The Factoring Channel, a featured commentator on The Legal Broadcast Network recently did a two part audio podcast with Mark Wahlstrom and The Settlement Channel on the issue of settlement brokers and their rights, responsibilities and pitfalls in working with factoring companies.
Mark and Matt review the ethical, compensation and disclosure issues facing settlement professionals as they work with factoring companies in a variety of situations. The biggest question, in my opinion, and I brought this up, is the obligation of the settlement professional to inform the claimant of the right to factor and the pressures they will face to do some from various sources, and also that careful design of the annuity up front is crucial. I feel that claimants must know about section 5891, need to know about state laws on factoring and what their options are if they decide to pursue it.
The bigger issue though is on existing or pre-5891 clients. Do we have an obligation to notify them, what do we do when they contact us, and how to we handle compensation and disclosure issues.
Listen to the series, i'll have part two tomorrow and be sure to start reading the Settlement Capital blog to keep up on issues in the factoring industry.