We’re executing the second phase of our 24-month pandemic preparedness plan. Here’s how our lean operations and unleveraged finances put PLG in the lead for 2022 and beyond.

PLAN SUMMARY & OVERVIEW

This report is designed to inform clients of Padgett Law Group’s continued strong financial position and fiscal planning,  current staff readiness and on-going training efforts, and our long-term strategy to address the challenges of softened market demand, heightened file complexity, and uncertain timelines for industry normalization. The immediate economic reality facing PLG and other creditors’ rights law firms requires rethinking short-term margins and unleveraged, calculated investments for long-term firm health and readiness as the industry remains mired in file holds, moratoriums, and evolving government, program, and agency guidance.  

Our aggressive plan ensures the appropriate resources devoted to our core business lines, ample staff to manage files at our proven performance ratios, and the right technology solutions to support our people and clients at the level required this year and beyond.  ​
PLG has made several targeted, strategic investments to improve its operations, retain staff, and position the firm for increased volumes when market conditions stabilize and default work normalizes. In the short-term, PLG anticipates a calculated loss for the next quarter as staffing remains elevated and moratoriums continue to impact the firm’s core business. The strategic moves and calculated investments outlined here will help clients understand the firm’s long-term plan and why our investment makes sense for our business and your needs.  

2020 brought unprecedented disruption to the mortgage servicing industry and its impacts are projected to last at least through 2021. Throughout the crisis, PLG has maintained its pre-pandemic staffing levels, improved its already impressive financial reserves, and invested in additional technology to better serve its clients and provide a safe working environment for its employees. ​

In 2020, we aggressively stayed the course retaining more business and staff than most devoted creditors’ rights law firms.

COVID response and work-from-home continues in place
Today, over 90% of PLG staff members remain working and operating remotely from their secure, compliant, and connected home offices. In mid-2020, PLG injected an additional $100,000 into the firm’s IT budget to ensure work-from-home security and compliance. Core, critical operational staff continue in place at our physical locations, which continue to meet all physical, electronic, and regulatory compliance requirements even with reduced use. Leases and rents on PLG’s eight physical locations have remained current and unabated throughout the pandemic. In January 2021, PLG added a new physical location, its eighth, in Indianapolis, Indiana, when the firm expanded staffing in that state to meet GSE requirements, making Indiana the firm’s seventh core, full-service footprint state of default operations. Other offices include Tallahassee and Tampa, FL; Atlanta, GA; Memphis, TN; Little Rock, AR; Dallas, TX; and Dayton, OH. All PLG staff and operations are on-shored in the United States and wholly-owned and operated by Padgett Law Group.  
Cross-trained teams and our layered leadership plan
With different demands placed on PLG staff due to shifts in the firm’s non-foreclosure business and moratoriums affecting up to 60% of the firm’s core foreclosure business year-over-year, the firm initiated a major cross-training initiative within the foreclosure group and across state practices for non-legal operational and support work. A new state of service, new vertical within the bankruptcy, and the firm’s efforts to incorporate a project-based line of work into the firm more broadly, all contributed to PLG’s efforts to retain, retrain, and cross-train existing staff across the firm’s needs as they evolved throughout the pandemic. Specific examples include:  
  • Three individual contributors, previously cross-trained in multiple processes, were elevated into supervisory positions. As a result of broadening our subject matter expertise at the supervisory-level, PLG was able to cross-train employees and expand the subject matter knowledge of many of our front-line people. 
  • PLG added a new vertical in 2020 and was able to promote a manager from within to oversee the framework, development, and successful launch of that new vertical. 
  • Cross training existing foreclosure supervisory staff to fulfill additional oversight needs, as they arose, due to the unprecedented number of moratoria and files entering holds.  
  • Foreclosure and Replevin staff, in general, are cross trained in multiple state’s processes, with all production staff familiar with the foreclosure process in at least two states with many having been cross trained in three to four states. 
Our on-demand tech back-up for large referral batches
With a single, uniform case management system serving as the sole system of record across all PLG practices and jurisdictions, the firm continues to enhance, optimize, integrate, and streamline its technology solutions and vendors to drive further automation in the firm’s practice and operations. 

With PLG's excess staff and file management capacity currently in place and budgeted to remain so until moratoriums and holds are removed, the firm anticipates having sufficient internal resources to handle significant referral volumes, on-boards, and transfers. PLG has a back-up file intake and open process in place to swiftly open, review, and triage all new referrals to support internal staffing should volumes stress the firm's staff to attorney and attorney/staff to file ratios in a short-term post-moratorium crunch. 
Our volume-based capacity readiness plan
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YOU SCRUB THE MATRIX, WE SCRUB THE FILES

Our plan takes a close look at 120 day deadlines, restarts, and milestones. We've incorporated specific volume-based and quality control metrics.

In Q121, we’re recalibrating our medium-term strategy to meet another protracted period of soft demand for PLG’s core business.

Over the last twelve months, PLG has shared three previous versions of a capacity document detailing the firm’s financial health, post-pandemic preparedness, and commitment to its staff. As moratoriums continue to be extended, now through at least June 30, 2021, PLG remains committed to excess staffing up to 15% over current capacity needs, even in the face of manageable losses in the short-term. PLG has adopted an approach of maintaining excess capacity with respect to its staff and is fully prepared to sacrifice short-term profitability in exchange for this preparedness.   

As a forward-looking enterprise with healthy non-default revenue streams and conservative business practices, PLG anticipates a short-term monthly operating loss 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 and PLG projects a near-immediate return to profitability within 120 days of moratoriums lifting, expiring, or otherwise no longer impacting the firm’s core business.  
We’re committed to meeting in the middle by accepting lower profit margins during this protracted soft period while keeping some elasticity in our right-sizing efforts by remaining 10-15% over capacity. 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 business objectives as other revenue streams pick up.
With the release of project-based and under-performing staff and lowered short-term profitability expectations, PLG anticipates that nominal losses fall within the firm’s calculated range and easily absorbed by existing reserves. PLG anticipates continued high levels of cash operating reserves and does not intend to draw down the firm’s line of credit or otherwise leverage the firm. In mid-2020 PLG participated in phase one of the Paycheck Protection Program and received $1.8 million in funding which the firm is confident will be forgiven per program guidance. Of note, PLG intends to participate in the latest round of program funding that includes tighter restrictions for participants, requiring they be small businesses with fewer than 500 employees, among other requirements.  

​With non-default revenue growing concurrent to core default work remaining on hold, the firm’s current forecasts may be updated to reflect less impact than forecast here. PLG will assess quarterly and remain transparent in its financial reporting to clients. As of this document’s publication, the firm’s credit line remains untapped; staffing continues to hold near the firm’s pre-pandemic twelve-month average of 165 FTEs; and the firm’s A/R and cash reserves remain robust and healthy. ​​

Keeping #PadgettPeople engaged, trained, and safe has been a cornerstone of our efforts. Here's how we've navigated employee satisfaction, performance, and efficiency.

At Padgett Law Group (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.
Employee Engagement Strategies
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Work-From-Home Compliance & Security
PLG was one of the earliest adopters of the top-tier hosting and support model offered by the firm's case management technology provider, a recognized leader in the space. 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.
  • Generac Natural Gas-Powered Generator Deployed.​

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 Padgett Law Group (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 (www.padgettlawgroup.com/prepared), 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), American Legal & Financial Network (ALFN), and the Legal League 100 (LL100). You can learn more about our ongoing efforts at PadgettLawGroup.com/Prepared or contact us directly at Marketing@PadgettLawGroup.com with any questions.

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 moratoriums expiring.