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.

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. 

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. 

One of the nations leading experts on the taxation of damages is Attorney Robert Wood of the firm, Wood Porter of San Francisco, CA and he joins Mark Wahlstrom and Scott Drake on Speaking of Settlements this week to discuss his recent article in the Journal of Tax practices and Procedure on the use of 468b trusts. 

As regular readers and listeners to The Legal Broadcast Network and The Settlement Channel know, 468b trusts, also know as qualified settlement funds, are one of the single most useful and powerful tools for the management of multi-claimant/multi-defendant litigation. They provide a safe harbor during the management and prosecution of a case into which funds can be received by defendants at various times and amounts, with out taxable receipt by the attorney or the plaintiffs in the case. This allows for a rational, transparent process by which legal fees are paid, expenses are paid, government benefits or liens calculated and accounted for, structured annuities purchased and funded along with other substantial benefits. 

However, as these gain in popularity and awareness in the trial practices of leading attorneys, the potential for mistakes or over reaching as to their use looms large and that is the focus of these articles and this two part podcast. Rob and Mark discuss how lawyers can avoid mistakes in the creation of these trusts in the first place, but in the article and podcast they also review the process by which a code sec. 468b trust for a lawyers trust account can potentially be established even after receiving settlement proceeds. This is a very technical area and one that attorneys or settlement professionals should tread carefully in, and only with top quality tax counsel that knows exactly what they are doing.

If you or your firm are considering the use of a 468b trust, or possibly have received funds in a recent case that you think might have been better served by the process of electing status of a 468b trust, then you should listen to these two podcasts or go to Rob Wood's site where you can access the complete articles.

You can listen to the first podcast on 468b trusts by clicking here.

You can listen to the second follow up podcast on 468b trusts by clicking here. 

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.  

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.  

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 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.  

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.