With the advent of the Internet, pundits predicted an
impending end to the law lists. Industry insiders reasoned that attorneys
would no longer pay to be listed in the directories when they could set up
Web sites that any collections agency could find with a Google search.
But, to paraphrase Mark Twain, reports of the law lists’
demise were greatly exaggerated. Law lists not only have survived in the
Internet age, but they claim to have thrived. The industry is in an upswing,
says Robert Pinchuck, president of Columbia Law List in Boca Raton, Fla.
“More referrals are coming through the law lists then ever,” he says.
“Membership has increased significantly, both nationally and
internationally.”
Law lists are used by collections agencies, debt buyers,
insurance companies and other debt forwarders to locate collections
attorneys across the nation and internationally. Lawyers pay a fee to the
law lists to be listed and the directories are distributed to collections
agencies, insurance companies, debt buyers and other forwarders for free.
Listing fees differ based on the directory involved and the geographic
location of the law firm. For example, lawyers in bigger cities generally
pay higher fees then those in smaller cities. Although most law lists are
tight-lipped about the fees they charge, Thomas W. Hamilton, of the American
Lawyers Quarterly in Cleveland, cites a range of $50 to $5,000 for a listing
in the ALQ directory.
In an era of consolidation in the collections industry, the
law list business has been surprisingly stable. All the law lists in the
Association of Law List Publishers are more than 50 years old. In the past
ten years, says Pinchuck, no list has gone out of business, no new ones have
entered the business, and there have been no mergers or acquisitions.
“Our company has been around since 1921, and I can see us
being in business in 2021 and relevant without too much trouble,” says Ted
M. McManamon, president of International Lawyers Company in Cleveland. Many
list owners expect that stability will continue into the future.
Changing Times
The core function of the law lists is still what it has
always been – to generate business for member attorneys. However, there have
been some changes. “In some ways the business is done in the same way we’ve
done it for 100 years, but in other ways it has changed,” says Hamilton. For
example, 10 years ago, almost all the business forwarded to listing lawyers
consisted of commercial debts from agencies. Today, however, there is less
commercial work available than there was in the past. Big box stores, such
as Wal-Mart, have driven out of business many of the smaller businesses that
used to be the bread and butter of the commercial collections industry,
McManamon explains. So, in response to changes in the collections business,
law lists have sought to expand the range of work sent to listing lawyers.
Retail, or consumer, collections has become increasingly
important as a source of business for collections attorneys. Furthermore,
five years ago forwarding international work, other than debt from Canada,
was practically non-existent, says Hamilton; but today international work
accounts for 12% to 15% of the value of business forwarded. And while, he
says, just five years ago few attorneys wanted to work with debt buyers, now
50% to 60% of listing attorneys are looking for that work as well.
Insurance subrogation work is also becoming an important
source of revenue for collections lawyers. According to Hamilton, 10 years
ago lawyers did not want to handle insurance subrogation. “Now 30% to 40% of
listing attorneys are looking for subrogation work,” he says. In response to
the increased desirability of subrogation cases, Clearing House Quarterly
recently remodeled its law list and renamed it Clearing House Quarterly and
Subrogation Attorney Network directory, says Jonathan Birk of Clearing House
Quarterly, Gainesville, Fla.
Law lists are also adapting by expanding the scope of
services offered. For example, four years ago National List of Attorneys
owner Jeffrey Zuck collaborated with Stevan Goldman, the owner of Commercial
Legal Software, to devise a product for passing claims electronically.
YouveGotClaims.com was the result. A data standard was developed and put
into the public domain. Thousands of forwarders and receivers have adopted
the standard and now forward and download claims seamlessly, Zuck says. “I
didn’t expect it to make money,” he adds. “I saw it as a back entrance to
the retail business for the National List.” Although he won’t cite specific
numbers, Zuck says YouveGotClaims.com has become a big revenue generator –
earning millions of dollars for a company he and Goldman co-founded 15 years
ago, Montville, N.J.-based Automated Collection Control. And, he says, it’s
been a plus for receivers and forwarders using the National List.
Columbia Law List also has introduced an e-claims product,
called Global E-Claims, which allows lawyers to electronically send claims
to each other and collections agencies to forward claims to lawyers, says
Birk. Global E-Claims not only makes it easier for collections agencies to
flip out claims to lawyers, he says, but it also helps the agency pick the
appropriate lawyer for the claim. “This year we launched USCA – US
Collection Attorneys, a Web-only referral service that is state-specific in
focus,” he adds. “Users can access our database by the main Web site or via
state-specific sites.” His firm also is working on two new marketing
products for attorneys that are not related to collections.
Sometimes, the more things change the more they remain the
same. Some predicted the demise of the law lists’ printed directories, if
not the law lists themselves, but that prediction has proved incorrect – so
far. “People still like to flip through a book,” says Don C. Scott,
president of the Wright-Holmes Law List in Mount Kisco, N.Y.
However, although years ago the only way to find a
collections attorney was to look in a book, debt forwarders can now look on
law list Web sites. And more change is brewing. Although there is still an
old-school base to appeal to, Birk says that his company’s future products
will be Internet-only. “It only makes sense,” he says, “both from an
overhead standpoint on our end and the fact that the user is assured of the
most up-to-date information.”
In addition to new products and services, law lists have
survived for other reasons. One reason is habit. Locating attorneys through
law lists is the way it has traditionally been done in the collections
business and it’s very difficult to compete with old habits, says Pinchuck.
“Relationships have been established with collections
agencies. There is a lot of trust and friendships in this industry that has
developed over the years,” says Donald B. Kramer, president of the
collections law firm of Kramer & Frank P.C., which has offices in St. Louis
and Kansas City, Mo. It’s not unusual, he says, for a collections agency to
call a law list and ask advice about which attorney is the best to use in a
particular city.
Law lists also provide services beyond attorney referrals.
“If the business was just providing the name, address and e-mail of lawyers,
then the Internet would have displaced us, but the business is more than
that,” says Scott. For example, law lists have service departments that
support collections agencies, McManamon points out. “If an attorney is not
responding, then we can intervene,” he says. Removing an attorney from the
list is just one way the law lists can pressure a non-responsive attorney.
Personal Touch
Collections agencies still like the personal service that
law lists provide, Pinchuck agrees. “People are still interested in the
personal touch, in knowing the person they talk with knows every attorney on
their list. On the Internet, the attorney only tells you what you want to
hear,” he says. “We can give collections agencies inside information
regarding law firms that the Internet does not.”
But the primary reason why law lists have not been displaced
by Internet searches is that the law lists offers bonding. The bonds cover
debt forwarders’ losses for theft, overcharges or embezzlement, says
Hamilton. The amount of the bond varies by law list, ranging from $1 million
to $3.5 million. For example, Hamilton’s American Lawyers Quarterly, which
specializes in larger-volume debt, offers a $3.5 million bond.
On the other hand, the Santa Barbara, Calif.-based National
List offers a $1 million bond. “We’ve never had to place a claim with a
bonding company so there’s no need for more,” says Zuck. “We’re meticulous
in choosing our listees.”
Increased Competition
That is not to say that the law lists have been insulated
from competition. Ten to 15 years ago there was only one place for
collections agencies to go for referrals to lawyers handling commercial
claims – the law lists. Many of the directories had waiting lists for
attorneys who wanted to be listed in certain cities. Now, however, lawyers
have other options for business development, including membership in newer
trade associations such as the National Association of Retail Collection
Attorneys, or NARCA, and the Debt Buyers Association. They can attend the
associations’ conferences, as well as a growing number of other industry
gatherings, to meet potential clients.
The shift from commercial to consumer work has also created
additional competition for law lists. Certain “gentlemen’s agreements” that
helped to insulate law lists from outside competition still stand in
commercial collections, which is based on the “triadic system.” That is,
creditors forward accounts to collections agencies, which, if they cannot
collect the debt, send the business on to collections attorneys. “It’s still
a big no-no for attorneys to go directly to creditors,” says Kramer, just as
it is still considered a “no-no” for law lists to send directories directly
to creditors. However, in the world of retail or consumer collections, it’s
considered OK for collections attorneys to seek work directly from
creditors.
And trade associations such as NARCA help retail collections
attorneys bypass the law lists for retail work. NARCA prints a directory of
its membership, which now includes 740 law firms that handle retail
collections, and sends it to collections agencies and creditors, effectively
circumventing the law lists.
There is also more competition among the law lists
themselves. Consolidation among collections agencies and credit grantors
means fewer large-volume relationships between forwarders and receivers. In
1978 more than 5,000 law firms were listed in one or more of the law lists,
says Scott. That number has dropped to about 2,000 but, he adds, the law
firms that are left handle much larger volumes.
Lawyers also are more discriminating about the lists they
join. One year, says Kramer, his firm received $400,000 in claims from a
single list, but made no money on the claims. So when the list a year later
asked for the firm to sign up again, Kramer declined. “The quality of the
claims is just as important as the volume of the claims,” he says. Kramer
reports that 15 years ago his firm listed on every law list. Now it only
lists in the two that have given it the most business.
In the end, the Internet and e-mail have not hurt the law
lists but rather helped the business to expand, says Pinchuk.
Sometimes the success of a business involves finding a niche
and properly working it, say McManamon.
That's a formula the law lists seem to have followed
successfully so far.