| The Trusted Adviser |
January 2013 | Volume 6 · Number 1
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REPORT FROM ATG's PRESIDENT:
Year-End Review 2012
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It is with pleasure and pride that I review the performance of your company in 2012. For nearly fifty years, ATG has continued to defy all odds, succeeding in even the most challenging times. It is our mission to be the premier lawyer service organization for the benefit of the public and the profession. By almost every measure, we are succeeding in our mission.
FINANCIALS
Our consolidated revenues for 2012 were more than $43 million with profits that will approach $10 million. This represents the strongest financial performance in our company's history. While ATG has always been a member services driven organization, it is critical that we build reserves to protect our policy holders, meet the increasingly stringent requirements of our regulators (and lenders), and use our profits to expand member services. We maintain an A-prime rating from Demotech and B+ rating from Kroll Bond Rating Agency, Inc.
EXPANDED MEMBER SERVICES
In 2012, we went live with our new website, www.atgf.com. The site provides users an intuitive and powerful tool to access a wealth of underwriting and procedural information, forms, seminars, and other content. The response has been tremendous and we continue to make refinements and add even more useful features.
We also modified our title and closing software, ATG REsource®, to allow for electronic delivery of policies. To take advantage of this new time-saving feature, register and view a short registration video by clicking here.
We are pleased to report that in 2012, our Search and Title Services Departments delivered ordered documents by the date requested more than 99% of time. Even while transaction volume increases, we are working to further enhance customer experience.
SUBSIDIARY AND PRODUCT GROWTH
ATG now has six subsidiaries. This diversification over the years has been a leading contributor to our continued success. Read the highlights from each subsidiary, below.
ATG Legal Education offered 28 programs, which were attended by 3379 members and other lawyers. I think you will agree that ATG programs are among the best in the CLE industry. Virtually all of these programs were offered to our members free of charge in 2012. We will continue to offer these top flight programs free of charge to ATG, ATG Trust, and IRELA members in 2013.
ATG Trust Company is approaching half a billion in assets under management. ATG Trust represents an attractive alternative to law firms and their clients looking for professional trustee solutions that sometimes are just not available or cost effective in the mega bank trust department environment. In addition to helping law firms generate new revenue through its account representative program, lawyers can maintain ongoing and more meaningful inter-generational relationship with their clients.
ATG LegalServe facilitated service of process in more than 11,300 cases—an increase of more than 90% over the previous year. Our largest customer, a high-volume litigation firm, uses sophisticated metrics to measure performance of its vendors: ATG LegalServe was its highest rated vendor in 2012. We are confident we can deliver those same results to your firm. We hope you will consider ATG LegalServe for your litigation needs.
The Judicial Sales Corporation (TJSC) continues to be ATG's most profitable subsidiary. It is the gold standard of selling officers in Illinois, providing the best service at the best price. We continue to do battle with the counties that pressure judges to mandate the use of the local sheriff. We hope to put that issue to rest in 2013.
NLT Title had its best year ever in 2012 thanks to the leadership of Michael Moore. It delivers premier services to members in Boone, DeKalb, McHenry, Ogle, Stephenson, and Winnebago counties while contributing to ATG's financial success.
Auctions by ATG is ATG's newest subsidiary. This innovative young company provides a solution to lenders and investors looking for a cost effective method of selling their inventory. In 2012, we conducted four auctions and already have two planned for February 2013. Our marketing and technology have been praised by lenders and investors. This will be a break-out year for Auctions by ATG.
ADVOCACY
ATG continues to advance the interest of our members in the Courts, the Legislature, as well as in the bar associations and national trade associations. Read on for examples of each.
American Land Title Association (ALTA)
I serve on the Board of ALTA and currently hold the position of Treasurer. Jerry Gorman is a member of the ALTA Forms Committee, and Dave Huffman also maintains an active role within the organization. Given the sweeping changes facing our industry, it is critical that we have a seat at this table. The new RESPA/TILA Rules and the ALTA Best Practices will be game changers. ALTA membership gives us an important vehicle to address these issues.
Illinois Land Title Association (ILTA)
ATG has a long history of committee involvement and leadership in this organization. In 2012, ATG General Counsel Augie Butera served as President of ILTA; VP Claims Counsel, Mike Brandt, is a former ILTA President. ILTA gives us a platform to build consensus in the industry to effect legislation and address other matters of importance to the industry in Illinois.
Courts
We presented arguments before the Illinois Supreme Court Rules Committee on two occasions in 2012: One dealing with the issue of the unauthorized practice of law (UPL) in short sales; the other addressing the issue of the appointment of private selling officers. We also serve on the Circuit Court of Cook County's Special Committee on Mortgage Foreclosure. Additionally, we worked with the Office of the Illinois Attorney General, the Cook County Sheriff, the Illinois State Bar Association, and the Secretary of State to combat several forms of fraud and UPL in the circuit courts.
Bar Associations
ATG continues to work with many bar association leaders to ensure that the interests of our members are represented. We are proud that ATG Board member, Aurora Austriaco (whose very first job in the U.S. was working for ATG) is the President of the Chicago Bar Association, the largest metropolitan bar association in the U.S. John O'Brien is a founder of IRELA, and a Past President of the Illinois State Bar Association. He will chair the ISBA Mutual in the coming year.
Legislature
We were active last year in Congress and the Illinois Legislature on a wide variety of topics including the proposed amendments to RESPA/TILA.
SERVICE TO THE COMMUNITY
ATG has always been committed to being a good corporate citizen. 2012 was a banner year for ATG's service to the community.
Lawyers Feeding Illinois
ATG is the primary sponsor of the ISBA's Lawyers Feeding Illinois contest. The goal of Lawyers Feeding Illinois is to gather and distribute 1,000,000 meals to Illinois families in need through the eight Illinois food banks. To find out how you can participate through food or monetary donations, click here.
Chicago Bar Foundation
In 2012, ATG was pleased to make a significant financial contribution, our fourth straight year. These monies are used in foreclosure prevention and other vital services.
The Cara Program
We are proud to support this organization, which provides job training and employment to citizens, many of whom are difficult to place.
The Jesse White Foundation
ATG's donation will help support the Jesse White Foundation's future community center in Chicago. The center will house the Jesse White Tumblers, after school programs, and programs for senior citizens.
University of Illinois College of Law
ATG established and continues to support the Ward F. McDonald Scholarship at the U of I College of Law, honoring the man who has made such an important impact on ATG and in the mentoring of young lawyers.
Chicago-Kent College of Law
We are proud to support Chicago-Kent in celebration of its 125th year.
Gift Matching
In 2011, ATG implemented a corporate Gift Matching program that permits ATG and subsidiary company employees to request a corporate match to donations made to organizations that are important to them and meet the criteria of our Gift Matching program.
This year employees donated to several qualified charities, including area food banks, research for childhood diseases, the environment, and organizations that provide support to people with cancer or diabetes. We were pleased to match these gifts.
Ernie Codilis/Denis Pierce
ATG members Denis Pierce and Ernie Codilis have been active philanthropists in housing and other worthy causes. We have joined forces with them in making gifts to The Chicago Bar Foundation, Mercy Housing, The Jesse White Foundation, and The Cara Program. We thank and honor these men for their service.
Read more about ATG's year end giving, here.
WHY WE SUCCEED
ATG continues to outperform the market. What drives our success?
I believe that it is the "esprit de corps," the shared vision of our loyal and dedicated membership, a Board that is 100% committed to the practicing lawyer, and a knowledgeable and energetic staff.
ATG's tenure at the staff, Board, and membership levels is remarkable. For example, 33 of our 162 staff members have been with ATG 20 years or more. This is 20% of the entire staff. Employees stay at ATG because we provide a supportive work environment and have a commitment to a mission that they truly believe in. Our Board is also 100% committed to serving you. Many of our Board members have served the shareholders for more than 20 years. In 2012, long term Directors and Past Chairmen Dan Marsh (Chicago) and Wally O'Brien (Oak Brook) retired from the Board. John O'Brien resigned from the board to join our staff as Vice President and Counsel. We salute them for their service. In 2012, we welcomed our newest Board Member, Jon Sherry of Chicago.
Another driver of our success is the diversity of our products and services. Some of our businesses are cyclical, such as our core business—it goes up and down with the market. But we also have counter-cyclical products (The Judicial Sales Corporation) and cyclically-neutral products (ATG Legal Education and ATG Trust Company).
MARKETPLACE ISSUES
We still have many challenges in the marketplace.
The Economy and Housing
There are many variables, but our best forecast is that housing will show improvement as a result of the accelerated release of bank-owned inventory and continued low interest rates. These factors should spur transactional activity and price improvement.
The Future of the Mortgage Market
The debate over the future of Fannie and Freddie continues. If these entities lose the backing of the government, liquidity will diminish, raising costs and reducing availability. In addition, the new rules on qualified mortgages will prevent lending abuses (e.g., "no doc" loans) but will also tighten credit.
Consumer Financial Protection Bureau (CFPB)
The new RESPA/TILA Rules will certainly change the manner in which closings are conducted. ATG, working with ALTA and others, will be ready to accommodate this new process when it is implemented in 2014.
In the wake of the financial meltdown, there is unprecedented regulation as well as pressure on the "too big to fail" banks and those providing service to those lenders. In my estimation, these events will have unintended consequences that will negatively impact law firms and consumers.
Closings used to take an hour. Now they take two or more. In the near future they will take three. Consumers will pay the tab for this and sadly will garner little if any increased protection.
Also in the "too big to fail" world, the mantra is that bigger is better and that mom and pop law firms that do title work and closings are no longer a workable platform. We aim to challenge that thinking and will fight to ensure consumer access to affordable, accessible, and most importantly, independent representation.
ALTA Best Practices
For the reasons cited above, lenders—and anyone included in the origination and closing of mortgage loans—will be held to new higher standards of performance. Working with ALTA, we will make sure that law firms continue to represent clients and provide title services in the home closing process.
Realtor-Controlled Business
This continues to be a priority issue for ATG. We continue to be concerned about those Realtors who demand "pay to play" by requiring lawyers to use their captives. We are looking to stop this harmful practice.
Unauthorized Practice of Law
Here, our biggest priority is the cottage industries of short sale shops and out of state title vendors that are engaged in UPL. We are prepared to challenge these practices.
SAYING GOODBYE
In 2012, we lost two of the great stalwarts of ATG.
Stan Balbach, our Founder, passed away on November 12, 2012. Without his vision, ATG would not exist today. Read our tribute to Stan.
Andy Dystrup, a former ATG Chairman and Board Member for more than thirty-five years, passed away on April 3, 2012. His steady hand, no-nonsense attitude, and love of ATG helped us navigate some of our most turbulent times. Read our tribute to Andy.
WE ARE HERE FOR YOU
In the coming years, our support system will change dramatically. Now, more than ever, we need to give our members the tools they need to compete.
There are challenges, but the opportunities are incredible. You have our pledge that we, as stewards of this company, will be on the forefront of delivering competitive tools to you. We are prepared to fight in Congress, the Courts, with Regulators, the State Legislature, with banks and the media to ensure that consumers are given access to top quality legal services at a reasonable cost.
The coming year will be one of the most critical in our history and we are committed to delivering impeccable service to you. We will lead you through the RESPA/TILA amendments, ALTA Best Practices, and continue to expand on our mission to be the premier lawyer service organization in the U.S.
As always, I thank you for your support of this fine organization and look forward to embracing the coming year—and many more, with you.
Sincerely,
Peter Birnbaum
ATG President and CEO
[Last update: 1-31-13]
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