Process serving reform calls for renewed transparency, integrity and innovation

By Matt Massa - March 10, 2011

The last few months have been a distressing time for the mortgage service industry, partly due to some inexcusable and unacceptable process serving practices. While it is clear that some process servers have not lived up to the highest possible ethical standards in doing their jobs, the breakdown has been magnified as many process serving companies have washed their hands of indignities and claimed to have no responsibility for their errant, subcontracted process servers’ actions.


Yet where there is distress and disorder, there is opportunity for renewal. Substantive reform not only can correct both real and perceived problems, but also serve as an example for how service providers in diverse industries can better manage their vendor relationships.

Impact on housing economy

Allegations of sloppy and fraudulent practices have ranged from process servers lying about delivering foreclosure notices to homeowners, to legal documents used to seize homes that don’t even identify the lender claiming to hold the mortgage, to “robo-signers” approving documents without carefully reviewing them when foreclosing on homes. Such revelations dating back to late last year have led to a nationwide investigation by state attorneys general. While we don’t know the outcome of those investigations, even simple errors of omission in case detail from the bottom up could expose unhealthy processes to potential litigation, more bad press, and financial repercussions. The bottom line is that unethical practices will cost the industry in terms of reputation, revenues and continued chaos.

After alleged abuses made national headlines, major banks like JPMorgan Chase (JPM: 45.54 -2.19%) and Bank of America (BAC: 14.26 -2.26%) briefly halted their foreclosures to review their internal processes and those used by the law firms they hire. This hold – as well as any future interruptions during the course of ongoing investigations – impacts the daily costs that lenders have in carrying the default loan (lost interest, property maintenance, depreciation or risk, etc.). Operational overhead also adds pressure to the rest of the loan pipeline, including law firms and their vendors. Obviously, stalls in the process make it difficult to maintain economic balance.

When downstream vendors, of which process servers are just one example, cause a negative impact on upstream bottom line, it leads to a general breakdown in trust. The gut reaction is to replace vendors. In cases where a single vendor was used, the instinct is to replace it with several vendors to increase competitive innovation. Unfortunately, this typically requires more time for oversight and leads to greater inefficiency in performance (including learning curves), inconsistent communications and missed assumptions (toward potentially unexpressed expectations), and potentially more errors. Additional management time plus a greater number of vendors and processes naturally lead to increased total costs of sales for each case, therefore driving project overhead up and profit down for all parties involved.

Furthermore, the perception of malfeasance is contagious. When a mutual vendor, or even a client, is caught with their hand in the cookie jar, it is assumed to be a widespread issue. Similarly, when an industry colleague is accused of something, it is feared that all similar companies are engaging in the same behavior – adversely affecting the reputation of an entire industry.


Ensuring quality vendor relationships

Process serving companies – the majority of which are not guilty of malfeasance or responsible for this latest crisis – are wise to first volunteer transparency to help rebuild industry trust. But restoring integrity also must involve putting quantitative processes in place to ensure the RIGHT process serving professionals are hired. In addition, the remedy needs to include implementation of tangible systems to build confidence that those individuals are doing what they are supposed to do, even when no one is directly observing them on the job. Applicable systems and procedures include diligent screening of prospective process servers; implementing industry-standard quality control measures and processes; and ensuring that process servers possess sufficient knowledge about their profession and the proper licensing, as well as uphold personal, company and industry standards.

A quantitative approach to screening for people of character and integrity. If a company does not really, truly know who is handling its files, now is the time to find out. Our industry needs to ensure that only people of integrity who also greatly respect their trade are in the profession of serving documents. The way to do this is by adopting character-based processes for selecting candidates. It is imperative, for example, to ask potential employees and their references about dependability, honesty, thoroughness, discretion, creativity, flexibility and attentiveness. In addition, we must verify candidates’ track records for success, performance and loyalty, even through criminal or other background checks as appropriate.

Greater emphasis on preparing process servers for success. Ensuring success on the job starts with clearly establishing and communicating the standards, ethics and compliant conduct that define the profession. Next, it is vital to ensure, capture and leverage professional knowledge and experience through enhanced training. This involves proper use of technology, but also adherence to process serving laws, civil procedure codes, court-specific interpretations and requirements, shared best practices and standard operating procedures, as well as client-specific expectations.

To achieve unequivocal excellence and efficiency, without competitive bias, it is imperative that our industry adopt a universal certification/approval program for independent, professional process servers. The better trained and educated servers are, and the more standardized the material and knowledge, the less likely servers will stray from the standards of practice. Pay-for-perfection compensation systems also are a proven tool for helping workers stay invested in their work.

Implementing integrated, industry-standard quality control. At the bare minimum, process servers are supposed to make sure that the processes they follow are legitimate and executed in a manner according to set laws and regulations. But without proper checks and balances and quality control, the opportunities for cutting corners are magnified. Important to an overall strategy of restoring integrity to our industry is the use of technology that can help deter potential abuses. Readily available and proven tools include GPS, systematic flagging of multiple jobs at different addresses, suspicious time stamping protocols, and time tracking against distance projections. Process serving companies also should give 24-hour, unrestrained access to client files and real-time updates, as well as proactively invite client audits. Such tools and practices help to build much needed transparency into the process.

Using innovation to create a modern process serving environment. It’s time to reinvent the yardstick. Measuring process server success strictly on speed of service and completeness is outdated and irrelevant. Instead, law firms and their servicers should look for vendors dedicated to change and progression, as well as strive to bring diverse vendors together to help innovate and streamline processes. These forward-thinking companies are committed to creating lean environments including process improvement and innovation, continuously building better and more economic ways of getting the job done on target. Routinely matching – and sometimes surpassing – time and completeness goals is a byproduct of lean and efficient process execution. However, the real value of these progressive vendors is found in the little innovations – often aberrations – that improve the daily life of a case. These small enhancements ultimately provide economic efficiencies on total case costs, giving lift to firm/servicer profitability.

Our industry has surely suffered in the short term due to some callous mistakes by process serving agents who fall short of the high standards of professionalism and ethics that most of us in the industry continue to uphold. Now we must move forward by making tangible changes in how we hire, educate and train professionals who perform this critical function. We need a more enlightened climate of collaboration, transparency and integrity, as well as a renewed commitment to innovation. Those companies that resist the transition will be left behind and may risk keeping our entire industry under a cloud of suspicion filled with the sins of the past.

Matt Massa is the national operations director of Firefly Legal, a leading associate legal services company that specializes in process serving, traces and searches, face-to-face services, and court filing. With offices nationwide, the company partners with its clients to find solutions that are guided by collaboration, innovation and integrity.
 
Posted By Jeff Karotkin

NATIONAL PROCESS SERVERS ASSOCIATION LAUDS N.Y. DECISION

“The National Association of Professional Process Servers (NAPPS) wishes to extend its congratulations to the New York State Professional Process Servers Association (NYSPPSA) in its agreement with the New York City Department of Consumer Affairs to a 30-day extension before implementing the newly adopted process server rules and law for New York."

“NYSPPSA worked closely with the New York City Department of Consumer Affairs in coming to this agreement and we are pleased that the Department has also agreed to continue negotiations as both sides have a shared goal in providing quality services to the legal system and ultimately justice for those who engage that system."

Posted by Jeff Karotkin

Service of Process by Publishing Documents to a Public Website

Another creative way to Serve foreign defendants.

On February 24, 2010, Microsoft provided notice and service of the Complaint, Summons and related materials in English and Chinese through the publicly available website http://bit.ly/fZ5y4w (www.noticeofpleadings.com) Microsoft has updated the website throughout this case.


The Court’s orders and notice regarding this action have also been widely reported in international media publications, including news media in China. (D.I. 32-2 at ¶¶ 15-22.) The reporting and publication of this action in China and throughout the world has been continuous. (Ramsey Decl, Ex. 11 (filed herewith).)

Posted by Jeff Karotkin

How to Serve Osama Bin Laden and Al Qaeda

Plaintiffs have sued two classes of defendants. The first class is the foreign State defendants, Iran, and Iraq. The second class consists of individual terrorists and terrorist organizations including Osama Bin Laden, al Qaeda, and the Taliban, a/k/a the former Islamic Emirate of Afghanistan.

As to both classes, if plaintiffs know the specific address of a particular defendant, service will be made by conventional means pursuant to Fed.R. Civ. P. 4. As to foreign states, their agencies and instrumentalities, service will be effectuated pursuant to Fed.R.Civ.P. 4(j) and 28 U.S.C. § 1608. However, a number of the named defendants cannot be located. Therefore, alternative methods to effectuate service of process upon these defendants, as set forth on “Exhibit A”, pursuant to Fed.R.Civ.P. 4(f)(3), are fully warranted.

See full motion and order here.

Posted by Jeff Karotkin

Electronic Delivery System for Subpoenas - A Case Study

The City of Inglewood and the Los Angeles District Attorney’s Office wanted to implement an automated electronic delivery system for Police Department subpoenas. The electronic delivery system needed to constitute legal service of the subpoena.

Implementation of an “Electronic Delivery System” to deliver subpoena data was needed to provide timely and efficient service to police officers who work a variety of shifts and create an audit trail for delivery and receipt of the subpoena. It was crucial to create a system that provided: confirmed identification of relevant parties, uniform search criteria and scalability to serve multiple cities Police and City Attorney Departments in the future, The system needed to be web-based solution for ease of administration and end user access via web browser for the Police Officer served with the subpoena, provide real time notification, monitoring of all Subpoena activities and easy to use reports for management.


This is yet another example of the landscape changing in way we didn't expect just a few short years ago. I have heard several process servers say... At least this does not affect us. Really in jurisdictions all over the country this same thing is happening and process servers are being displaced, the act of service of process physically is replaced with systems that offer tremendous efficiencies to all the agencies involved. To suggest otherwise is naive.

I am not saying this is a good thing or a bad thing, I am simply pointing out that it is happening and we process servers need to be informed so we can make intelligent decisions about what it means to each of our businesses moving forward.

A copy of the case study can be found here.


Posted by Jeff Karotkin

LOUISVILLE, KY, Metro Police, Jefferson Courts Test Electronic Subpoenas

LOUISVILLE, KY City leaders hope a stimulus grant will buy the Metro better court attendance. Starting next month, Louisville Metro Police Department officers will get their Subpoenas to attend court  proceedings electronically. 

This system is set to replace the cumbersome physical service method in place today where documents are lost and officers are not getting notice on time to attend.  It is estimated that some 100,000 subpoenas are served on county agencies in Louisville annually.  For more on this story click here.

I originally reported on this project in April of last year. See blog post http://bit.ly/g1G5uw

Official (Former Process Server) to use business background to help him govern

MARTIN COUNTY - City Commissioner Troy McDonald plans to put his experience as a local business owner to work for the people of Stuart.

For 12 years, Mr. McDonald has operated Duces Tecum Process Serving. Less than one month in office, he said his priorities include seeking ways to improve the business environment to create jobs, develop opportunities for existing companies and attract investment to the area.

"I've seen the difficulties that businesses have been through," he said. "I've talked to a lot of business owners. I can use the tools and knowledge I've gathered to help them."

http://www.myhometownnews.net/index.php?id=78018

Consumers Union Recommends Increased Oversight of the Service of Process

Consumers Union Report was issued last month (January 2011) that deals with alleged debt collection abuses. Process Servers and the service of process are mentioned in the report.

The report addresses many alleged abuses committed by the collection industry. Admittedly Process Servers are not the primary focus of the report, but once again the New York sewer service incidents are being called out as the reason for increased oversight of the process serving profession. However, one of the key recommendations by Consumers Union is to “increase oversight of the service of process” at a state and federal level.


I believe that even though it may feel like the right thing to do for those in power, more laws and regulations like those currently being imposed in NY are not necessary or useful. These new laws will only serve to drive many small and solo process servers out of business or force them to become part of larger companies in order to survive.


If the profession has any hope of stopping the kind of knee-jerk reaction like we are seeing NY, the profession should continue to watch the Federal Trade Commission’s activities
and recommendations and the activities of the newly formed agency Consumer Financial Protection Bureau who may have the authority to write new laws under the FDCPA to rein in alleged abuses.

Proposed Rule Requires GPS to Track and Record Process Server Activity

The New York City Department of Consumer Affairs has given notice that it  intends to adopt new rules regarding the licensing of process servers.   The new rule 2-233b Electronic Record of Service, would among other things require all process servers in New York City to have a GPS enabled device for the purpose of tracking, monitoring and recording electronically all the activities a process server engages in to affect service.

The DCA hearing is set for January 27, 2011 at 10:00 a.m., 66 John Street, 11th floor hearing room, New York, N.Y. 10038.

The proposal new rule dictates what records physical and electronic must be kept, how they are to be maintained and for how long.  Process servers will be is responsible for turning those records over upon request to the Department of Consumer Affairs.  

This rule is an additional requirement imposed by the NYC council last year.  As I understand it some of the details are still being worked out, but all process servers will also be required to purchase a $10,000.00 surety bond and all process serving agencies will be required to have a bond in the amount of $100,000.00.

All of this is the result of a few rouge process serving agencies that allegedly engaged in "Server Service".  This blog has reported on a few of those agencies in prior posts.  

At least two of those process serving agencies, "American Legal Process" and "Serves You Right, Inc" have been investigated by the NY State Attorney General Office and as a result have been either formally charged with crimes or closed down. 

Another NYC process serving agency "SamServ" was in the news this week.  The American Bar Association Journal ran a story entitled "Federal Judge OKs RICO Conspiracy Class Action Against Law Firm in ‘Sewer Service’ Case" the story refers to a lawsuit that alleges a scheme where debt buyers, a law firm and a process serving agency worked with one another to defraud consumers in collections cases. 

This Federal Court decision could not have come at a worse time for New York process servers given the Department of Consumer Affairs hearing later this month. 

If these and other agencies did commit fraud or worse, they should be held accountable to the fullest extent of the law.   Unfortunately all other process serving agencies will have to also pay a steep price as a result as a result of the new rules and regulations.  Some fear that many process serving agencies will be forced out of business as a result. 

Service of Process in a Virtual Law Firm

Reprinted with permission of Virtual Law Practice
Stephanie L. Kimbro, Esq., M.A., J.D.

Virtual Law Office: Kimbro Legal Services, LLC


More virtual law firms are springing up that combine a traditional litigation practice with the features of a virtual law office. Members of these virtual firms use the online law office as a way to communicate and collaborate on case matters and to work remotely. Their clients use the client portal as a way to keep current on the status of their case, review documents, avoid numerous in-office visits and to pay their legal fees online. Some litigation practices, depending on the state bar’s rules, are foregoing the office lease and meeting with clients in shared office spaces with virtual receptionists (if you are a licensed NJ attorney, stick w/the brick & mortar expenses).


One of the questions I hear from litigation-based virtual law firms is how to handle service of process online. Most rules of procedure still require that the summons and any other accompanying documents be handed to the defendant in person at his or her residence or place of business. Different states have variations of the rule. Some require only service of process by licensed, private process servers rather than service by a court official, such as a sheriff. Some allow for electronic service of process. The states also have different forms and time deadlines for the process.

If the case is being filed in U.S. district court, the process is covered by Rule 4 of the Federal Rules of Civil Procedure. For an in-depth, 2009 law review article on the topic of electronic service of process in federal court, check out: Electronic Service of Process at Home and Abroad: Allowing Domestic Electronic Service of Process in the Federal Courts, by Ronald Hedges, Kenneth Rashbaum and Adam Losey, The Federal Courts Law Review, Volume 4, Issue 1, 2009.

If you are a virtual law firm, you are more likely to be handling cases where your clients and their case matters are not geographically located in the same cities where you and your firm members are practicing law. Imagine how a multijurisdictional virtual law firm that handles litigation must comply with different states’ rules for service of process. Most states allow for service by mail if the defendant is located in another state. But what if the virtual law firm has a presence in that state in the form of a firm member who is working remotely? Or what if the firm does not have a member physically in that state but who is licensed to practice law in the state that the defendant resides in? Is service by mail allowed then? Can email or social networking sites be used after snail mail fails to work?

I’m sure many of you read about the Australian case in 2008 where the law firm had attempted to follow traditional methods of service and after those failed turned to Facebook as a means of serving the defendant. See another fun law review article on this topic: Superpoked and Served: Service of Process via Social Networking Sites, by Andriana L. Shultz, University of Richard Law Review, Volume 43, 2009.

There are a lot of arguments in favor of electronic service of process which I’m not going to get into. In 2006, the ABA Section of Science and Technology Law updated its Best Practice for Electronic Service of Process. From my reading though, e-service continues to grow in acceptance and use, but is not in every states’ rules of procedure. Many firms, even those that use technology to deliver legal services, still prefer in-person service of process. In certain cases, they may want the in-person method to also convey to the defendant a greater sense of urgency that he or she take the matter seriously. A sheriff banging on the door might send a certain message that a posting on the Facebook wall might not.


For that reason and while waiting for all court systems to get on the electronic service of process bandwagon, a virtual law practice could consider the use of a web-based process server that allows the firm to order, track and manage service of process securely online. This might be a good use of web-based technology to assist a virtual law firm in handling service of process across the country, online in a secure web-based system. I’m sure there are other process server companies out there adapting to the changes in technology, but I’ve been exploring the services offered by USA-Serve and how they might be used by a virtual law firm whether its a solo practice or a larger multijurisdictional firm. The company has a secure portal for attorneys to manage and track service of process. If you are a litigation-based virtual law practice, it might be worth checking out this cloud based service for certain cases.

Know of any other companies providing electronic service of process or that has a web-based system that firms can use to track and manage service of process across the country and internationally? How can these systems’ features be integrated into the case and client management of a virtual law office? As more litigation-based firms add virtual law offices to their services, I would expect to see this component added into the process of managing a client’s case online for use by the firm’s remote attorneys and virtual administrative assistants and paralegals.
 
For more blog posts from the author of this post please visit Virtual Law Practice