The recent conference in DC was a heavy reminder of how fragile our industry is currently, especially the collection law firm model. With issuers deciding to cease all legal work and placements down 50-80% from the issuers and debt buyers who are still placing, how does a law firm secure its position?
First we need to consider whether any litigation model is a successful one of these days? Let’s consider that there will be placements to work and with that being said there are opportunities in the current marketplace. It was clear at the NARCA conference that a multi state law firm that is highly compliant, very transparent to its clients, customer oriented and provides liquidation is the only possible model for 2014.
The majority of the law firms that are members of NARCA are either single or two State firms in most cases, so this leaves them open to loss of clients. The issuers and large debt buyers that remain in the marketplace have no desire to manage multiple law firms. This has always been a difficult portion of inventory management for the placers of debt.
When I was managing large portfolios of debt with collection agencies and law firms the biggest opportunity I found was with in the law firm portion of the portfolio. In fact dormant judgments were often the largest opportunity within the portfolio I was managing. Today the same opportunity that exists for current law firms and inventory managers.
So now that we know what that multistate law firm must look like how do you find an opportunity to become that firm by 2014? There are four opportunities to become multistate if you are currently a single state law firm.
1) Purchase law firms in other states- this would be the suggested opportunity if you have the funds to purchase law firms in other states. If the other firms are on the same collection system this provides value for the purchase. If the other firms have clients that are not currently in your stable we value increases.
2) Set up remote offices in other states- I have been helping clients to set up remote offices with a new or young attorney for many years. It’s a joke in the industry but also true that all they need is an 8 x 10 office, a Fiat and a heavy schedule to be profitable.
3) Merge with one or more firms in other states- this is a great opportunity but difficult to accomplish as both firms must agree on the value of the other firms. The truth is if you are a one state law firm you’re out of business so your firm is worth zilch. Merging the firms should be easy, but getting two or more attorneys to agree on the value of their firms is almost impossible.
4) Be purchased by another law firm- if a value can be agreed on this is a win/win for both parties.
If you are wondering how to survive the current marketplace Lighthouse Consulting has your solutions! We have spent many hours looking for the best solutions for todays ARM industry issues. I am not saying we have a solution in a box that gets you back to 2007’s, numbers but I do have solutions, opportunities and ideas.
☎You owe it to yourself to talk to us and see if we can help each other. Lighthouse Consulting has been providing solutions to collection agencies, law firms and issuers since 2003. No other ARM consulting firm can make this claim. We have stayed in business over a decade because we provide quality service at a reasonable price point.
Lighthouse Consulting can help you create Six Sigma processes, operational excellence, manage costs, develop the staff from the managing partner to the new hire, and create guaranteed compliance.
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