure of joining a social network with out all of the potential draw backs? It's a pretty simple solution in that you just start searching for networking sites that specialize in your profession. The problem with that is that most "networks" are on list servers for state trial lawyer groups or bar associations, which by their very nature end up being isolated behind a membership fire wall. They don't allow for creation of individual firm or attorney profiles, they don't promote your specialty areas and they really only function as a question and answer board using technology around since 1990. They are exceptionally limited and provide the lawyer with only one of the three features of a social network and that is the abiiity to speak with their peers. 

What The Legal Broadcast Network has come up with is our own professional network that attorneys, law students, law professors, paralegals, media professionals and others can join that will be filled with their peers and the type of media you have come to expect from our platform.

We have titled it The LB Network and you can find it by clicking here.

What you will find is our beta phase test of a professional media network for attorneys that is totally open for any lawyer, law student, judge, law professor, reporter or legal marketing expert to join. Once you join you can create your media profile, links to your law firm, publications, up load audio and video podcasts and develop a blog all for no cost. The value to you is the opportunity to raise your profile among lawyers, clients and potential clients. In short, it helps them find you, refer you and communicate with you in an immediate fashion that other internet marketing options don't provide.

As this is the first of a five part series on developing your media profile and starting your networking program, you need to make sure you are subscribing to my RSS feed so you can read the next few posts that will get into the details of social marketing for lawyers and why you need to be part of it. My next post on professional marketing will get into the development of a professional media profile and it's essential ingredients.

On this weeks Speaking of Settlements, the weekly podcast feature of The Settlement Channel, I am joined once again by noted tax law attorney Robert Wood of the firm Wood & Porter of San Francisco, CA. The reason for having Rob back two weeks in a row is the news that the Treasury has issued final regulations on section 468B-6 trusts and I wanted to get copies and material to my audience as soon as possible.

Now, before anyone gets too excited, these regulations and final rules are NOT related to the more commonly discussed 468B trust that is used for litigation and mass torts. These rules are not related to those trusts or the pending issue before Treasury regarding the taxation of single claimant structures, as much as we would like to get that ruling after all these years of waiting.

No, this podcast is relative to the section of those trusts that govern a variety of other trusts, but specifically those related to section 1031 exchanges and the trust accounts used to manage those transactions. Now, before you go away and don't read this, keep in mind that Allstate Life has their structured sale product, which is a vital element of the 1031 fall back or fall out market so knowledge of these provisions is of keen interest if you are involved in that market.

I know it's a small niche as of yet, but a lot more producers should be looking at the 1031 fallback or fall out market as a means of getting into the structured sales arena. So take a few minutes, click on this link, and learn a little more about 468B-6 trusts and the new rules on section 1031 exchanges. 

You can also read more on these regulations and obtain a copy of this ruling by going over to The Tax Law Channel and looking for the pdf copy of the regulations.

In some rare good news out of the US Treasury department we finally obtained new, final regulations on the application of IRC code section 1.469B-6 trusts. While at first read a lot of structured settlement professionals will be getting all excited and thinking that this is the long awaited ruling from Treasury on 468B qualified settlement funds and single claimant cases, it is in fact related to the issue of escrow accounts, trusts and other funds used during deferred exchanges, such as a section 1031 like-kind exchange.

However, while this is not really relevant to the mass tort and multi-claimant aspect of the structured settlement industry, it is of intense interest to the people over at Allstate and for those of us who are actively in the structured sales business. As we all know this area has languished as a result of a very slow build up in knowledge and familiarity with these annuities, but with a very likely capital gains tax increase on the horizon with the 2009 U.S. Congress the viability of tax deferral of capital asset sales using a structured sale annuity will be of far greater interest to tax payers and tax experts. 

The area of 1031 like kind exchanges is a further subset and niche in that market, but one with immense potential for those settlement professionals willing to invest the time, talent, marketing and process to make it a new line of business. My day job at Wahlstrom & Associates has been focused on this area for over two years and these clarifications should be welcome news in marketing to qualified intermediaries and others who inhabit the 1031 exchange world. 

I will be hosting Attorney Robert Wood, principal of Wood & Porter of San Francisco and the lead commentator on The Tax Law Channel, our newest channel here on LBN. If you want to know more about this ruling, obtain a pdf copy of it or investigate how you can start to work in this market, give me a call or send me an email after our podcast later this week. 

Again, it's not the long awaited 468b single claimant ruling, but it's almost as good if you are in the structured sales market. 

In part two of a podcast that Jan and Rob did while at the WTLA conference in Scottsdale, AZ we are part of an in depth discussion on the topic of 468b trusts. I know a lot of people ask me why I am such an advocate of these and my answer is that virtually no area of settlements is more wide open for growth then cases in which these are used. Now that I have LBN properly funded and staffed, your going to see a major expansion of the content and business focus of Wahlstrom & Associates, and that is going to be about our wide ranging work on cases involving 468b settlement funds. If you are a trial lawyer, a structured settlement professional or a plaintiff, these series of video and audio podcasts on structured settlements, settlement planning and 468b trusts are going to be of interest to you.

Famed trial lawyer Joe Jamail, the attorney that brought in a $12 billion verdict against Texaco in the landmark Pennzoil vs Texaco case was recently interviewed by the Legal Broadcast Network while at a NSSTA regional in Austin, TX.

Mr. Jamail had spoken at length to the members of the National Structured Settlement Trade Association earlier in the day and then agreed to an interview to discuss the vital importance of structured settlements as a tool for injury victims and others who receive large court awards. Very often it is the trial lawyer who over looks the key role they play in providing settlement options to their clients, matching them up with a qualified settlement professional and explaining how the structured settlement annuity is used to guarantee tax free income and future funds to protect them and their family.

You can view this entire video, that was sponsored by NSSTA and produced by The Legal Broadcast Network, by either clicking on the TV screen in this blog or clicking on this link. If you are considering the option of using a structured settlement or if you are a trial lawyer wondering what your responsibility is to obtain professional advice for your client, this is a very valuable video for you to watch.

Wahlstrom and Associates is one of the leading experts nationally in the use of structured settlements and underwriting settlement annuity contracts. If you want to know more about structured settlements or how to work with our firm, contact us at the email form on this page.  

In what is shaping up to be a significant transfer of assets from Merck to the legal community, both defense and plaintiff attorneys I might add, the recent Vioxx settlement is touching off a mad scramble among banks, investment firms, legal lenders and others interested in invested those funds.

I've already seen press releases from legal finance firms offering bridge loans and financing at preferred rates to trial lawyers with large Vioxx case inventories, a flood of articles and solicitations by structured settlement firms for attorneys to structure their fees as well as traditional banks and brokers angling for the tax planning and investment windfall.

However, as Lee Corso of ESPN College football often says, " Not so fast my friend!".

If you take a look at the actual numbers and what the dynamics have been of this case it is pretty obvious the big money in the investment community is going to be made by legal finance companies who will advance fund the attorneys who stand to make big pay days on their inventory of cases, but might have to wait anywhere from 6 months to a year or longer for those funds to actually get paid. I don't think most people realize just how far into this case a lot of firms are financially and many are hanging on by their finger nails.

While it would make incredible sense for most trial lawyers in Vioxx to structure their legal fees and spread the tax hit out over several years, the reality is that most need the money now, tax consequences be damned. Other then a relatively small group of attorneys at the top levels of this litigation who stand to make considerable money the majority of firms around the country will be happy to collect their funds, in advance from a legal finance firm, and be rid of this litigation disaster that threatened the viability of many of their firms.

However, if you are one of the attorneys who is interested in structuring your legal fee, you absolutely must get with a qualified structured settlement brokers soon to begin mapping out a plan of action for your fee structure. There are sure to be a lot of dynamics at work here, among them attempts by banks and brokers to retain control of the assets as well as efforts by various structured settlement firms to control who writes the annuities. There is a long way to go in this case and as such you need to start gathering information now and making plans.

If you are a financial professional awaiting an investment windfall you better be working with some of the select guys at the top or I'm afraid you will be staring at a rather small net amount once this all gets paid out and disbursed.  

As someone who actually works in the area of designing, pricing and and closing structured sales annuities I have to confess that some of my most serious concerns regarding the marketing of this concept have begun to come true. With the demise of the private annuity trust market, and the vast array of online scam artists promoting that concept, I have for the past year consistently received about a phone call per week from "marketing experts" in the real estate exit business, or former PAT salesmen, asking to affiliate with my firm to promote the sale of structured sale annuity plans on a regional or national basis. While most of these are sincere and well meaning professionals, a great many fall into the familiar category of fast buck, exploitative sales practices that typically have ruined many a good financial vehicle through corrupt or careless marketing practices.

A quick review of the google and yahoo search of the term structured sale, structured sales or installment sale, pop's up the click through search engine marketers who are now selling "class room training", certification programs, marketing opportunities and big commissions for real estate and other professionals looking to cash in on this new and exciting program. These firms tout the coming wealth transfer of the WWII generation, the collapse of the private annuity business and the shear size of the real estate markets as a reason for people to rush into this area and affiliate with, or direct business through, their offices and general agencies. While many of the reasons why people should investigate this concept are valid, the theory that you can just listen to a few hours of audio tapes and start handing out sales material is in my opinion dangerous and potentially harmful to the long term success of this concept in the planning community.

Therefore, if you are professional that is looking into the facts behind structured sales and how they can be used in real estate installment sales I would urge you to consider the following before you start talking to your clients about them:

1. The structured sales market is currently controlled by the 30 appointed general agents who have access to the Allstate structured sale annuity and the Prudential structured sale annuity. These general agents are almost all universally grounded in casualty claims or life insurance, have strong backgrounds in court settlement annuities, but typically have little or no experience in real estate sales, estate planning or retirement planning that is typically at the heart of a clients desire to structure a real estate sale over time.

2. If you are going to partner with a GA or marketing organization to learn the ropes, you really do need to look at what it is they have done in the past, who they have coordinating their efforts and if those people have a prior track record in the previously discredited PAT and tax avoidance promotion industry. What exactly do they bring to the table as far as technical, sales and administrative support to help you with the complexities of actually closing a case.

3. A lot of these cases get opened. quoted, discussed and ultimately never close due to a lack of ability to understand the many facets of the transaction. If the general agent or marketing organization is providing you with most of the commission, you had better be prepared to do most of the work.

4. There is still no PLR or revenue ruling from either Allstate or Prudential, which to me is a glaring act of negligence in helping to build this market. While I personally feel, and have felt, that neither a PLR or revenue ruling is really all that necessary as the foundational tax aspects of this process are really pretty clear cut, but the facts are that most CPA's, tax lawyers and others doing the due diligence on your clients transactions are going to ask for it. Therefore, you had better be totally prepared in the foundational tax law and rulings if you have any hope of actually seeing the sale close.

5. This is not a simple transactional business that lends itself to a quick and easy sale. You have a buyer to educate, a buyers broker, a buyers tax and financial advisor, the seller, the sellers broker and agent, the sellers tax and financial counsel, the title company, escrow agents, etc, etc, etc. Again, if you are getting most of the commission you better be sure you are ready to do most of the work. There is no quick and easy class that gets you out selling and closing cases for big money all for the low, low price of $99 and a set of steak knives.

So what to do if you want to know more about this transaction, want to consider integrating it into your practice and wish to partner with one of the GA's or marketing firms? A few simple suggestions:

1. Do your research and homework. Now granted, most of the online resources are generated by sales organizations but there are some very good third party pieces from tax counsel, the life markets and others that can bring you up to speed on the basics of how these transactions work.

2. Don't expect a lot of big ticket sales. These are typically transactions of between $300,000 and $700,000, which while substantial are not the big million dollar programs that everyone talks about. You need to be prepared to work on modest size cases with long lead times and learning curves.

3. Understand it's not a quick transaction and is going to take a lot of education, salesmanship and sweat to get all involved parties to feel comfortable moving forward. It's a new concept, it's poorly supported by the life markets and the burden is going to fall on the agent to make it happen.

4. Recognize that deferral is only part of the process. You had better have a plan or the capacity to help the people involved to invest the proceeds in a rational and well thought out process or all you've done is set up a financial dissipation plan, not an exit strategy. Most GA's and marketing firms are utterly unprepared to handle that aspect so you better have the skills or acquire them if you don't.

5. Avoid firms that "made their bones" in the tax avoidance or private annuity trust business. They are popping up all over the internet purporting to sell and offer structured sales, when all they are really doing is taking the trade name and slapping it on to their most recent high commission creation. Not all PAT firms were bad, but enough of them were to make it a big red flag in who you are dealing with going forward. Carefully research the back ground, principal owners and others involved in the organization you are considering working through.

Bottom line is that this is a one sale at a time, time intensive market and you need to partner with a company that recognizes that and supports your efforts. Just as your clients were careful in selecting you to work with, be equally diligent in who you partner with to offer these uniquely powerful planning strategies with.  

As anyone who reads my blogs here and at The Settlement Channel know i've been warning about the inevitable collapse of the real estate market for over two years now. My most recent post on The Settlement Channel discusses my thoughts on real estate, sub prime mortgage and where we go from here.

As part of those warnings I mention the loose and careless lending practices being promoted by mortgage brokers nationwide, although living in Phoenix I got an up close view over the last 7 years of just how wild and crazy it got. Virtually anyone could get a loan if you really wanted one. College students buying houses on the prospect of sharing the mortgage payment with their roommates, retirees on fixed incomes getting no money down loans to buy condo's, single mom's just out of a divorce and bankruptcy getting a 2% down loan with an ARM at 3% to buy a home in Scottsdale. Those are just some of the one's I know of personally.

So, the inevitable happened. The market slowed down, payments got late, foreclosures rose, home prices dropped, mortgage rates reset at higher levels, and all of a sudden we have a mortgage crisis as all these packaged loans start to go bad and the institutional investors panic about losing their money. We are now in the midst of a classic credit induced sellers panic and it should last at least a full year as the lending community figures out how to start making responsible loans again.

The issue is, what if you have a sale you were trying to make happen and were scheduled to do a 1031 roll over or transfer, and now the new property you wanted to go into can't be financed for what you thought you could get? I have no doubt that there are a lot of transactions right this minute that are blowing up because the property to be rolled into can't appraise for what the buyer needs, the financing has collapsed or other issues have put your purchase at risk.

What do you do if your 1031 roll over is going bad, but you still must sell your property?

You absolutely need to look into using a structured sale annuity to spread out your tax hit and defer the taxation of your gains as the real estate markets go through this correction. If you are lucky enough to have a buyer that can still afford your property, and you want to spread your gains out, to my mind the best option now is to use a structured sale annuity to fund an installment sale over time. Spread out your tax hit, consolidate your assets and debt, wait for a better buying opportunity and then take advantage of it when you see it.

Rolling over into a property that is over valued and sure to decline is never a smart decision no matter what you think you might save in taxes! Take your sale, defer the gains safely and at good rates of interest and then wait for your next buying opportunity.

Contact my office if you'd like to know more.  

Mark Wahlstrom, President of Wahlstrom and Associates of Scottsdale, AZ was recently featured on KFNN, 1510 in Phoenix, Arizona for a full hour on Talk Real Estate. This syndicated daily real estate show is hosted by Drew Grunwald of The Red Door Group and Doug Blackwell of 1031 Exchange Partners, and the four part hour long discussion centered on the use of structured sale annuities in deferring capital gains on appreciated real estate.

Wahlstrom, who has been mentioned in Forbes, the Wall Street Journal, Vacation Homes, The Robb Report and The National Law Journal as an expert on structured settlements and structured sales, has an intriguing hour long conversation with two leading real estate and 1031 exchanges experts and talks about where structured sales, or installment sales of real estate secured with annuities fits into the the real estate investors plans.

You can listen to each of the podcasts by clicking the following links, or you can go to our podcast directory and play them from there.

Part One of the interview with Talk Real Estate.

Part Two of the interview with Talk Real Estate.

Part Three of the interview with Talk Real Estate.

Part Four of the interview with Talk Real Estate.

Structured sales, or installment sales of real estate funding with secured annuities is a method of deferring capital gains in a secure fashion that is gaining increasing popularity. This interview and our other resources here on this blog can assist you in getting up to speed on how it works, where it is appropriately used and whether or not it might make sense in your situation. You can contact Mark Wahlstrom via the contact page here if you'd like to know more.  

Mark Wahlstrom, President of Wahlstrom & Associates and host of The Settlement Channel will be presenting to the NSSTA ( National Structured Settlement Trade Association) in Toronto on April 24, 2007 on the topic of 468b Trusts in Mass Tort and Multi-Claimant cases, a new approach to an old problem.

One of the leading innovators in the creative uses of structured settlements, non-qualified annuity contracts and settlement trusts, Mark will be sharing his latest innovation that has been designed for multi-litigant and mass tort cases such as the anemia drugs Procrit and Aranesp, as well as on going litigation such as Vioxx and Accutane.

While 468b trusts have been part of the tax and legal community for over 20 years, their use has been hindered by confusion, lack of education, turf battles between settlement professionals and interference from financial institutions hostile to the settlement planning industry.

You may read the outline of this talk, as well as access all of the embedded video and media clips from a wide range of attorneys and experts commenting on this unique approach to mass tort case management and settlement.

Click here to access the outline and media resources.  

Every now and then a business publication really sets out to do a real job of reporting on a topic or concept.

Todays Wall Street Journal article written by reported Rachel Emma Silverman on Structured Sales is really one of the better written and researched pieces of journalism on the structured settlement process, and in particular the structured sale.

You can link to the article by clicking here although you need to subscribe to the WSJ online to read the entire piece.

Failing that get a copy of the March 21, 2007 copy of the WSJ and go to section D1. I'll eventually get a pdf and put it here in the resource section.

Her summary was essentially as follows:

1.  The strategy can be useful for older people wanting a guaranteed income stream.

2. The IRS hasn't opined on the approach, so there's a risk it could be disallowed at a future time.

3. Low capital gains rates might make it better to pay the tax upfront.

I agree with each of these conclusions, and it should be a real spur to Allstate, Prudential and others to GET A PRIVATE LETTER RULING AND GET OF YOUR REAR ENDS AND GET IT SOON!

Everyone out here selling and marketing these knows that a PLR would dramatically accelerate the sale of this product, but it should not be incumbent on my firm or my clients to go get it. The stakeholders with the most to gain are Allstate and Prudential and they need to get on the ball and get this done. 

All in all a very good article.  

While i'm not thrilled with the article, as it generally lumped structured sales in with an article ripping up private annuties, 1031 exchanges and other questionable real estate gain schemes, they at least spelled my name properly and got me located in Scottsdale, AZ.

You can read the full article here, although you will have to register with Forbes, which is free to do.  

As you'll read in the article, which is generally hostile to the concept of tax deferral of real estate property gain, they tend to take the approach that all products designed to defer gains are some how anti-consumer and not worth the effort. While I would agree that private annuities were totally abused by the planning community, and that 1031 exchanges are probably the next big area of IRS scrutiny, they gloss over the strong tax status and history of installment sales. Just because it has a fixed annuity and assignment attached to it doesn't make it suspect, as they would imply, it actually makes it stronger as you end up with Prudential or Allstate as the payor of the installments and guarantor of payments.

Hopefully the article stimulates more discussion of the concept and more in depth analysis of it's benefits and drawbacks, but again, they got the name right and I still encourage you to read it and see what you think.  

In the current edition of Robb Report Vacation homes, December 2006/ January 2007 Mark Wahlstrom was featured in an article entitled "The annuity Way" discussing the use of structured sale annuities to fund installment real estate sales.

The article was written by John Morell and reviews the recent increased awareness of the product, how it is applied in real estate sales and it's application in the vacation and second home markets.

In a frustrating note, they don't have an online link to the story available on the Robb Report web site, but I'm working on getting a clean pdf file copy to post here on the site. In the mean time, go pick up a copy at the news stand or contact my office and i'll fax you a copy of it for you to read and review.

The general awareness of the financial and real estate community about the relatively new use of this product is starting to increase, and there are more and more real estate professionals looking to offer this to their clients. If you are a financial, tax or real estate professional who is looking to learn more about how you can offer structured sales to your clients, contact my office and lets talk about working together on this. Lets use your local knowledge and contacts, and my expertise in structured sales to assist your clients with their tax and cash flow planning.  

Pacific Life and Annuity company announced today significant changes in their structured legal fee program, or if you prefer, structured attorney fees.

Essentially the changes offered by Pacific Life are:

1. The claimant now does not need to structured any of their benefits in order for the trial lawyer or attorney to structure their legal fee on a case. This applies whether or not the claimant/plaintiff structures with Pacific Life or any other company. What this means is that they will now allow for true stand alone legal fees, thus allowing the trial lawyer to defer taxation on their fee award to future tax years, even if the client isn't structuring a dime of their award. It is a decision entirely up to the attorney and is not impacted by the clients desires to structure.

2. Pacific Life has joined other life markets in offering joint and survivor annuity benefits on structured legal fees. This means that an attorney can now select a life time annuity payment on their legal fee structure, but name their spouse as the joint annuitant. On the death of the attorney all payments will continue for the life of the spouse/joint annuitant, a crucial benefit when designing retirement plans for the trial lawyer. Any trial lawyer that has maxed out their pension plan contributions needs to be looking into the use of structured legal fees to supplement their retirement income in this fashion.

3. Pacific Life will require the use of a Uniform Qualified Assignment and Release form on all stand alone legal fee structures. This is a departure from the more commonly used Uniform Qualified Assignment form, in that it adds release language that provides for stronger security and compliance with tax standards. The point is, don't enter into a structured legal fee with out the advice and assistance of a specialist in structure legal fee's to insure the proper matching of markets and language in your settlement to the particular needs and facts of your case.

This news further proves that the trend of trial lawyers structuring their fees is accelerating and that tax planners, CPA's and trial lawyers need to be working with a settlement professional to allow their clients to take advantage of this important opportunity to defer income to future tax years.