With our capable and cross-trained staff, well managed financials, newly expanded footprint, and additional service offerings, there's just one thing to know: we're ready for what's next.
EXECUTIVE SUMMARY & OVERVIEW
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This report is designed to inform clients of Padgett Law Group’s (PLG) current financial position and responsible fiscal planning; current staff readiness and on-going training efforts; and the results of our long-term strategy to address the challenges of softened market demand, heightened file complexity, and the industry's regulated return to normal business operations. The impact long-term moratoria have had on PLG and other creditors’ rights law firms requires rethinking short-term margins and making un-leveraged, calculated investments for long-term health and readiness. As the industry remains mired in file holds, fraying moratoria strategy, evolving government programs and agency guidance, it is more important than ever to have trusted and prepared business partners.
OUR AGGRESSIVE, LONG-TERM STRATEGIC RESPONSE INCLUDED THREE DISTINCT PHASES: Phase One: Initiating work-from home and launching our primary COVID-19 pandemic response. Phase Two: maintaining financial health and implementing measures to protect our people, practice, and economic stability. Phase Three: our return to normal business operations as the industry's most prepared and least impacted creditors' rights law firm. This includes our hiring efforts and new talent acquisition, newly layered leadership and oversight roles, return-to-office procedures and introducing new flex, remote, and hybrid offerings to better meet employee preferences. As we implement Phase Three of the plan, we are specifically addressing our new and redundant vendor vetting and onboard goals; standing up new oversight and management roles; and addressing our training and education goals. Our multi-pronged plan ensures appropriate resources are devoted to our core business lines, ample staff are in place to manage files at our proven performance ratios, and that the right technology solutions are available to support our people and clients at the level required this year and beyond, particularly as special attention is paid to investor directives, local and other moratoria, and CFPB guidance. |
Since the onset of the global health crisis caused by COVID-19, PLG has made numerous targeted, strategic investments in its business in order to improve operations and worked diligently to retain as much staff as possible, including our key legal, operational, and other critical firm leaders. Over the course of the pandemic's nearly two-year impact on the firm, we have not cut salaries nor reduced the hours of any FTEs. While our physical locations have largely gone unused for 18 months, our leases remain in-place as we execute on our Phase Three return-to-office plan. Today, our employees are compensated at their full, pre-pandemic salaries and hourly employees are engaged at their pre-pandemic levels as well, also with no reduction in salary or wages. Over the same time period, PLG has maintained its pre-pandemic attorney-to-staff ratios identified as minimums in the firm's Business Continuity Plan.
As market conditions continue to stabilize and default work normalizes across various metrics, we have made significant strides in our efforts to position the firm for increased referral volumes. During Phase One of our plan, PLG anticipated calculated, minimal losses as staffing remained elevated and moratoria continued to impact the firm’s core business. In Phase Two, we stabilized our turnover rate, made additional investments in our technology and security and returned to profitability. As we initiate Phase Three, we are aggressively hiring, returning to offices, and fine-tuning our new hybrid and remote operations and processes. Our strategic planning and calculated investments outlined here should help clients understand the firm’s long-term plan and why our business decisions make sense for PLG and its clients. COVID-19 brought unprecedented disruption to the mortgage servicing industry and its impacts are projected to last at least into 2022. On this page you can review our comprehensive plan as detailed in this summary and better understand our vision as we expand services and staffing across the PLG footprint and deepen our investments in technology and talent in order to better serve you as your business partner of choice. |
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PHASE THREE GOAL
Talent AcquisitionGoal: Achieve 100% of PLG's pre-pandemic staffing levels by the end of Q4 2021 and continue to grow staffing margins in tandem with referral growth considering our 25% excess capacity plan. Tactics: PLG is reviewing all employee exits for hiring targets and is actively advertising in each major market the firm serves. Additionally, PLG continues its strategic industry review for key talent acquisition opportunities. PLG intends to make certain work-from-home flexibilities a permanent employee benefit, likely through a tenured hybrid model to increase flexibility and reduce the need for additional leased space. |
PHASE THREE GOAL
Training & EducationGoal: Newly-hired employees are educated on industry trends and regularly trained and tested on day-to-day operations and process improvements with particular attention to Loss Mitigation and new CFPB guidance for borrowers exiting forbearance.
Tactics: PLG will continue with its regular training webinars available to clients and staff. The firm will roll-out enhanced employee on-board and training efforts and introduce a more rigorous testing and training certification mechanism for all employees. |
PHASE THREE GOAL
Pipeline EffortsGoal: To have alternate back-up vendors for those organizations providing services directly to PLG; additional technology integrations and automations; and to achieve triple layered back-ups across the firm's national network.
Tactics: PLG is currently vetting, approving, and on-boarding new third-party vendors or expanding service agreements with other existing vendors to have back-ups in place and performance ready. PLG aims to have alternate back-up vendors in all major areas of service by December 31, 2021. |
Throughout the pandemic, we aggressively stayed the course retaining more business and staff than most devoted creditors’ rights law firms.
We've recalibrated our short-term strategy to meet a protracted period of soft demand for PLG’s core business and increased complexity on default work anticipated in late 2021 and through 2022.
Over the course of the pandemic PLG shared three previous versions of a capacity document detailing the firm’s financial health, post-pandemic preparedness, and commitment to its staff. Throughout this period of soft demand, PLG remains committed to excess staff capacity of at least 25% and as moratoria expire and the types of files that can move increases, PLG has begun actively hiring to further expand its capacity and execute on the plan detailed here.
As a forward-looking enterprise with healthy non-default revenue streams and conservative business practices, PLG anticipates short-term, nominal operating losses reflected in quarterly financials due to the firm’s COVID-19 related imbalance in core default referrals versus retained staffing from pre-pandemic levels. Calculated losses will be absorbed entirely by cash reserves as opposed to leverage. The firm’s general financial health remains as strong as ever.
As a forward-looking enterprise with healthy non-default revenue streams and conservative business practices, PLG anticipates short-term, nominal operating losses reflected in quarterly financials due to the firm’s COVID-19 related imbalance in core default referrals versus retained staffing from pre-pandemic levels. Calculated losses will be absorbed entirely by cash reserves as opposed to leverage. The firm’s general financial health remains as strong as ever.
We’re committed to meeting in the middle by accepting lower profit margins while keeping some elasticity in our staffing by targeting 25% excess capacity and keeping our top-level talent in place. We’re doing this for a few reasons: to keep our best performers engaged and performance-ready; to have the overall staffing in place and trained when files move; and to support our other long-term objectives as we return to business-as-usual.
tim & robyn padgett
Originally, PLG planned for nominal quarterly losses through the end of Q2 2022 as moratoria could potentially impact the firm's bottom line through that date. Any losses to date were known, calculated, and anticipated by PLG management as the firm remained committed to excess staffing ratios and maintaining its core executive team. By the end Q2 2021, nearly a year earlier than originally planned, PLG returned to profitability. Additionally, PLG's turnover rate stabilized at the end of Q2 2021. Today, PLG's financials, staffing, and growth rates have stabilized, normalized, or returned to pre-pandemic levels, indicating a remarkable V-shaped recovery for the firm across all key performance indicators and financial metrics. Our employee headcount has grown month over month since May 1, and we continue to strategically acquire talent at all levels of the firm and are actively hiring in every major market we serve. PLG continues to assess financials in real-time and will remain transparent in its financial reporting to clients. Today, the firm’s credit line remains untapped; staffing continues to hold near the firm’s pre-pandemic twelve-month average of 160 FTEs and is growing week-over-week; and most critically, the firm’s A/R and cash reserves remain robust and healthy. With the leveling of our turnover rate, new and re-hire strategy, and aggressive employee training plan, PLG leadership anticipates no staffing or capacity issues upon the resumption of normal default referral volumes.
IMPORTANT THINGS WE DIDN'T DO
From the pandemic's onset in March 2020, PLG leadership remained focused on what we've always believed is the most important aspect of our business: people. Over the most disruptive and uncertain period the firm has ever faced, we are exceptionally proud that PLG did not access its available line of credit, in fact the firm secured an additional one million in available credit thereby significantly growing the amount of credit available to the firm; we never reduced rents nor did we reduce our physical footprint; and finally, we never reduced any salaries for any PLG employee in response to COVID-19. While we did make a single reduction in force, it impacted just 11.4% of our total employee count at that time. Today, we've already hired or rehired in excess of that number and we are confident the decisions made over the last 18 months reaffirm our core belief: #PadgettPeople are the best people in the industry.
Keeping #PadgettPeople engaged, trained, and safe has been a cornerstone of our efforts. Here's how we've navigated employee satisfaction, performance, and efficiency.
EMPLOYEE ENGAGEMENT
Corporate culture and employee engagement quickly became one of the most consequential business priorities during COVID-19. In response, PLG launched a new employee newsletter and devoted, employee-only space on PadgettLawGroup.com to share photos, screen shares, recipes, and advice employee-to-employee. Additionally, we launched our first-ever web summit, PANDIFFERENT, which took our employee engagement, education, and client interaction to an entirely new level, all in a safe and socially distant environment. Along with our regular webinars and educational efforts, PANDIFFERENT saw #PadgettPeople collaborate and create ten additional hours of client and employee educational sessions. As we enter Q3 2021, PLG will have generated 35 hours of new and timely employee and client educational offerings.
IN JULY 2021, PLG'S WEB SUMMIT, PANDIFFERENT, WAS RECOGNIZED WITH AN APEX AWARD FOR EXCELLENCE IN COVID-19 MEDIA, COMMUNICATIONS, TRAINING, AND EDUCATION.
Finally, we reassessed our holiday time in mid-2020 to allow more flex time and additional holidays of choice to better reflect our diverse body of employees. Also, we did not forget to celebrate each other and our larger Padgett Family. Our traditional holiday parties went digital and we reframed our celebration to include a Padgett-branded swag store on LandsEnd.com with coupons for all employees to make purchases, along with UberEats codes to deliver a celebratory lunch on the firm.
Work-from-home welcomed new colleagues (little ones, furry ones, and more) and #PadgettPeople aggressively leveraged technology solutions to stay connected, engaged, and in touch with colleagues and clients.
PLG was one of the earliest adopters of the top-tier hosting and support model offered by the firm's case management technology provider. With its uniform, cohesive system of record in place firm-wide, PLG was in the nimble management position to quickly and securely adopt work-from-home policies. The firm’s long-term technology improvement roadmap has been largely unimpacted negatively by COVID-19, in fact, in response to the pandemic certain priorities were reassessed and additional investments have been made. Between March 2020 and March 2021, PLG has completed the following:
- Moved 90+% of Staff to Remote Working Environment and Deployed 111 Meraki VPN Devices.
- Case Management System Infrastructure Moved to Hosted Solution with dual redundant power and locations.
- Case Management System Test Environment established.
- Antivirus Upgrade to PCMatic Pro.
- National Network Case Management System Sequences Built.
- Integration with BKWatch.
- Integration with BKFS.
- Integration with First Title.
- New State (Indiana) Case Management Sequences Built.
- Deployed PLG-owned Generac Natural Gas-Powered Generator.
Return-to-Office Strategy
In May, PLG began an office-by-office strategy of returning employees to brick-and-mortar office locations. To date, the majority of the firm's office locations have initiated onsite work performance again: Tampa, FL; Tallahassee, FL; Dallas, TX; Atlanta, GA; and, Little Rock, AR. With the return to office, PLG has offered employees increased flexibility with waivers or by accommodating other requests. PLG retains the ability to swiftly implement selective remote work environments for disaster relief, variant or other epidemic outbreaks, or as required by state, local, and or federal guidance.
PLG plans to continue assessing remote, flex, and other location-based flexibilities as an employee benefit. Today, PLG maintains physical locations in Tampa and Tallahassee, FL; Atlanta, GA; Memphis, TN; Little Rock, AR; Dallas, TX; Dayton, OH; and Indianapolis, IN.
In May, PLG began an office-by-office strategy of returning employees to brick-and-mortar office locations. To date, the majority of the firm's office locations have initiated onsite work performance again: Tampa, FL; Tallahassee, FL; Dallas, TX; Atlanta, GA; and, Little Rock, AR. With the return to office, PLG has offered employees increased flexibility with waivers or by accommodating other requests. PLG retains the ability to swiftly implement selective remote work environments for disaster relief, variant or other epidemic outbreaks, or as required by state, local, and or federal guidance.
PLG plans to continue assessing remote, flex, and other location-based flexibilities as an employee benefit. Today, PLG maintains physical locations in Tampa and Tallahassee, FL; Atlanta, GA; Memphis, TN; Little Rock, AR; Dallas, TX; Dayton, OH; and Indianapolis, IN.
Our initial COVID-19 response was aggressive, comprehensive, and successful. Our operations and financials remain sound, our staff remains safe, and our clients remain satisfied.
INITIAL RESPONSE STATEMENT FROM MARCH 2020
At PLG, we responded early and aggressively by initiating our Business Continuity and Pandemic Response Plan (BCPRC) in the second week of March. By March 24, 2020, over 90% of our workforce, spread across six states and seven physical locations, was fully operational and working in secure, compliant, and remote locations. Core, critical, operational staff remain in place at our physical locations per our BCPRC. The firm's PCPRC remains in place today and PLG leadership is monitoring local conditions, state and federal guidance, and monitoring guidance from the CDC and NIH as the firm prepares to transition back to use of our physical office locations. Clients will be updated directly as this plan takes shape over the coming weeks.
Additionally, PLG launched an early client communications portal with the release of our COVID-19 response blog, #PadgettPrepared, where clients can access court closure details, servicing guidelines and updates issued by key financial services regulatory bodies, legal analysis from PLG's attorneys, and access our Spring & Summer Learn-From-Home Webinar Series, a six-part client educational series designed to meet the on-going educational needs of clients while face-to-face travel is limited and in-person conferences are canceled.
We continue to send direct e-marketing and educational blasts to clients on our mailing list; participate in and sponsor now-virtual industry events; and, contribute legal content, lend support, and participate as thought leaders to the industry associations we are proud members of, such as the Mortgage Bankers Association (MBA) and the Legal League 100 (LL100).
To learn about current opportunities, including our recent Reg X webinar featuring Marissa Yaker, Esq. and special guests Brian Montgomery, former Deputy Director of HUD, and other other guests, click here.
Additionally, PLG launched an early client communications portal with the release of our COVID-19 response blog, #PadgettPrepared, where clients can access court closure details, servicing guidelines and updates issued by key financial services regulatory bodies, legal analysis from PLG's attorneys, and access our Spring & Summer Learn-From-Home Webinar Series, a six-part client educational series designed to meet the on-going educational needs of clients while face-to-face travel is limited and in-person conferences are canceled.
We continue to send direct e-marketing and educational blasts to clients on our mailing list; participate in and sponsor now-virtual industry events; and, contribute legal content, lend support, and participate as thought leaders to the industry associations we are proud members of, such as the Mortgage Bankers Association (MBA) and the Legal League 100 (LL100).
To learn about current opportunities, including our recent Reg X webinar featuring Marissa Yaker, Esq. and special guests Brian Montgomery, former Deputy Director of HUD, and other other guests, click here.
PADGETT'S POST-PANDEMIC READINESS IS UNMATCHED.We've looked forward and backed our plan out from where you need us to be when files start moving again.In a pre-pandemic comparison of referral volumes, performance timelines, and financial management versus today, PLG is confident that our core business fundamentals are the least impacted across any mortgage servicer's legal matrix. When file volumes move and file complexity increases, you need a reliable partner that has stayed ready, continued to perform, and planned for the future. That partner is Padgett Law Group. Take advantage of reduced file transfer fees and immediate portfolio scrubs or build-out your national bankruptcy, replevin, or loss mitigation strategy in advance of moratoria expiring.
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Questions about this plan?
Padgett Law Group's Post-Pandemic Readiness Plan and Capacity Report is a webpage hosted on PadgettLawGroup.com and is subject to periodic updates as our hiring rates and other metrics improve, evolve, or otherwise change. The page may be updated between visits and reflect updated figures or adjustments to our post-pandemic readiness plan. Any specific, non-legal questions should be submitted via our general client service inbox here or directed to Dave McManus or Kawanna Buggs.
Padgett Law Group and Padgett Law Group EP are D/B/As of Timothy D. Padgett, P.A. Timothy D. Padgett, P.A.'s practice areas include creditors' rights, estate planning and probate, real estate transactions and litigation. Not all practices or services are available in all states in which Timothy D. Padgett, P.A. practices.
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