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The Trusted Adviser

January 2020 | Volume 13 · Number 1

Looking Back at 2019, Looking Forward to 2020

Dedicated to Not Only Preserving Your Practice, but Enhancing It

As I reflect on our 2019 performance and more broadly, the arc of my 39 years at ATG, I feel both pride and gratitude for all that we have accomplished.

In our 55-year history, ATG attorney agents have issued nearly four million policies. During that time, our agents have generated well over one billion dollars of revenue by providing title and other services through ATG.

More importantly, because of the success of ATG, consumers have access to legal counsel in the most important financial transaction of their lives. Helping lawyers serve their clients is our founding principle and still at the root of everything we do. Over time we have built on our success and expanded our offerings to create a lawyer-service organization that provides opportunities for lawyers: our core business of title insurance and real estate closings, trusts, continuing legal education, judicial sales, and other offerings that benefit lawyers and their clients.

While ATG has distinguished itself as a company dedicated to serving the profession, our competitors in the title insurance space mostly pay lip service to the notion. Why? Because imitating ATG’s business model is the only way to gain market share in the Chicago Metro Area. Under closer scrutiny, some competitors operate more like Trojan horses. Make no mistake, but for ATG, lawyers would be out of the real estate practice. Because of that distinction, when you listen to the competitive rhetoric, remind yourself that ATG stands alone in advocating for your long-term interests.

The success of the ATG Family of Companies reflects the collaboration and shared vision of our attorney agents and staff:

• Collective vision and spirit of camaraderie. Attorney agents, staff, and our Board know we are working toward a common goal; this spirit is palpable at any ATG gathering.
• Loyal army of law firms. Many attorney agents have relied on ATG, and we in turn have relied on them, for our entire careers.
• Board of Directors 100% committed to our mission. Our Board sets the tone for our mission through strategic planning and thoughtful leadership.
• Knowledgeable, energetic, and long-tenured staff. More than one-third (38%) of our employees have been with us ten years or more.
• Profitable subsidiaries. Our diverse product mix allows us to weather the vagaries of the housing market.
• Quick reflexes. We can react quickly, no ivory towers at ATG.
• Good corporate citizens. We are in leadership roles at many beloved institutions and professional associations.
• Unified mindsets. My eldest daughter recently observed that the word “indivisible” in the pledge of allegiance is incongruous given that partisan politics have become so tribal. Our country, at times, is politically divisible, but at ATG we are indivisible. Our strength is in our unity.

ATG's most important 2019 accomplishments center on our leadership team, innovative technology, financial stability, and advocacy. Read on for the highlights.

Leadership Team

We have built our best-ever leadership team spanning the ATG Family of Companies. I hope you have had the opportunity to interact with this hard-working and innovative group. We have been deeply involved in strategic planning, with the goal of building a stronger company for the benefit of our stakeholders. Learn more about them at About Us (Executive Staff) and the About Us pages of our subsidiaries' websites.

Accomplishments in 2019

Technology. We dedicated 2019 to rebuilding the foundation of our technology stack at ATG. The highlight of the rebuild was our implementation of ResWare, a brand new title production system. ResWare features action-driven workflows, robotic processing, and various partner integrations that have drastically upgraded our technological efficiency. As we complete the rollout in the Chicago area, we look forward to releasing it in all markets.

In September, we launched ATG GO, our new collaborative order platform created specifically for real estate attorneys. ATG GO is both a desktop and mobile app where agents can place title orders, perform title exams, share documents, text wire instructions, schedule closings, and more! We rolled out this new software initially in the Chicago area and we plan to expand as we move into 2020.

Operations. Order volume is not following the seasonal ebb and flow norms that we have seen in the past. Refinance activity picked up significantly in the last quarter of 2019. During this time, our operations team is busy implementing new workflows and other process modifications.. These changes complement our new title production software and will improve the overall customer experience.

Financial Strength through Reinsurance. During the last quarter of 2019, ATG forged a new reinsurance relationship for 2020 and beyond. With the reinsurance backing of venerable "A" rated syndicates at Lloyd's of London, ATG now has the capacity to write title insurance policies up to $500 million, with more than $10 billion in capital backing those transactions. Read more: ATG Reinsurance Program Summary and Financial Comparison.

Agent Affinity. Longtime ATG agents, Galanopoulos and Galgan of Elmhurst, Ill., recently closed their 10,000th ATG REsource transaction, and have closed a total of nearly 16,000 transactions with ATG. What an incredible milestone. Having joined ATG in February 1986, the firm has consistently ranked among our top agents for decades. We appreciate Bob's and Dean's loyalty and trust, as well as that of their whole staff. They are part of the foundation upon which ATG is built, and we couldn't be more proud to be associated with their firm. This is a concrete example of the affinity and loyalty between ATG and its agents.

Advocacy

Challenges Today – The Case for Regulatory or Legislative Reform

These are the most significant issues we face:

• Real estate brokers have formed captive title companies, and some of them exert undue influence over the lawyer and the consumer.
• At the same time, competitors in the Chicago market offer "too good to be true" incentives that drive up prices while in Downstate Illinois, prices in many counties are too low.

We believe legislative or regulatory action is needed to address both of these issues.

Broker-Captive Title Agencies Are Increasingly Powerful Market Forces

We welcome competition by all title agents engaging in good business practices. But we abhor those that condition the referral of legal services on the lawyer's use of a captive agency. We believe the referral of a client in exchange for the referral of a title order is harmful in several respects:

• Violates anti-kickback provisions of RESPA and the Illinois Title Insurance Act;
• Creates an ethical dilemma for the lawyer;
• Hurts the public; and
• Hurts the profession.

In the absence of legislative change or regulatory enforcement, the problem will continue to grow. To that end, we supported the introduction of SB 2262 now pending in the Illinois Senate. Not surprisingly, some of the most ardent opposition to reform comes from the coalition of real estate brokers that own captive title agencies.. But opposition also comes from a self-proclaimed "bar-related" competitor deeply involved in supporting broker captives who nevertheless obfuscates that part of the business. In its weekly dispatches, this competitor criticizes with fiery rhetoric and half-truths, our efforts to stem the tide of improper steering by brokers and others, as well as our other efforts to protect the long-term interests of the practicing lawyer.

How Do We Thread the Needle?

Can we prevent bad behavior through legislation/regulation while recognizing the reality of competition?

In assessing the long-term interests of your real estate practice, we look at some of the questionable procedures in the Chicago area and ask: What happens if someone really challenges this behavior?

Our biggest competitor launched a price war in 1989 to put ATG and our lawyers out of business. It didn’t work. In 2020, that same underwriter has reluctantly “embraced” the lawyer agent model. Would that same underwriter defend you if a lawsuit or regulator challenges the rate structure — even when those fees are the result of that company’s practices? Our take: If market practices are unchecked, the entire real estate bar could be at risk, and only ATG will be there to fully support the practicing lawyer.

It is for this reason that we have been working with the Illinois Land Title Association (ILTA), Illinois Bar Association, title agencies, underwriters, and other groups to see if an accord can be reached on legislation drafted by ILTA and introduced as SB 1317. While the legislation needs work, we are hopeful that we can reach agreement on a bill that will serve the long-term interests of our attorney agents and all practicing lawyers.

Litigation Challenging DS-1 Disclosure Form

In July 2018, ATG successfully won a suit for a temporary restraining order (TRO) against the Illinois Department of Financial and Professional Regulation (IDFPR) to enjoin the state from requiring Producers of Title Insurance to provide disclosures to consumers which ATG argued were prejudicial against lawyers, impractical to implement, and that exceeded the IDFPR's authority. ATG, along with its co-plaintiff, the Illinois Land Title Association, has been working with the state to develop a disclosure form that encourages the use of lawyers in real estate transactions; provides meaningful disclosures to consumers; and is practical to implement.

The state has agreed to remove the disclosure of legal fees to third parties; for the most part agreed to remove the language that ATG found to be prejudicial against lawyers; and, has compromised that the disclosure of fees retained by agents be limited to a percentage or actual dollar amount of the Owner Policy and Mortgagee Policy premium. While the new form requires more data than the form in use today, we believe it improves disclosure, will be practical to implement, and most importantly will secure judicial approval.

ATG Agents: We will keep you apprised as that litigation progresses. Until that time, continue to use the current disclosure form.

NOTE: ATG has reported frequently on SB 2262, SB 1317, and the DS-1 Disclosure Form (see ATG Advocacy in Action). To read more, check these links: Oct/Nov 2019, June 2019, and April 2019.

The Future

"Intermediary services" that link consumers and lawyers are increasingly common, but there are inefficiencies in the legal services marketplace that unnecessarily limit consumers' access to lawyers. I was privileged to be among those selected to review and comment on a proposal to amend Supreme Court Rules to address these inefficiencies by removing regulatory hurdles that create some of the limitations. This special committee of the Court is looking at how those should be regulated to best serve consumers and lawyers.

ATG can be a provider of choice in this emerging marketplace. Under the leadership of Chris Burhans, our Chief Information Officer, we are rolling out what we believe to be the best-in-industry technology that significantly improves an ATG agent's productivity, but that also keeps other parties to the transaction apprised of the transaction. We will continue to build on this success by developing more tools to improve your practice.

More broadly, we all know technology is changing the consumer experience in a wide variety of businesses. It is only a matter of time before consumers demand that their real estate closing, estate plan, or incorporation of an LLC be made "Amazon simple."

Consumers will put increasing pressure on practicing lawyers to meet those demands. In response, there will be continued growth of services like LegalZoom that tread a fine line between offering convenience and the unauthorized practice of law.

The confluence of emerging technology and changing consumer expectations is no doubt a threat to the practicing lawyer. But it is also an opportunity, one that ATG is fully embracing.

Because technology is shaping a new consumer experience in real estate transactions, there is a pathway to position the lawyer as a trusted advisor, even where much of the experience is done online. ATG is not only on board but is developing tools to lead the process.

Your ATG Leadership Team and Board are fully committed to not just protecting your practice but to enhancing your practice. Our pledge to you:

• Provide you the means to meet the demands of the changing consumer landscape.
• Serve you better by fully integrating our technology, financial services, and operations to provide you with impeccable customer service.
• Expand our support services in the markets we currently serve and scale the ATG Family of Companies into other markets where we can provide value.
• Fully dedicate ourselves to your success.

We thank you for the opportunity to be of service to you and welcome your feedback. We wish you and your families a Happy and Healthy New Year.

Peter J. Birnbaum
ATG President and CEO

[Last update: 1-15-20]

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