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Juristec Juristec Presentation Transcript

  • Debt Collections Legal Solutions 5383 South 900 East | Suite 103 | Salt Lake City, UT 84117 (801) 361-0502 | www.juristec.com
  • Table of Contents • Juristec Overview – Comparison to Traditional Solutions – Value Proposition – Proven Results – Why Juristec? • Appendix A: Market Direction – Increase in Debt to Household Income – Increase in Delinquency Rates – Increase in Debt Write-offs – Debt Collection Industry • Appendix B: Juristec Details – Juristec Technology – Juristec Features – Security & Confidentiality – Juristec Tenets of Excellence – Management Team – Frequently Asked Questions 2
  • Executive Summary • Juristec automates the process of collection litigation to efficiently and cost effectively manage high volumes of bad debt. • Our goal is to provide solutions for debt that is currently not being effectively collected including late-stage and small-balance bad debt. • Our focus is on the needs of our clients and how we can enable them to capture value lost through bad debt. • Our team has tremendous experience in collection litigation, strategy planning and consulting, and technology implementation for ASP services. • Our mission is to provide best-in-class technology and services that will enable clients to better manage and collect their bad debt. 3
  • Advantage in Debt Collection Over Traditional Law Firms Clients using Juristec are fundamentally better at collecting on bad debt because clients can collect on “affordable” debt. High-balance debtors have a greater likelihood of filing for bankruptcy and defaulting on their debt. Law firms typically settle for what they can get. High $50,000 Written Traditional Bad Debt Balance Juristec pushes the cost Off of each case down Law Firms making it possible to (“The Can’ts”) pursue low-balance debtors that traditional law firms can not pursue $5,000 Clients Using Juristec Low-balance debtors have a greater capacity to pay off their debt and can make manageable “The Won’ts” installment payment rather than defaulting. $500 Low Low Ability To Pay High 4
  • Advantage in Debt Collection Over Traditional Collection Firms Current solutions for collecting late-stage debt are inadequate. Juristec significantly improves the effectiveness of collecting older debts. 35%** C A) Industry average for collections is 14% (ACA international). 20% A B) The probability of collecting late stage debt is 72-87% less than collecting at an earlier stage. 10% 25% B C) With Juristec 15% Clients/Attorneys utilize the effectiveness of litigation 4% with the high volumes of collection agencies. Collection Collection Late-Stage/Secondary Placement Industry Industry Collection Through Total Late-Stage/ Juristec* Early Stage/Primary Secondary Placement *Based on five-year average of Peterson & Simpson’s debt collection law practice. Cases received by Peterson & Simpson are late- stage (8-14 months) and low-balance ($1,000-$1,250 average) and are focused mainly in Health Care. **Average reaches 35% when excluding skips. 5
  • Complaints to the FTC The FTC continues to receive more complaints about third-party debt collectors than about any other single industry. The number of these complaints has been increasing steadily for a number of years, reaching nearly 70,000 in 2006. - Deborah Platt Majoras, Chairman, Federal Trade Commission 80 Complaints to the FTC, In Thousands 70 60 3rd-Party 50 In-House 40 30 20 10 0 05 06 01 02 03 04 99 00 20 20 20 20 20 20 19 20 Nilson Report (835, 857, 880) 6
  • Comparisons Collection Agency Traditional Law Firm Client Using Juristec Collection Calls, Demand Letters (non Demand Letters, Litigation, Demand Letters, Litigation, Capabilities legal), Credit Checks Garnishment, Bench Warrants Garnishment, Bench Warrants Regulations Tightly regulated by Partially regulated by FDCPA Partially regulated by FDCPA FDCPA but has many more options but has many more options through litigation through litigation Obstacles Under FDCPA, collectors Bankruptcy Bankruptcy can no longer contact if debtor requests no contact. Does not take legal action. Contingency Fees 50% 33-50% 25-40%* Collection Stage Early: 60-180 days Any Any (Typically late-stage: 180+ days) Case Load 10,000-25,000 per year 200-500 per year 10,000-25,000 per year Average Case Size 1,000 5,000 1,000 % Collected 10-15% 20-30% 20-30% *By increasing volume of cases to a law practice and providing the means to process them, client can better negotiate legal fees with attorney. 7
  • Value Proposition Juristec adds value to clients, attorneys and debtors. Enables clients to maintain a professional relationship with debtors through litigation. Client •Allows client to capture 20-30% more of their bad debt. •Informs client through real-time reports. •Lowers costs and minimizes losses. •Provides full audit trail of case work and payments. •Retains control over handling of individual cases. •Enforces client’s procedures and policies. •Enables the collection of small-balance and late-stage •Extends the statute of limitations allowing client cases. longer time to collect. Attorney Debtor •Includes checks to prevent legal errors, •Permits debtor to pay manageable malpractice, and missed deadlines. installments without undue cost. •Increases professionalism and •Allows debtor’s payments and costs decreases risk of counter suits. to be accurately posted and tracked. •Allows attorney to handle greater •Reduces Attorney’s fees, for which caseload. debtor is liable, through efficiency. •Tracks all money transactions for •Provides due process to debtor auditing. through court. •Collates similar cases for efficient work •Allows debtor inquiries to be quickly distribution. and accurately handled. •Automates repetitive procedures to reduce processing costs. 8
  • Legal Process is Complicated Client In-House collections contact debtor Payments made. Debtor is encouraged to pay off debt or set up payment plan at any Client can forgive the time during the process. Attorneys can move Debts not paid sent to Debtor’s debt at any case along without undue cost or loss of legal team time in the process efficiency if payments are missed Compiles cases and Debtor receives Debtor generates batch of demand letter demand letters. Demand letters sent Debtor files answer Payment Received with firm/court. Summons and Complaint are Supplemental delivered by legal proceedings: officer to debtor and is Summary Judgment Judgment extends filed with the court. Judgment statute of limitations from 4 to 8 years. Default Judgment Attorney can garnish Firm files with court. wages/bank account if (Debtor doesn’t Pre-Trial / appear) debtor is non- Attorney Trial compliant. Judgments place liens on real property and Court can prevent debtors from obtaining further credit. 9
  • Juristec is the Solution Client has access to Juristec database with all case information. Database Client is backed up on a secure network daily. Juristec tracks time intervals and generates filings for the court. Attorney has several Attorney litigation options to obtain judgment. Juristec tracks payment and creates ability for periodic payment from debtors. Debtor Juristec creates error-free pleadings completed in one-step process. Cases can be sent electronically to the court. Juristec updates case Courts proceeding quickly and easily, assigns ticklers for further proceedings. 10
  • Proven Results When demand letters are no longer effective, litigation should begin. Demand Letter Pleadings Trial/Judgment Post-Judgment Juristec automates Most responsive Court orders debtor Attorneys may all litigation debtors settle or to pay. Attorney garnish wages or procedures, tracks make payment can question debtor place liens on deadlines and arrangements about personal property to compel payments. before going to finances. debtor to pay. trial. Greater Most cases are Judgments can effectiveness when Legal officer serves ruled in favor of the prevent debtors demand comes pleadings directly creditor. from obtaining from an attorney. to the debtor. future credit such FDCPA prohibits Judgment allows as home/auto other collectors attorney to take loans. from personal appropriate action visits. against the debtor. 43% Collected Pre Judgment* 57% Collected Post Judgment *Based on five year average of Peterson & Simpson’s debt collection practice 11
  • Proven Results – Case Study Juristec ASP is a proven technology that has been used to collect over $75 million in late-stage collections. Peterson & Simpson was a small, but very effective legal practice with two attorneys, one paralegal, a few administrative assistants and part-time file Total Remittances: clerks. $300 Million The firm received 500 new cases per week with an average case size around $1,000, with $500 as the minimum. Cases were received between 8 and 14 months past due after several collection attempts had been made. Each case was prosecuted to judgment and a debtor's exam unless paid or settled. Cases that warranted it were garnished. The office staff created a Collected: Collected: series of pleadings and letters with minimal input and without resorting to word $75 Million $75 Million processing, which provided a complete audit trail of pleadings and transactions. The firm allowed debtors to make installment payments; the program calculated a per diem interest rate. The firm was able to move forward on those who defaulted in payments without any loss of efficiency. The platform allowed the firm to maintain a high level of professionalism in their practice, enforcing the office standard forms, eliminating human error, and automatically calculating interest, costs, attorney fees and balances. Judges appreciated the firm’s pleadings because of this efficiency. Collections for Peterson & Simpson, Attorneys at Law The client received monthly reports including payments, costs, and important status changes. Development of the first electronic filing system with the Sandy Court in Utah increased ease of filing cases. The firm collected 20- 30% of outstanding debt per year, double the average of traditional agencies. 12
  • Proven Results “There is a unique power in utilizing the court; however, it’s certainly fair and effective to use a court to collect a debt which has not been paid after years of debt collection efforts in many cases.” - Adam Olshan, Past President of the National Association of Retail Collection Attorneys A) Most traditional collection attorneys C are not able to handle large volumes nor low-balance debt. Because A high-balance debt is often difficult for 20% B debtors to manage financially, Collection Volume attorneys face less actual collections and more bankruptcies. 25% B) Average collection for industry 10% 20% players is approximately 15% (ACA, 15% 2005). C) Only with Juristec can clients/attorneys utilize the effectiveness of litigation with the Current Collection With Attorneys Industry Juristec* high volume practice of collection agencies. *Based on five-year average of Peterson & Simpson’s debt collection practice. Cases received by Peterson & Simpson are late-stage (8-14 month) and low-balance ($1,000 average). 13
  • Why Juristec? Juristec provides both technology and services that allow clients to cost effectively litigate on a high volume of low-balance and late-stage bad debts while maintaining control of the case. Juristec enables its clients to: – Capture revenue that has been written off to bad debt by the client. – Focus on collecting a higher volume of small-balance and late-stage debt. – Collect 20-30% of qualified delinquent debt through litigation. – Increase the ease and professionalism of their debt collection process. – Maintain oversight of the collection process. Allows client to have adequate communication with customers and prevents over-zealous collection practices. – Track and document each case and efforts for collection. 14
  • Table of Contents • Juristec Overview – Comparison to Traditional Solutions – Value Proposition – Proven Results – Why Juristec? • Appendix A: Market Direction – Increase in Debt to Household Income – Increase in Delinquency Rates – Increase in Debt Write-offs – Debt Collection Industry • Appendix B: Juristec Details – Juristec Technology – Juristec Features – Security & Confidentiality – Juristec Tenets of Excellence – Management Team – Frequently Asked Questions 15
  • Outstanding debt to Income “The household sector is much more exposed to consumer credit than it has been for a long time; in fact, than it ever has been. We are at a record level now of the ratio of total debt outstanding to household income. - Bill Hampel, Senior Vice President, Credit Union National Association 16
  • Debt to Household Income Innovation in the financial services marketplace has given consumers many more choices, including an array of options for paying for goods and services, and these innovations, of course, have an impact on the willingness and ability of consumers to borrow money. 20.00 18.00 16.00 14.00 12.00 10.00 Mortgage 8.00 6.00 4.00 Consumer 2.00 - 19 1 19 4 19 3 19 2 19 1 20 2 20 1 20 4 20 3 20 2 20 1 20 4 19 4 19 3 19 2 19 1 19 4 20 3 20 3 20 2 20 1 4 19 1 19 4 19 3 19 2 19 1 19 4 19 3 19 2 19 1 19 4 19 3 19 2 19 1 19 4 19 3 19 2 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 92 93 94 01 01 02 03 04 95 04 95 96 97 98 98 99 00 05 06 07 07 80 80 81 82 83 83 84 85 86 86 87 88 89 89 90 91 92 19 Federal Reserve Flow of Funds, Commerce Department 17
  • Debt to Household Income “If all of the debt is held by people with really high incomes, it’s much less of a concern than if it tends to be concentrated in lower income groups.” Bill Hampel, Senior Vice President, Credit Union National Association Income All Household Debt 45% 42.70% 40% 35% 32.40% 30% 23.90% 25% 19.50% 20% 18.20% 14.90% 15.10% 15% 12.30% 10% 7.40% 7.40% 5% 3.10% 3.30% 0% 1st Quintile 2nd Quintile 3rd Quintile 4th Quintile Next 10% Top 10% Federal Reserve, 2004 Survey of Consumer Finances 18
  • 19 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 85 Q 19 1 19 85 Q 19 4 86 Q 19 3 87 Q 19 2 88 Q 19 1 88 Q 19 4 89 Q 19 3 90 Q 19 2 91 Q 19 1 91 Q 19 4 92 Q All 19 3 93 Q 19 2 94 Q 19 1 Business 94 Q 19 4 95 Q 19 3 96 Q 19 2 Residential 97 Q 19 1 97 Q 19 4 98 Q 19 3 99 Credit Cards Q 20 2 00 Q 20 1 00 Q 20 4 01 Q 20 3 02 Other Consumer Q 20 2 03 Q 20 1 03 Q 20 4 04 Q 20 3 05 Q 20 2 06 Q 20 1 06 Q 20 4 07 Q Commercial Banks Delinquency Rates 20 3 08 Q 2
  • 19 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 85 1 9 Q1 85 20 1 9 Q3 86 1 9 Q1 86 1 9 Q3 87 1 9 Q1 87 1 9 Q3 88 1 9 Q1 88 1 9 Q3 89 1 9 Q1 89 1 9 Q3 90 1 9 Q1 90 1 9 Q3 91 1 9 Q1 The Federal Reserve Board 91 1 9 Q3 92 1 9 Q1 92 1 9 Q3 93 All 1 9 Q1 93 1 9 Q3 94 1 9 Q1 94 1 9 Q3 Business 95 1 9 Q1 95 1 9 Q3 96 1 9 Q1 96 1 9 Q3 Residential 97 1 9 Q1 97 1 9 Q3 98 1 9 Q1 98 1 9 Q3 Credit Cards 99 1 9 Q1 99 2 0 Q3 00 2 0 Q1 00 2 0 Q3 01 2 0 Q1 Other Consumer 01 2 0 Q3 02 2 0 Q1 02 2 0 Q3 03 2 0 Q1 03 2 0 Q3 04 2 0 Q1 04 2 0 Q3 05 2 0 Q1 05 2 0 Q3 06 2 0 Q1 06 2 0 Q3 07 2 0 Q1 Commercial Bank Charge-offs Rates 07 2 0 Q3 08 Q1
  • Commercial Bank Charge-Offs 25,000 In Millions $$ Q2 ‘08: $20,461,000,000 20,000 15,000 10,000 5,000 - 19 1 19 4 19 3 19 2 19 1 19 4 19 3 19 2 19 1 19 4 19 3 19 2 19 1 19 4 19 3 19 2 19 1 19 4 19 3 20 2 20 1 20 4 20 3 20 2 20 1 20 4 20 3 20 2 20 1 20 4 20 3 2 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 85 85 86 87 88 88 89 90 91 91 92 93 94 94 95 96 97 97 98 99 00 00 01 02 03 03 04 05 06 06 07 08 19 (5,000) All Commercial / Industrial Real Estate Consumer Residential Credit Cards Other Commercial Real Estate The Federal Reserve Board 21
  • Debt Collection “Debt collection plays a vitally important role in this system of consumer credit. Collecting on a debt, of course, benefits individual creditors who are repaid money they're owed, but it also has much broader economic benefits. If consumers don't repay their debts, then sellers will seek to increase the prices of the goods and services to those of us who are paying to cover the cost, and if consumers don't repay their debts, creditors will be less willing in the end to lend money to consumers, and that will decrease our future purchases. So, obviously debt collection plays a key role in keeping prices low and ensuring that consumer credit remains widely available across sectors of our economy.” - Deborah Platt Majoras, Chairman, Federal Trade Commission 22
  • Table of Contents • Juristec Overview – Comparison to Traditional Solutions – Value Proposition – Proven Results – Why Juristec? • Appendix A: Market Direction – Increase in Debt to Household Income – Increase in Delinquency Rates – Increase in Debt Write-offs – Debt Collection Industry • Appendix B: Juristec Details – Juristec Technology – Juristec Features – Security & Confidentiality – Juristec Tenets of Excellence – Management Team – Frequently Asked Questions 23
  • Juristec Technology Juristec Utilizes Cutting-Edge Technology to Provide Greater Security and Flexibility •Oracle has proven to be the most reliable and most secure database in the industry. Used by more than 50% of the top Fortune 100 companies and the American Hospital Association. •Combining Sun's Enterprise Servers with the latest Solaris Operating Environment delivers enhanced security, manageability and performance. Sun™ Open Net Environment (Sun ONE) is based on Health Insurance Portability and Accountability Act (HIPAA) regulations regarding encryption for privacy of patient records. •The Java™ platform is the foundation for networked and Web services. Java's "run anywhere" technology provides a highly flexible and highly scalable solution. •Intellivex: Through our Security Solutions Co- location Provider, Juristec provides a veritable fortress for our clients protected data. 24
  • Juristec Features Juristec is a feature-rich application that allows attorneys and clients to manage the process of bad debt litigation. SYSTEM FEATURES BENEFITS Juristec’s provides: Case Management Stores case work and allows instantaneous •Security and reliability tracking and manipulation of cases on screen. •Increased professionalism and decreased errors of legal documents and pleadings Debtor Management/Cost and Tracks payment and creates ability for Payment Management installment payments from debtors. •Flexibility to handle high volume of cases with smaller debts •Easy and rapid implementation with low Easy-to-use, Multi-User Legal/non-legal staff can create error-free maintenance Access pleadings and updates though a secure access. •Low-scale investment in technology or in-staff training Court/Judge Database Tracks information on judges and courts and matches judges to cases •One-step pleadings processing •Real-time operating statistics and customizable Automated Transaction Full record of all cases, payments and per case reporting Archival and Reporting costs for auditing and reporting to attorney/client •Auditable payment and transaction tracking One-step pleadings •Seamless integration on any operating system Error-free summons, summary judgments, etc. completed in one step process •Secure and automated data backup XML Court Filing Court cases can be directly filed to the courts over the Internet 25
  • Security & Confidentiality Juristec facilitates compliance between the Client and Attorneys to protect customer information. • Administrative Procedures to Guard • Technical Security Service to Guard Data Data Integrity, Confidentiality and Integrity, Confidentiality and Availability Availability. – Role/User based access – Virus Checking – Data Authentication – Security Testing – Automatic Log Off – Awareness Training – Audit Trail – Incident Reporting • Physical Safeguards to Guard Data • Technical Security Mechanisms to guard Integrity, Confidentiality and against Unauthorized Access to Data Availability Transmitted over a network. – Access/Biometric Security Controls – Encryption Technology – UPS (Uninterruptible Power Supply) – Virtual Private Networks – Protected data backup and storage – Dedicated Firewall – Data and equipment monitoring – Unique User Names and Passwords 26
  • Juristec Tenets of Excellence Juristec is an Application Service Provider (ASP) that provides technology to both Clients and Attorneys for the purpose of collecting bad debt through litigation. BEST-IN-CLASS SIMPLIFIES INCREASES GREATER SECURITY TECHNOLOGY COLLECTIONS PROFESSIONALISM & SUPPORT •Juristec provides a full •Provides document •Enforces Client’s •High-level encryption technology solution for automation and one-step procedures and policies. standards collection litigation. pleadings, which speeds the litigation process, •Increases communication •Secure and automated •Manages all technical eliminates errors and reduces costs. between Client and data backup. aspects including data and Attorney. database management, •Easy and rapid •XML/EDI standards to firewall protection and •Provides full audit trail of implementation with low import/export cases encryption. Debtor payments maintenance. through a secure Web site. •Provides flexibility to •Includes checks to •Real-time operating •Attorneys work cases to handle high volume of prevent legal errors, statistics and collection and Clients cases with smaller debts. malpractice, and missed customizable reporting. monitor the progression. deadlines •Proven technology •24X7X365 monitoring •Payment and interest currently in operation for 15 •Greater Client control of and comprehensive tracking system allows years managing 20-30,000 individual cases. contingency Debtors to make cases per year. infrastructure. installment payments. 27
  • Management Team Lawrence R. Peterson – Founder, President • Founding Partner of Peterson & Simpson Attorneys at Law • 30-year member of Utah State Bar Association • Member of the Utah Collections Bar Association • Certified Solaris/Sun Systems Administrator • Juris Doctorate from University of Utah Brent Peterson – Director of Business Development • Manager for the Cicero Group • Manager at Bond Street Limited, LLC • Chief Analyst for Blackford Capital, LLC • B.A. from Brigham Young University, degree in Economics 28
  • Frequently Asked Questions Will we be subject to counter-lawsuits if we litigate on our bad debt? Juristec provides greater professionalism and eliminates errors from prosecuting each case. Client also has the ability to filter out any cases they feel may be in question. What about those individuals that don’t have the ability to pay for economic reasons? Those individuals who do not have the ability to pay are virtually unaffected by the process because they typically do not have assets that can be placed under lien. Often times they can qualify for charitable contributions by the creditor. Why aren’t collection agencies able to collect as much as we can with Juristec? Consumers know that collection agencies tend to make idle threats in suing the consumer but never do, and therefore, collection letters are typically ignored. With Juristec, consumers will receive a demand letter from an attorney and will be summoned to court if payment arrangements are not met. Consumers are much more compelled to pay when faced with a lawsuit and can be forced to pay when judgment is rendered If we use Juristec, will we stop using our collection agency? Juristec is typically utilized for late-stage (greater that 180 days) consumer debt. Most collection agencies see their results fall the longer the debt is outstanding. 29