|
In this issue: Letters to the Editor In case you haven't received the word, The Free Press has instituted a "Letters to the Editor" column. If you don't want to take time out of your busy schedule to do research for a scholarly article, if you have a suggestion, recommendation, or constructive criticism to direct to the Section leadership or the Free Press editorial board, or if you just want to "vent" (in a non-abusive manner, of course), you will now have a forum. You can submit a letter any time it suits your fancy, and you need not wait until just prior to the publication of an edition of the Free Press. Submissions will be kept on file for future publication. Please submit your letters to Livui Vogel, (lvogel@salonmarrow.com) co-chair of the CRS Newsletter Committee. The Free Press Best Feature Article Award The Creditors' Rights Section will annually recognize outstanding articles submitted to The Free Press, with a "Best Feature Article Award" to be presented to the author of the winning article, at the Creditors’ Rights Section general membership meeting at the CLLA Eastern Regional Meeting in New York. Articles submitted for the Fall, Spring and Summer editions of The Free Press will be eligible for the award and will be considered for the award if so requested by the author. Any articles submitted for the Summer edition of the Free Press for consideration for the Best Feature Article Award must be submitted to the Free Press by May 15, and judging of all articles submitted for the Award will take place over the summer. Each year, the Best Feature Article Award will be presented in New York, for the best feature article submitted within the previous year. The following criteria should be adhered to for articles submitted for consideration for the Award:
All articles must be submitted in Word formal, via e-mail to Liviu Vogel, co-editor, lvogel@salonmarrow.com Any questions may be directed to Brenda Majewski, (414) 276-0435, co-editor. Your subscription You have been subscribed to this list as part of your membership in the Creditors Rights Section of the Commercial Law League of America. Changes to your e-mail address and all other comments can be sent to crs@clla.org CLLA 70 East Lake Street, Suite 630 Phone: 312-781-2000 Newsletter design by: |
The Free Press - Volume 4, Fall 2007 Report from the ChairBy Beau Hays, Esq.
It isn’t all attributable to aging, though it can be mathematically proven that time goes faster when you age. With eight things to do in the time formerly allotted for three, the Internet Age has sped up everything. I find myself wondering where the time went. Which brings me to the point: that my year as Chair of CRS has gone by in a complete rush. It seems far too soon to be done and hand the reins over to Ed Friedman; not enough got finished, or even started good. As I look at the year, we haven’t made strides as I would have wanted. We’ve taken steps. But, looking at it without the melancholy of the time passing too quickly, maybe this year only required steps. My goal for the year was to make the Section more useful, more relevant for each member. How’d I do? Not as well as I’d have liked. But we’ve taken steps. We put a forum section onto the CLLA website, where members can exchange questions and ideas. It hasn’t taken off yet, but it’s there as a resource and it can become as useful as the members want it to be. We’re finalizing an on-line CRS membership roster, where your entry
is entirely customizable with your own bio and/or firm resume, picture, and
links through to your email and website. This roster will be accessible
not just to other members but to anyone looking for a CRS attorney. All
of the League’s efforts to drive potential clients to the website will
then be a chance for you to have promoted your practice. There’s more. The Strategic Planning conference generated new ideas for how to improve the Section internally and externally, but I won’t bore you with a laundry list of concepts and opportunities until some of them look closer to fruition. We’re taken a couple of steps. But there is a long way to go to my goal of making the Section a tool for your practice. The CLLA website and the CRS portions may not ever be the first place you connect when you fire up the computer each day, but it can be a place to look for answers and to ask questions. We’ve made the commitment and created the resources. Now it is up to each of us as members of the Section to make the resources valuable. And now, before I step off the bully pulpit: Thank you, Dick Schascheck – for your help, your efforts and your enthusiasm. Dick is paid to be our CRS staff – but his ideas and his genuine friendship for the stiffs that he is forced to work with goes far beyond the job that he is paid to do. Without him, CRS would be a much less effective organization, and the job of chair would be far less enjoyable. So my year is done. But you can’t get rid of me that easily. I’m a creditor’s attorney. CRS remains the place to be. Editor’s Note: Beau Hays, Esq., Chair-elect of the Creditors’ Rights Section, is a partner in the Atlanta, GA law firm of Hays & Potter, P.C., practicing in the areas of creditors’ rights, construction law, bankruptcy, business law, commercial law, collections and civil litigation. Report from the Nominating CommitteeBy: Robert Bernstein, Esq. The following persons were nominated for the following positions and are running unopposed in the CRS elections scheduled for New York meeting:
The following persons were nominated and qualified to run for the position of Secretary of the Creditors Rights Section:
The following names were placed in nomination and qualified to run for the Executive Council of the Creditors Rights Section (4 positions open for election):
Each candidate will have the opportunity to address the general membership at the general membership meeting of the CRS to be held on Saturday, November 10, 2007. The elections will be held at the conclusion of the general membership meeting. Only CRS members in good standing will be eligible to vote in the CRS elections. Report from the CRS Board representativeBy: Robert A. Bernstein Although
there has been significant Board activity since the last CRS General Membership
meeting in Chicago, there have been few issues related specifically to the
Creditors Rights Section. To advance the interests of the members of the League,
the Board of Governors agreed to fund a position paper proposing the modernization
of the FDCPA, for presentation at a conference of the Federal Trade Commission
in October. The position paper was drafted by any Newburger, Barbara
Barron and Ed Walton, and was presented by Manny Newburger on behalf of the
Commercial Law League of America at the Conference on October 11, 2007. The
position paper and Mr. Newburger urged the FTC to support a modernization of
the 30 year-old FDCPA to reflect current and future technology issues. The
CLLA recommended a change in the Act to preserve vital common law immunities
from liability for the contents of pleadings and witness testimony. The
position paper funded by the Board can be found on the League’s website
at http://www.clla.org/resources/position_papers.cfm. In addition
to receiving the National Committee reports, the Board has taken steps to support
the integrity of the CLLA Certified Agency Seal from improper use in the industry. It
had come to the Board’s attention that some non-certified agencies were
appropriating the Certified Agency Seal and copying it in their correspondence,
giving the false impression that they had received the certification from the
League. Procedures were set in place to prohibit non-certified agencies
from using the Seal, ranging from a cease and desist demand letter to filing
litigation to prevent the improper use of the League’s intellectual property. The
League has authorized litigation in several instances to stop the unauthorized
use of the Seal, and is seeking monetary damages from the offending agencies
in current cases pending in federal court. Education Committee ReportBy Matthew J. Burkinshaw, Esq. and Lorna Walker, Esq. The Education Committee is very pleased with the education programs that are planned for the 87th Annual Eastern Meeting in New York in November. On Saturday, November 10, the CRS will present a program by Judge Ronald J. Hedges on arbitration. Judge Hedges served for 21 years as a United States Magistrate Judge for the District of New Jersey. During his time as a judge, he served as the Compliance Judge for the Court Mediation Program, was a member of the Lawyers Advisory Committee, and a reporter for the Civil Justice Reform Act Advisory Committee of the Court. Judge Hedges' program will feature practical tips and applications for all aspects of preparation and advocacy in arbitration. In addition, the CRS is sponsoring a panel discussion on Mechanic’s Liens featuring CRS members Nicholas Krawec of The Bernstein Law Firm in Pittsburgh, PA, John Guerrini of The Guerrini Law Firm in Pasadena, CA and our current CLLA President, Wanda Borges of Borges & Associates in Syosset, NY. The program will be a panel discussion of the nuts and bolts of filing and perfecting mechanics’ liens, bond claims and the effect of bankruptcy on these liens. Finally, the section will sponsor a program called Debtor Dodges presented by Bettie Kelly Sousa of Smith Debnam Narron Wyche Saintsin & Myers, LLP in Raleigh, NC. The program will focus on standard and non-standard defenses raised by debtors in response to collection actions and how to combat those defenses in litigation. We are in the planning stages right now for programs for the Spring in Chicago, including programs on subrogation, post-judgment collection techniques and receivership. As always, the Committee welcomes input on past, present and future education programs from all CRS members. We encourage you to approach us with an idea for a program or to volunteer to speak at an upcoming convention. Speaking at a convention is a great way to raise your profile in the League which can in turn lead to more business for you and your firm. Please feel free to contact one of us with your ideas. Editor’s Note: Lorna Walker, Esquire and Matthew J.Burkinshaw are Co-chairs of the CRS Education Committee. Matthew Burkinshaw, Esq. serves on the Executive Council of the CRS and Co-Chairs the Education Committee. He is the principal attorney of Burkinshaw Law Offices, P.C. in Milford, MA. The firm concentrates in handling commercial and retail collection matters throughout Massachusetts. Lorna Walker, Esq. is a principal in the firm of Sweet & Walker in San Francisco, CA, specializing in commercial collection. The firm handles all collection matters, including insurance premiums collections, trucking claims, etc. Lorna has been practicing for 15 years and has specialized in collections litigation for the last 13 years. SPOLIGHT ON THE BEST FEATURE ARTICLE AUTHOR: Charles E. Bobinis, Esq.Interview by Liviu Vogel, Esq. FULL NAME: Charles E. (Chuck) Bobinis. RESIDENCE/HOMETOWN: Mt. Lebanon (Pittsburgh), Pa. /(Born: Pottsville, Pa.). EDUCATION: B.A., Lafayette College, 1976; J.D., University of Pittsburgh School of Law, 1979. WORK HISTORY: FAMILY: Grew up working in family road construction business,
attended college on athletic and academic scholarships, part time jobs. AREAS OF PRACTICE AND SPECIALTIES: Certified in Creditors' Rights by the American Board of Certification; Philadelphia Magazine "2007 Pennsylvania Superlawyer" in Creditors' Rights and Bankruptcy. While broadly seasoned in Creditors' Rights and Bankruptcy, generally, focus of expertise is on Commercial and Bankruptcy litigation, with cutting edge ediscovery practice. Currently, Chair of the Ediscovery Committee, 2007 Bankruptcy Symposium, Allegheny County Bar Association, (Bankruptcy and Insolvency Section). WHAT YEAR DID YOU JOIN THE CLLA: 1979. WHAT OFFICES OR COMMITTEE CHAIRMANSHIPS HAVE YOU HELD IN THE CLLA: None. TELL US ABOUT YOUR HOME LIFE AWAY FROM OFFICE: "Tons" of time and
energy devoted to raising two daughters with my wife, the younger being a Sophomore
in High-school. 10 years study in the martial arts, and active interest in
the shooting sports has given way to restoring a 100 acre WHAT WAS YOUR REACTION TO BEING SELECTED AS WINNER OF THE FREE PRESS AWARD: Very grateful for attention being drawn to the subject, which affects everyone, and thankful for the positive professional feedback. HAVE YOU WRITTEN OTHER ARTICLES BESIDES THE WRITING YOU HAVE DONE FOR THE CLLA: From time to time, I've written materials for presentation at seminars, and have recently written some articles for local trade organizations and groups on various topics of interest. I've received favorable feedback, but no awards. I have recently made the effort to write more for publication. WHAT WOULD YOUR ADVICE BE TO OTHER CLLA MEMBERS WHO MAY BE THINKING OF SUBMITTING ARTICLES TO THE FREE PRESS: Do it. WHAT DO YOU DO FOR FUN AND RELAXATION: Run tractor, chop firewood, tend the forest, restore roads, paths and meadows, build or refurbish farm buildings, enjoy the outdoors and dream about what it will all look like in 10 years... IF YOU WOULD NOT HAVE BECOME A LAWYER, WHAT DO YOU THINK WOULD HAVE BECOME YOUR LIFE'S WORK: a priest, a forest ranger or a revolutionary. WHAT IS YOUR FAVORITE QUOTE OR WORDS TO LIVE BY: "Preserve me, O God: for in thee do I put my trust." Psalm 16:1. DID YOU HAVE ANY ROLE MODELS IN GROWING UP, AND IN YOUR CAREER: Several of my uncles were quiet, courageous men, who served their Country in WWII. Joe Bernstein showed me in "no-nonsense" terms how to be "salt" as a professional, and make a living bringing malefactors to account. IF YOU COULD HAVE DINNER WITH ONE FAMOUS PERSON IN HISTORY, AND ONE FAMOUS PERSON ALIVE TODAY, WHO WOULD THEY BE, AND WHY: George Washington, iconic leader, had absolute power laid at his feet, served humbly, and when his task was finished, had the character and perspective to turn around and walk away. He is the modern Cincinnatus who gave us a free Republic, which is now, tragically, in jeopardy. I would ask for his insights on the Founding Fathers, and what might be done today to protect and restore the Republic for us all. Ben Bernake knows more than he's saying. I'd like to know all that he knows on every subject and level. WHAT IS YOUR FAVORITE: CAR: Jeep Rubicon Wrangler-short wheelbase, (when you're serious about getting there); FOOD: Genuine ethnic anything; VACATION SPOT: The farm; ACTRESS/ACTOR: (Not particularly fond of any of them); MOVIE: LORD OF THE RINGS (Yes, the books are infinitely superior, but they got closer than I thought anyone could); HOLIDAY: Christmas; MUSICAL GROUP/SINGER: Ralph Stanley; BOOK: The Bible; AUTHOR: J.R.R. Tolkien; SPORTS FIGURE: Chuck Noll/ Vince Lombardi (they had their minds right and could lead).
Editor’s Note: Liviu Vogel, Esq. is a partner in the New York City based law firm of Salon Marrow Dyckman Newman & Broudy LLP. He heads the commercial collection department of his firm and his practice includes civil and commercial litigation, construction, real estate, and corporate transactions as well as business formations. Charles E. Bobinis’ winning article, "Unmanaged Attrition of Records When Litigation Likely: an Exceedingly Costly Trap for the Unwary" appeared in the Fall, 2006 Edition of the Free Press. The other articles submitted for consideration for the Best Featured Article award were: "Chasing and Enforcing a Foreign Judgment" by Martin F. Goldman, Esq., which appeared in the Winter, 2006 Edition, "When are Legal Fees not Attorney Fees in Actions for Conversion?" by Ian Bardin, Esq., which appeared in the Fall, 2006 Edition, "Collecting the Difficult Texas Judgment" by Matt Garcia, Esq., which appeared in the Fall, 2006 Edition, and "Pennsylvania enacts Amendments to Mechanics’ Lien Law" by Nicholas D. Krawec, Esq., which appeared in the Summer, 2007 Edition. The editorial staff thanks all five authors for their submission, and also extends sincere thanks to the judges who volunteered to review and vote on the articles; Ryan Gesten, Esq., Jay Scheinfield, Esq., and Gary M. Weiner, Esq. Letters to the Editor:We have no letters this issue. Letters or comments can be sent to LVogel@salonmarrow.com or brendam@kohnlaw.com. In case you haven’t received the word, The Free Press has instituted a "Letters to the Editor" column. If you don’t want to take time out of your busy schedule to do research for a scholarly article, if you have a suggestion, recommendation, or constructive criticism to direct to the Section leadership or the Free Press editorial board, or if you just want to "vent" (in a non-abusive manner, of course), you now have a forum. You can submit a letter any time it suits your fancy, and you need not wait until just prior to the publication of an edition of the Free Press. Submissions will be kept on file for future publication. Please submit your letters to Liviu Vogel, (lvogel@salonmarrow.com) co-chair of the CRS Newsletter Committee. Washington Legislative ReportBy David P. Goch, Esq. Bankruptcy After the September 25th hearing before the House Judiciary Subcommittee on
Commercial and Administrative Law, focusing on ways to ameliorate the effects
of subprime mortgages through possible changes in bankruptcy procedures that
could allow judges to approve loan modifications, on October 4th, the subcommittee,
split along a party line 5 to 4 vote, passed HR 3609, the Emergency Home Ownership
and Mortgage Equity Protection Act of 2007, on to the full committee.
In related news, the House on October 4th voted 386-27 to pass HR 3648 that permanently excludes from income debt forgiven as a result of a mortgage foreclosure or renegotiation. On October 2nd, the House Judiciary Committee’s Subcommittee on Commercial and Administrative Law, spurred by the House Committee on Appropriation’s claims that the U.S. Trustee Program expends "excessive resources" to dismiss consumer bankruptcy cases for "insignificant filing defects" and "making burdensome requests of debtors to provide documentation that has no material effect on the outcome of bankruptcy cases," held an oversight hearing on the US Trustee program. Hearing witness included:
White defended the program stating it, is guided by a single principle: to faithfully carry out the law as written by Congress ..." Contrary to the allegations of the Appropriations committee, White testified that the Program stands on a substantial record of accomplishment since enactment of the BAPCPA. Powers stated she felt that the policies and practices of the Program have been moving "away from its mission…[and] from justice." Powers said that while work at the UST’s Buffalo office, her work "had very little to do with 'justice." Stating the focus was debtor abuse with little or no training or focus on creditor abuse; despite the fact that, in her opinion, the majority of filings she handled did not contain debtor abuse. Powers further opined that the passage of BAPCPA increased the Program's "pressures to produce 'numbers." Cristol said that for Chapter 11 reorganizations, the Program’s staff at local levels provides valuable experience to the courts. In the area of Chapter 7 and Chapter 13 Cristol said the problem is "the perspective of [former director] Mr. [Lawrence] Friedman and Mr. White." He said both men "seem to view all debtors with suspicion through prosecutorial eyes as dishonest crooks trying to beat the system and perceive debtor's lawyers as disreputable and untrustworthy." Wedoff offered a different view stating that in his role on a working group to create draft forms, including a means test form he never felt the members of his working group "saw their role as one of attacking debtors or making the process of obtaining bankruptcy relief more difficult than BAPCPA requires." Uyehara indicated that there are a number of failings of the Program, focusing primarily including language-based discrimination in the bankruptcy system and the Trustee Office’s failure to comply with the requirements set by Congress to review credit counseling agency qualifications and force providers to adhere to applicable standards. Also, of interest to League members are bills that increase the pay for the Federal Judiciary. The bills, S. 1628 and HR 3753 are both championed by the respective Chamber’s Judiciary Committee Chair: Sen. Leahy (D-VT) and Rep. Conyers (D-MI). The CLLA has been a long time supporter of such legislation and has submitted
letters of support to Congress express concern that, over past several decades,
the salaries of federal judges have severely eroded and failed to keep pace
with the general rise in wages in this country. Between 1969 and 2006,
the real pay of the average American worker, adjusted for inflation, increased
by approximately 18 percent. By contrast, the real pay for federal district
judges, adjusted for inflation, declined by approximately 25 percent. FDCPA/Social Security Numbers With the 30th anniversary of the Fair Debt Collection Practices Act (FDCPA) as a catalyst, the FTC is holding a workshop on Oct. 10-11, 2007, in Washington, D.C., and through a series of panel discussions and presentations, will examine how changes in technology and the debt collection industry have impacted businesses and consumers. The League was selected to participate in this very important program as a subject matter expert. In other FTC news, the FTC has scheduled a public workshop Dec. 10-11 in Washington on the private sector use of Social Security numbers and the use of Social Security Numbers to commit identity theft. Late the week of October 8th, the House is expected to take up HR 3056 on the floor, the bill extinguishing the IRS’ private debt collection program. On July 18th, the Ways and Means Committee approved the bill 23-18, with Rep.
Tanner (D-Tenn.), the sole Democrat voting against the bill, stating he feels
the program has proper safeguards in place. Editor's Note: David P. Goch, Esq., is the CLLA Washington Legislative Counsel. Newsletter Committee Report:This newsletter is circulated three times per year electronically in the Spring, Summer and Fall (and via fax for those not online). Members are encouraged to submit articles of interest or letters to the editor for inclusion along with a short bio for publication. The annual Best Feature Article award is noted elsewhere in this issue. The award and gift will be presented at the CRS meeting in New York. Current co-editors are Liviu Vogel, Esq., Salon Marrow Dyckman Newman & Broudy LLP, New York, NY and Brenda Majewski, Administrator, Kohn Law Firm S.C., Milwaukee WI. CRS Promotion and Marketing Committee Seeks MembersBy Nicholas D. Krawec, Esq. Earlier this year, our incoming CRS Chair, Ed Friedman, asked me if I would be willing to chair the CRS Promotion and Marketing Committee. When I asked Ed who the outgoing chair was and whether he or she would be willing to stay on as a co-chair or vice chair, as part of a transition, Ed told me that a chair for this committee was not appointed last year, and "we start fresh." Well, in my younger days, before I developed my present gentlemanly manners, I had been referred to as "fresh" but never in this context. So my next logical question to Ed was, "is there a list of committee members?" Another surprise...I am the only member. That immediately called to mind a song from the 1970’s by Eric Carmen: "All by myself, don’t wanna be, all by myself, anymore. (I understand Celine Dion also now sings an "All By Myself" song, though I find it difficult to believe that that’s a problem for her). In any event, I could use some company on this committee. Since we are "starting fresh," whoever joins the Promotion and Marketing Committee can help mold it, and bring new ideas to the table. I am told that there has been some exploration of a new on-line CRS Directory with some direct links to firms’ home websites, as well as advertising fees, for a larger listing. There are numerous possibilities for imaginative people, and since I am the only member of the Committee right now, we are presently lacking in that resource. Enough self-deprecating humor. If you are interested in becoming a member of the CRS Promotion and Marketing Committee, please drop me an e-mail at nkrawec@bernsteinlaw.com, or give me a call at (412) 456-8102. I look forward to seeing you in New York. Editor’s Note: Nicholas D. Krawec, Esquire, is a partner in Bernstein Law Firm, P.C., in Pittsburgh, PA, where he specializes in creditors’ rights, commercial litigation, collection law and mechanic’s liens and bond claims. He is Board Certified as a Creditors’ Rights Specialist by the American Board of Certification. "MARKETING YOUR LAW FIRM" -- 45 Ideas for your considerationBy Donald B. Kramer,Esq. On several occasions I have given programs for the CLLA and NARCA providing details on how I was able to create a law firm with 140 employees. As I gave the programs, I expanded the agenda to the point where it contained 45 ideas for consideration. This article will share those ideas with you. NAME, ADDRESS AND PHONE 1. The firm name should show some strength and size. Creditors
like to know there is "backup". So it would not be "Office
of John Jones"….it would be "John Jones & Associates". CONTACTS WITH CLIENTS 9. Use every excuse to make contact. If you see a name in the paper
of someone getting a promotion or award, send a note of congratulations. CONTACT WITH THE PUBLIC 18. Find a "nitch", and study it to become an expert so you
can speak on the topic; then make credit groups aware that you are available
to speak. Many creditor groups (trade associations, Chambers of Commerce,
Credit Union Chapters) are constantly looking for speakers. ATTENDING CONVENTIONS 29. Attendance at industry conventions is essential. COMPETITORS AND EX-EMPLOYEES 38. Never "badmouth" a competitor---"a kick is a boost". Competitors
can be feeders of business when there is a conflict. When you speak well
about a competitor, it shows strength of your office. GENERAL THOUGHTS 42. When trying to meet someone at a convention, first know something
about the person which will help you conduct a good conversation. Editor's Note: Donald B. Kramer is Founder and President-Emeritus of Kramer & Frank, P.C. of St.Louis, MO. He is the Founder and Chairman-Emeritus of the National Association of Retail Collection Attorneys (NARCA) , and was the recipient of the 2007 President's Cup of the Commercial Law League of America. CLLA Hosting Consumer Collection ProgramsFebruary, 2008 - Chicago By: Rick Thomas, David Gamache As many of you may have heard, David Gamache and Rick Thomas are co-chairing a Consumer Collection Committee. This is an ad hoc National Committee originally commissioned by former president Sid Friedman, and approved by current president Wanda Borges:
The Committee has been working diligently for over a year and a half to accomplish this goal. With the help of numerous volunteers, and input from all the sections of the League, we are in the final planning stages for two consumer oriented programs. The first program is a 90 minute telephone seminar on consumer Bankruptcy issues. The tentative title is Don’t Close That File (Yet), and is slated for the third week of February, 2008. Cathy Vance, with assistance from the Bankruptcy Section and the Consumer Collection Committee has three great speakers lined up to discuss issues on consumer bankruptcies when there may still be hope of recovery. The second is a one day program to take place at the National Meeting in Chicago on Friday, May 2, 2008. The theme of the program is LEGAL COMPLIANCE, and, as currently envisioned, will provide education, roundtable discussions, panel presentations and networking opportunities. The program will be marketed to Consumer Collection Agencies, Debt Buyers and networks servicing debt buyers, Consumer Collection Attorneys and Vendors to the Consumer Collection Industry. Look for more updates soon as to the nationally known speakers and organizations that will participate in making these exciting and informative programs not only for CLLA members, but other individuals and organizations involved in the consumer collection industry. Start spreading the word now to your clients and vendors involved in consumer collections - they won’t want to miss these great programs!
WHAT IS A FAIR RETAIL CONTINGENT FEE ????Donald B. Kramer, Esq. Several times a month new collection attorneys call me asking what they should charge to handle retail collection items. Many have been commercial collection attorneys who now smell money in the retail world. They were brought up in the commercial world where the fee structures differ from the retail world. Decades ago commercial firms even discussed an industry wide suggested rate, but upon advice of counsel, in fear of anti-trust violations, the plan was dropped, and firms were instructed not to use a uniform rate (although to this day some firms still use a graduated rate and insist on calling it "standard commercial rates"). To combat the low contingent fee structure in the commercial arena, a non-contingent "suit fee" is often added if suit is filed; however, "suit fees" are extremely rare in the retail world. Therefore, for many reasons, including fear of anti-trust violations, no consumer collection organization has attempted to structure a "standard retail rate". It would have been an impossible job, considering the fact that some states have favorable collection laws, while some are tough, and a few have no garnishment procedures. So when the call comes for advice, I suggest the attorney has to work out his/her own figures, keeping in mind (a) anticipated total gross collections per year, (b) gross overhead, and (c) desired profit from the operation. If a firm expects gross collections to be $5 million a year, and the overhead is $1,250,000, then a 25% contingent fee would be just a break even. But many law firms find they can collect $5 million with an overhead of just $590,000, meaning that at the 19% mark they reach the break-even point, and they must add 5 or 6 percentage points to obtain the profit needed to make it worthwhile. Could that firm survive if the creditor insists that the contingent fee be 20%? Probably not, particularly when some creditors ask their collection attorney to handle law suits throughout an entire state, failing to consider the fact that this could require appearances in many counties (Illinois has 102 counties, Missouri has 114). Attorneys must remind their clients that fees charged by attorneys may exceed those charged by collection agencies, but the few percentage points are worthwhile if they are prepared to wait awhile, and look at the "bottom line" when the law firm has had the opportunity to file suit, get a judgment, and file a garnishment or lien. In computing expenses, collection attorneys must now add the cost of compliance with major creditors' requests for more security (cameras and locks throughout the office). Many creditors, realizing their power, no longer say "Will you please do this". They say "If you desire our business, you will do this." It becomes particularly difficult for collection attorneys to compete in the medical collection field, where intense competition from collection agencies in some cities has forced the contingent rate as low as 10%. That sounds fine to some hospital supervisors who do not study "the bottom line". After all, what efforts can an agency perform for that small fee? Since 80% of medical delinquencies are less than $200, and therefore not worthy of suit, the loss of that arena does not seriously worry most collection attorneys. In many industries, service organizations are rewarded for better results. It is ironic that in the collection industry often the collector with the best results is asked to reduce the fee. Both creditors and attorney are working with smaller margins. Credit Managers are good business people. They are under pressure to pay as little as possible to get the best results. They have law firms competing with services and fees. They have the ability to compare recoveries from attorneys and agencies. They also know that "You usually get what you pay for". The collection lawyer must do his/her homework and be able to determine the appropriate rate structure, balancing his/her needs with those of the client. Good luck! Editor's note: Donald B. Kramer is Founder and President-Emeritus of Kramer & Frank, P.C. in St. Louis, MO. He is founder and Chairman-Emeritus of the National Association of Retail Collection Attorneys (NARCA) and was winner of the 2007 President's Cup awarded by the Commercial Law League of America. Reprinted with permission. Calendar of EventsNovember 15, 2007 – November 18, 2007 February, 2008 (date TBD) May 1, 2008 – May 4, 2008 Summer 2008 |
Time
flies. It used to be "time flies when you’re having fun" but
there’s no requirement that fun be involved any more. When I was
kid, the fastest measurable unit of time was the half-hour during "How
the Grinch Stole Christmas" on television. The clock said a half-hour
had gone by, but that was some trick. Now entire days pass in that same
click of the second-hand; weeks pass into a blur so fast that flipping the
calendar pages sounds like a train passing. Time just flies.