fee changes background materiallag time: referral to receipt of % fees payment matters generating...

Fee Changes Background Material

March 2015

The Current LRS Picture • Challenges

– Revenue is down, and is coming in more slowly – Revenue owed goes unreported/unpaid – No real opportunities to cut expenses – actually need

to increase marketing/public outreach and staffing levels

– Staff and marketing/public outreach increases are dependent on sustainable revenue

• Successes & Opportunities – Call/internet volume picking up – New website is a great marketing platform – New York City Bar Association investment in LRS

March 2015 2

Factors Underlying Our Challenges

1. The Recession

2. Increasing Lag Time: Referral to Revenue

3. Lopsided Percentage Fee Model

4. Revenue Owed Goes Unreported/Unpaid

March 2015 3

Increasing Lag Time: Referral To Revenue

March 2015 4

Lag Time: Referral to Receipt of % Fees Payment Matters Generating $15,000 or more to LRS in Last 11 Years

March 2015 5

2.43 2.66 2.65

3.01 3.08 3.16 3.37

3.48 3.47 3.53

3.82

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

FY 04-05 FY 05-06 FY 06-07 FY 07-08 FY 08-09 FY 09-10 FY 10-11 FY 11-12 FY 12-13 FY 13-14 FY 14-15 (to date)

Year

s Sin

ce R

efer

ral

Fiscal Year of LRS Receipt

Lopsided Percentage Fee Model

March 2015 6

New York City Bar LRS

7

Annual Listing Fees Base Listing Fee

$200

Percentage Fees Applies to attorneys' fees where the aggregate fee is $600 or more

Each Major Panel Category (area of law) Add

$60

Referrals made on or after 9/22/08: 6% of the first $10,000 12% of the next $40,000, plus 18% of the amount over $50,000

Association Membership Discount Subtract New York City Bar Association New York County Lawyers’ Association National Employee’s Lawyers’ Association American Immigration Lawyers’ Association

($50)

Referrals made before 9/22/08, and dental and medical malpractice matters: 5% of the first $10,000 10% of the next $40,000, plus 15% of the amount over $50,000

New to Practice Discount (admitted to practice less than 8 years) Subtract

($50)

March 2015

Cases that generate

$50,000 or more in

Attorneys' Fees

3%

Cases that generate

under $10,000 in Attorneys’

Fees

79%

Volume of Cases (under current rules)

$10,000, next $40,000, over $50,000

Cases that generate

$50,000 or more in

Attorneys' Fees

54%

Cases that generate

under $10,000 in Attorneys'

Fees

18%

% Fees Revenue (under current rules)

$10,000, next $40,000, over $50,000

March 2015 8

History of Changes - Percentage Fee Model

March 2015 9

• 1985: – 5% – All One Tier

• 1991: % Change – 5% of the first $10,000 0% – 10% of the next $40,000 100% – 15% of all over $50,000 200%

• 2008: % Change – 6% of the first $10,000 20% – 12% of the next $40,000 20% – 18% of all over $50,000 20%

Percentage Fees: What Do Other LRS’s Do?

March 2015 10

Percentage Fee Revenue Models

March 2015

Program Percentage Fee Revenue Model

Philadelphia $0 to $10,000 -- 10% of entire fee $10,001 to $20,000 -- 15% of entire fee $20,001 to $35,000 -- 20% of entire fee over $35,000 -- 33.33% of entire fee

Columbus 15% on everything less than $100,000 25% on $100,000 and over

Nevada 20%

San Diego; Los Angeles; Austin; Massachusetts 15%

Brooklyn 10%

New York City Bar 6% of the first $10,000 12% of the next $40,000, plus 18% of the amount over $50,000

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Comparison of Fees Generated

March 2015

Program Fee paid on $2,500 case

Fee Paid on $7,500 case




Philadelphia $250 $750 $1,500 $2,250 $25,000

Columbus $375 $1,125 $1,500 $2,250 $11,250

Nevada $500 $1,500 $2,000 $3,000 $15,000

San Diego; Los Angeles; Austin; Massachusetts

$375 $1,125 $1,500 $2,250 $11,250

Brooklyn $250 $750 $1,000 $1,500 $7,500

New York City Bar $150 $450 $600 $1,200 $9,900

79% of New York City Bar Cases

12

Revenue Owed Goes Unreported and Unpaid – Attorney Portal

March 2015 13

Revenue Owed: Unreported & Unpaid • Change from paper mailings to current PDF reporting is --

– A good start; helps cut down on postage, printing and administrative costs

– Still a slow process for LRS staff and panel members – Still relies on panel members’ and clients’ memories…if no one

remembers LRS referral when client retains panel member, no hope of collecting percentage fees revenue

• Attorney Portal: Online reporting is –

– Fast, easy, lowers or eliminates postage – Less administrative/nonbillable time to panel members – simple

questions, easy review of payment history for each client, etc. – Searchable database means more reporting and payment of

referral fees – search on new client name and know immediately if client was an LRS referral

March 2015 14

• The Association is investing in the Attorney Portal – LRS is not paying for version 1.0

• LRS will be responsible for enhancements (version 2.0, etc.) and maintenance

• Project Planning is underway • Timeline = 18 mos. (estimate)

March 2015 15

Attorney Portal

Turning it Around

March 2015 16

• New Website • New Phone System • Attorney Portal • Full Time Executive Director & Deputy Director • Paid Interns for Marketing/Public Outreach • Open to Increasing Staff if Sustainable Revenue

March 2015

Association Investment in LRS

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Changes to Legal Referral Service Rules for Panel Membership Rule 14 - Payment of Case Fees from Referred Clients

March 2015 18


19


$200



$60



($50)



($50)

March 2015

March 2015 20

New York City Bar LRS Percentage Fee Changes

Now Effective 5/1/15

Applies to attorneys' fees where the aggregate fee is $600 or more

Applies to attorneys' fees where the aggregate fee is $600 or more

Referrals made on or after 9/22/08: Referrals made on or after 05/01/15: 6% of the first $10,000 10% of the first $5,000 12% of the next $40,000, plus 15% of the next $35,000, plus 18% of the amount over $50,000 20% of the amount over $40,000

Referrals made before 9/22/08, and dental and medical malpractice matters:

Referrals made between 09/22/08 and 05/01/15:

5% of the first $10,000 6% of the first $10,000 10% of the next $40,000, plus 12% of the next $40,000, plus 15% of the amount over $50,000 18% of the amount over $50,000

Referrals made before 9/22/08, and dental and medical malpractice matters referred by the Service between 02/01/91 and 05/01/15: 5% of the first $10,000 10% of the next $40,000, plus 15% of the amount over $50,000

March 2015 21

Rebalancing Percentage Fee Model

Cases that generate

$40,000 or more in

Attorneys'

Fees 41%

$5,000 through $40,000

47%

Cases that generate


Fees 12%

% Fees Revenue Year 5 (est.) (under 5/1/15 rules)

Longer Lag Time

Cases that generate

$40,000 or more in

Attorneys'

Fees 47%

$5,000 through

$40,000 43%

Cases that generate


Fees 10%

% Fees Revenue (under current rules)

Longer Lag Time

Less reliance on cases which generate over $40,000 in fees and have the longest lag times from referral to receipt of % fees payment.

More reliance on cases under $40,000 with shorter lag times. Increases revenue overall.

Changes to Legal Referral Service Rules for Panel Membership Rule 3 – Membership/Annual Listing Fees

March 2015 22


23


$200



$60



($50)



($50)

March 2015

Annual Listing Fee Comparisons

March 2015

Program Annual Listing Fees for Members + (bar membership fees, if required)

Additional Panel

Annual Listing Fees for Non-bar Members

Philadelphia 385/year + (experience tiers $92 to $383) Bar membership required

Columbus LRS 300/year for new lawyers with 3 or less years experience 400/year for lawyers with more than 3 years experience

Same – no bar membership required

Nevada 50/year + (200/year, if less than 5 years experience) 50/year + (350/year, if 5 years or more experience) Bar membership required

San Diego 125/year + (experience tiers $0 to $230) 350/year

Los Angeles 300/year + (no public pricing) 50 550/year

Austin 200/year 3+ years experience + ($180 to $250) 175/year 1-3 years experience + ($180 to $220) 150/year under 1 year experience + ($180 to $220)

50 discount for new bar members

Massachusetts 100/year 1-4 years experience + ($75 to $175) 150/year 5+ years experience + ($300 to $410) Bar Membership Required

Brooklyn 400/year + ($100 to $185) 900/year

Queens 350/year + (no public pricing) 75 Bar Membership Required

New York City Bar 210/year 8+ years experience 160/year 2-8 years experience 60 260/year 8+ years experience

210/year 2-8 years experience

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March 2015 25

Annual Listing Fees (last change 1996)

Now Effective 5/1/15

Base Listing Fee $200 $390

Each Major Panel Category (area of law) ADD

$60 $75 for 1st panel If 2 or more panels, each panel is $60

Association Membership Discount SUBTRACT

($50) ($100)

(e.g., belongs to NYCBA, NYCLA)

New to Practice Discount SUBTRACT

($50) ($100)

(admitted less than 8 years)

New York City Bar LRS Annual Listing Fee Changes

• Pull LRS out of the Great Recession (next year +) • Staff increases phased w/volume & revenue growth • Marketing/public outreach increases phased w/revenue growth

– Produce additional content for new website – Revive Yelp – Start comprehensive social media campaigns, including pay-per-click – Increase current search engine optimization and keywords campaigns – Produce public service announcement videos for new website and other sites – Develop “trusted source” outreach campaigns to: CPAs, therapists, real estate

agents/brokers, mortgage brokers, doctors, health care professionals, chiropractors, financial planners, insurance agents/brokers, small business owners

– Start new professional trade publication campaigns (trusted source aggregators) – Revive New York Law Journal campaigns – Revive targeted newspaper campaigns (e.g., El Diario, etc.) – Revive grassroots public outreach campaigns – posters and business cards, etc., at

all courts, libraries, government offices, social service organizations, etc. • Attorney Portal & Website Enhancements • Moderate Means & Civil Court Project

March 2015

Additional Revenue = Ability to Invest in Operations & Marketing/Public Outreach

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