Adam Parks (00:08)
Hello, everybody. Adam Parks here with another episode of Receivables Podcast. Today, I'm joined by an industry legend on the creditors right side, Mr. Chuck Pona, who is managing one of the largest law firms in the country dedicated to the debt collection space. How you doing today, Chuck?
Chuck Pona (00:27)
Great, Adam. Thank you for having me as your guest.
Adam Parks (00:30)
I really do appreciate it's been a pleasure to get to know you over the past couple of years as we've crossed paths at a number of conferences and had an opportunity to see you present and speak at some of them as well. And I thought to myself, what an incredible guy to have on and get into a conversation with. So today, we're going to talk about really debt collection law firms, the application of data and doing more with less, which is something the entire debt collection industry is being faced with today.
But before we get into that, and for anyone who hasn't been as lucky as me to get to know you through the years, can you tell everyone a little bit about yourself and how you got to the seat that you're in today?
Chuck Pona (01:11)
Sure, well you're giving me a big head and very complimentary and I'm flattered. So thank you for that, Adam. So let me tell you a little bit about myself. I've been with the firm for 36 years. Joined the firm back in 1989 at the time I was working for a small commercial collection practice here in Ohio. And I received a call from one of my law school classmates.
and said, he of course was here at Weltman, and he said, hey, any interest in interviewing with Weltman? And in my opinion, you know, I was working for the Volkswagen of the industry and to interview with the Cadillac of the industry, I jumped at the opportunity. So, interviewed with the firm and was offered a position as what I call a support attorney. I was hired on to support the consumer collections business unit of the firm.
reviewing documentation, filing the lawsuits, litigating the cases, obtaining the judgments, things of that nature. So believe it or not, that was 36 years ago and I'm still here and still loving every day.
Adam Parks (02:21)
Well, and I'm sure that you've held a number of different roles over that time going from a support attorney and kind of managing different aspects of the firm to put you into your current seat. But for anyone who's not familiar with the firm, can you tell everyone about the firm in your specialty?
Chuck Pona (02:38)
Sure. So, Weltman, we're celebrating 95 years in existence this year, August of this year. So we're really excited about that. know, Weltman started out 95 years ago as strictly a collection law firm. That's all we did was collections. And then clients over time started asking that we become more full service. So in addition to consumer collections, that's a distinct business unit within the firm. We now have a commercial collections business unit, a bankruptcy business unit, a real estate business unit, and a what we call complex litigation business unit. So five distinct business units all headed up by partners within the firm.
Each is its own separate profit center. ⁓ And after about 25 years of running the Consumer Collections Business Unit, my partners six years ago, elected me to be their managing shareholder. So I've been doing that now for six years, doing a lot of course, administrative work, but still I dabble with legal matters. I want to keep my legal skills sharp, so I'll still handle a number of files from demand through judgment and collections.
Adam Parks (04:05)
I love that keeping your hand on the throttle and on the pulse of what's going on not only within your organization, but what a great way to stay on top of what's happening across the industry.
Chuck Pona (04:16)
Well, you know, Adam, want to, my thought is I want to keep my finger on the pulse of not only what's happening at the courts, right? So hearing firsthand or seeing firsthand any issues with the courts or their filing system or court cost issues. I want to know that firsthand. Also working with the clients still and knowing, you know, firsthand. what issues might be, what might they be facing, issues we're having with representing them. I want to know firsthand so I can more effectively manage the relationship.
Adam Parks (04:52)
makes a lot of sense to me. And it kind of transitions quite well into our discussion today, which is about the changing environment in the debt collection industry for attorneys, debt buyers, agencies, creditors, and obviously the law firms and looking at we're all challenged with an increase in the volume of accounts that we're managing. And at the same time, we're seeing more distressed consumers and those distressed consumers provide a lower liquidation of those accounts. which means that our clients have this expectation that we're gonna do more with less. And as you look at that as a large law firm, how do you start to address that do more with less problem?
Chuck Pona (05:33)
So let me piggyback on that question. So all of us in this industry, as well as other industries, are facing a labor shortage, labor issues, whether it be recruiting or retention. I think every law firm that I speak to in the industry is having the same issue. We are all blessed right now in that.
Placements have increased significantly over the past. say three to five years So to your point we have to figure out ways to work smarter rather than harder and You you can't book you can't go back to a client and say look We can't accept this next batch of accounts because we don't have the bodies to work them You've got to figure out ways to deliver a superior service to the client
So what we've done is have other firms that want to remain competitive in this industry. You've got to look at vendors to assist you. You've got to look at data to assist you to, again, work the accounts more efficiently and effectively.
Adam Parks (06:37)
And with that comes let's talk about efficiently and effectively because I think those are kind of two different paths. When it comes to working the accounts more efficiently. We're struggling to get people in place. And so in the TransUnion 2024 Debt Collection Industry Report we talked about how hiring locally has become a significant challenge. 88 % of companies in the space are having trouble hiring 81 % are having trouble retaining.
And I don't think that's necessarily related to the work or wholly dedicated to the debt collection industry, but the competition with McDonald's and Burger King and some of the wages that they're willing to pay or need to pay right now in order to fill the gap has really unbalanced the marketplace some in terms of being able to bring in new people, which brings in new challenges.
Have you been facing those same kinds of hiring challenges within the local markets?
Chuck Pona (07:35)
Absolutely. we've done everything, you know, sort of pull out all the stops, right? We've done everything from market studies, you know, how competitive are our salaries, our salary bands, if you will. So we've done those market studies, we've done the comparisons with other competitors near us and adjusted like a lot of firms had to adjust our starting salaries.
Again, the salary bands just to be competitive. That's number one. We also looked at things like recruitment bonuses. If our employees help us recruit quality individuals, we're willing to pay them a bonus, referral bonus, if you will. We've also looked at retention bonuses and pay retention bonuses to collectors and individuals who remain with the firm.
X number of months and that might increase over time. Just trying to come up with creative ways to recruit and retain employees because again, we're in a business that's heavily dependent on individuals and human capital, if you will. So we're looking at all ways to attract better, higher quality individuals at all times.
Adam Parks (08:44)
And I think as we look at that, if we want to expand our labor pools, one of the options that we have is the leveraging of BPO services, whether that be onshore or offshore, but there comes limitations from a client base, in terms of what clients will allow and won't allow to happen. And then even being able to transfer that type of specialized knowledge out to a third party organization or getting people trained around the globe, which is a challenge that I face regularly.
Is that something that you've explored in terms of leveraging new geographic footprints?
Chuck Pona (09:17)
Let me take you back a number of years ago. I was never an economics major or an accounting major, but I did understand you've got two columns, right? Income and expense. And when your expense exceeds your income, that's not a good thing, right? So a number of years ago, I looked around and said, okay, we've got our income. We know what that income is. I've got to somehow reduce expenses here.
Chuck Pona (09:43)
And along with the shortage that we just talked about in the labor market, we started looking at outsourcing some of our back office work and hitched our wagons, if you will, with one of the providers. And I can't sing their praises enough. But to your point, it was a difficult sell, right, to our own employees. They thought, OK, you're getting somebody to replace my job.
Chuck Pona (10:05)
And that's not it. What our message to our employees was, look, this is going to supplement, allow you to work on more substantive tasks and to really grow your career with our firm. We're going to take those mundane tasks and get them out to an outsourced company so that they can assist us. They can be an extension of the services that we provide. And then of course, to your point,
Chuck Pona (10:30)
Once you come up with the processes that you're looking to outsource, you've got to audit those processes, right? To make sure that they are doing things compliantly to your client standards, to your standards. So what we did with our provider is we had weekly audit calls and audited the work they were providing to us to make sure that it was not only to our standards, but our client standards.
And we've been probably working with that outsource company now for five to eight years, and it's been an excellent, excellent relationship. And back to my income and expense example, it has truly reduced our expenses significantly and has made us more profitable.
Adam Parks (11:12)
I agree with everything there being able to focus the time and attention of the staff that you are able to recruit and retain on the most impactful processes or the most impactful tasks in your organization is a focal point. And when we can provide them with additional support, whether it be offshore or onshore and just looking at expanding into new and interesting geographic footprints. That I think is where some of that really lies for us to more efficiently work accounts.
Chuck Pona (11:44)
The other thing we did, in order to get our employees more comfortable with the situation, we allowed them to co-author and work with us in delegating the tasks over to this outsource company. So they felt like they were part of the process, part of the solution, and they were more accepting as a result of that. So it worked out well.
Adam Parks (12:07)
feeling a level of ownership in the process there is an effective methodology for deploying them. also always make sure that I physically go visit my offshore facilities at least once a year, because the relationships that are built through your sharing a meal are a lot different than the relationships that are built through Zoom or Google Meet or whatever your flavor of virtual meeting is.
Chuck Pona (12:09)
Exactly. Right.
Adam Parks (12:32)
but actually being there with people and you're not just a scary face on the screen, but you're actually a person that's approachable and it tends to open up a lot of conversations. It does come with a wave of new questions and you have to be prepared to kind of manage that wave of new questions, but the output after that is always impactfully beneficial.
Chuck Pona (12:55)
And you've got to develop, you know, and I do this and have done this for the 36 years that I've been with the firm, develop personal relationships first before you develop a business relationship, because then there's buy-in from both sides. You don't want to disappoint your friend. So you're going to provide the very best in service and they can expect good responses from us because we've developed that friendship first. From there, we've developed a business relationship. So that's been my mantra for 36 years and it's worked successfully.
Adam Parks (13:31)
I think that makes I think that works. Clearly, it works for you. So we've talked about operating more efficiently, but I think we also should talk about operating more effectively. And when we talk about being able to improve our processes and be able to move more down the pipeline, I think that's important. But we also have to improve the quality of our workflow pipelines as much as we possibly can. And I know one of the ways that you've approached that is through the application of new data.
What kind of challenges have you faced in deploying new and interesting data into your workflows to become a more effective organization?
Chuck Pona (14:09)
Well, the first thing, we're fortunate, right, in our industry. We're fortunate. There are a number of wonderful vendors out there who provide very important services to the collection industry. You know, we're silly to think that we can handle it all ourselves. We can't. You know, we can't hire enough IT folks, you know, to come up with these data sources.
So. You've got to look outside and vet these vendors to see which ones that you're most comfortable with. So let's start from there. know, obviously attending trade shows, attending these conferences, you meet a lot of vendors that provide various services and products. So the first thing is, what do you feel most comfortable with? Back to developing a personal relationship with them, feeling who you have that comfort level with. Then of course, you have to vet them.
To make sure that they are compliant, professional, ethical in services and products they're providing you. We often have here at the firm, we have an actual due diligence team, our IT folks, our security folks, they're very much involved in the selection process of which vendors we're going to use. But let's talk now about
So you've now entered into a contract with one of these outside vendors. What can they help you report? What data can they provide to you? And it's invaluable, Adam, back to we have to work these accounts more effectively. So when do you file suit? What happens if you can't obtain service?
What happens if you can't identify an asset or a place to serve the defendant? These are all items that we need to be concerned about in order to maximize the revenue for the clients and maximize revenue for the firm.
Adam Parks (16:03)
When I think about law firms and data applicable to law firms, really I try to put it into two buckets, at least in my mind. And one is kind of that pre suit bucket, can I find them? Can I serve them? And can I prioritize appropriately to make sure that I'm balancing out my litigation costs and my court costs against the expected liquidations in the long term? The second bucket for me is that judgment bucket. It's that enforcement. Now I've got that piece of paper that validates, know, by the court that this money is owed. And now I've got a tool in my toolbox. But if I can't identify, again, depending on state, I can't identify an employer or a bank account or an asset of some sort of boat house, whatever, then I can't go placing liens, I can't actually go about executing on that. So, I mean, do you look at those two?
Do you look at data sources as falling into those two buckets? Is there something that I'm not considering that should be part of that evaluation?
Chuck Pona (17:01)
No, you're right on, you're right on. The way that we're structured, and I think most firms in this industry are structured, is we have an agency piece and a legal piece, right? Client places an account with you. Of course, the first thing you need to do is send written communication, you know, or could be digital, to the consumer, identifying who you are, who you represent, obviously providing all of the necessary language as is dictated by the Fair Debt Collection Practices Act. So you've got that agency piece. And back to your point, do you have a good address that you're to make contact with this consumer? Now that we're getting more and more into the digital space, do you have a good telephone number? Do you have a good email address if that's the source of communication that you want to use? So it's the agency piece. And we haven't even talked about, so.
It starts in the agency side, and then you've got to determine when and if you move it to the legal side, right? And a lot of that depends on the client and what their dictates are, what their requirements are. But do you have a good serviceable address now? know, have you attempted to amicably resolve that matter with the consumer? What is the propensity to pay once you sue or litigate that account? And then to your point,
Chuck Pona (18:18)
Now that you're on the legal side and you've now filed suit, once you get judgment, do you have an asset to pursue? Because to have an empty judgment does you no favors nor the client any favors. So do you have an asset in which to pursue? So it's locating a place of employment or a bank account. Do they own real estate that you can place a lien on? So again, a lot of that work, Adam, in our firm, is done internally. We have our own separate skip unit and asset locate unit. They do a great job, but even they need some assistance from outside vendors. So we'll utilize outside vendors to help in those regards so that we can maximize again, maximize recoveries for the client. That's the name of the game. You want to maximize recoveries for the client so that you earn a larger market share from those clients.
Adam Parks (18:45)
is identifying the post judgment enforcement mechanism part of your suit decisioning process. And I realize that'll change client by client, but I'm just trying to understand how you're how you're approaching the
Chuck Pona (19:23)
What we try and do, Adam, is before we litigate a matter, we want to know, is there an asset to pursue? Now, keep in mind, bank accounts is getting more more difficult to identify a bank account on the front end, okay? But place of employment, absolutely. There's a number of vendors, a number of ways that you can identify a place of employment. Again, same thing with real property. You can identify whether or not the consumer owns real estate that you can eventually attach a lien to. So yeah, that all goes into the decisioning. lot of clients require that as well. Okay, if I give you authorization to file suit, do you have an asset to pursue so that you can liquidate our judgment? So yes, that's all part of the decisioning process.
Adam Parks (20:13)
And so with all of the different data sets out there and all of the new data that's coming to the table and retesting old vendors and all of that, what is your, call it new data source testing actually look like? Is there a, you know, a defined process for it? Is it just taking samples and run an A-B test? How do you look at the methodology of testing new data?
Chuck Pona (20:36)
So to use a phrase in the industry, champion challenge, right? You know, we will look and investigate multiple vendors for whatever product or service we're looking for. We want to test them, we want to compare them, see who's providing the better service, the better product. We'll of course come up with a pool of accounts first before you just unleash this, right?
Chuck Pona (20:59)
We'll identify a pool of accounts, some test accounts, if you will. So not real data necessarily, but just run it through on a test basis to make sure that, okay, they're delivering the product or the service that we expected. And then you open it up, you know, to real files. And of course, we like to walk before we run. So we'll start out with a smaller population. And then once we've tested and once we feel comfortable, with the information that they're providing, then we'll expand it to a much larger population.
Adam Parks (21:32)
Then you can start to test that at a broader scale and get a feel for that. I mean, the champion challenger approach, I think is very popular in our industry. And I always challenge people to define what success looks like before you start experimenting with a new piece of data. Because it's been too often that I see organizations that are, I'm going to test these five different vendors.
Chuck Pona (21:37)
Exactly.
Adam Parks (21:54)
I throw it against the wall and you know, have they really thought through sample size? Have they thought through the statistical, you know, have they thought through standard deviation of the results and what that starts to look like? And, you know, sometimes I feel like the only math nerd in the room when I'm having some of those conversations, but the larger the organization, I think the more complex the analytics become, especially when it comes to those suit decisioning analytics. It sounds like you've got different groups that are kind of wholly focused on different areas of that debt collection litigation process. Do you have a dedicated analytics team that's looking at the data sets to drive decision making?
Chuck Pona (22:28)
Yes.
Yes, we do. And keep in mind, Adam, know, new vendors are popping up every day. New data sources are popping up every day. So I think it's in your best interest to constantly test, okay, here's the current provider we have. Here's the information they're providing to us. Is there someone better? Is there someone less costly to provide the same?
level of data for you that's going to be just as valuable to you to help liquidate those judgment files. So we're constantly testing and retesting, making sure that we're using the best in class, if you will. And that's how you retain the clients and that's how you continue to perform at a very high level.
Adam Parks (23:13)
And from a data perspective, when you're going through these, the process of testing, you know, what is what a timelines look for you in terms of being able to verify things. So, you know, I've seen these, there's verified and there's unverified products in the marketplace where it's either I'm selling you data or I'm selling you very physically verified data. How do you look at those two different worlds differently when you've got an internal staff who's capable of maybe doing some of the manual?
Chuck Pona (23:43)
Keep in mind, oftentimes when we use a vendor, for example, to identify a place of employment, what I had described to you, so we have an in-house skip and asset locate department. They've already vetted that file. Now we're sending it out to a vendor, see if they can find a place of employment that we could not find. If we get information back from them,
Chuck Pona (24:11)
It goes to that same team. It goes to that same team who's now going to validate that information. And if we've done our job, hopefully we've found that source. And we know that it's, for example, only part-time employment versus full-time employment. So it really doesn't help you. Or we may find that, yes, this was valid information, but now the person is no longer employed there.
Chuck Pona (24:35)
So to your point, we will audit the information that we get back from these vendors. sometimes it's a quick hit. You can quickly validate it. And sometimes it takes some time. again, the additional information we're getting from these vendors is so valuable. Because again, you want to liquidate these claims just as quickly as possible because there's more coming in the pipeline.
Adam Parks (24:44)
Well, in an account that's sitting still at the law firm isn't benefiting the client, it's not benefiting you, it, and it sometimes needs an additional piece of information in order for it to conform with the expectations of the next stage of collections.
Chuck Pona (25:12)
And I was just looking at a report today about, with regard to the performance on legacy files that are with our firm. And to your point, know, we do a darn good job of, we don't want dormant judgments sitting in our portfolio. You know, we're constantly reviewing it on a regular cadence to see if there's any new assets.
Chuck Pona (25:38)
Because again, to have a dormant judgment in your portfolio doesn't know it any good. So we're constantly looking on a regular cadence to see, there new information out there that will help liquidate this judgment? So that's our mantra. We do it all the time. And it's been very successful. And this portfolio I was looking at today, there's not lot of new placements coming from this particular client, but we have so many legacy files that we're still actively pursuing.
that the numbers are still so very high. It was impressive. It was impressive to me.
Adam Parks (26:13)
Being able to understand that and to build out those processes, dormant judgment is a very expensive judgment because you've got your court costs in it. You've got all of these, not only the cost of either having charged off or acquired that account, but all of the other associated costs with the debt collection process. Now it's sitting there. And the longer that it sits there, the more data I have to attempt to purchase or supplement to that file in order to find some sort of an enforcement option.
for that particular judgment. So those piles of judgments, I mean, I've heard organizations, I mean, a long time ago, 10, 15 years ago, that they wanted to get all these judgments in house and then see how long it took for that consumer to get back on their feet. And then they would look to execute it. But I always looked at it as a more expensive endeavor, because now I've created this whole other process for accounts that are legally enforceable, but at the same time, challenged.
Chuck Pona (27:03)
You know, one of the costs that you didn't mention is what about attorney time, right? So it's not only the filing fees and the cost you've incurred to get that judgment. What about all the human capital that went into work in that file, both on the collector side and then on the attorney side, the meaningful attorney review that has to be done, the appearances, you know. Yes, more more courts are going to remote hearings, but there's a
Chuck Pona (27:30)
still a number of courts, mostly rural courts, right, that still require attorneys to be present, to attend the pretrials, the motion hearings, of course the trials. So when you factor in all that attorney time, to your point, you don't want an empty judgment, dormant judgment sitting there. You want to liquidate that so that we can be fairly compensated for all the time and energy that went into that file.
Adam Parks (27:57)
Yeah, not only the time that you're in the court, but the time it takes to travel to and from these rural locations or to find somebody who's going to be able to operate of counsel and the expenses associated with that is all very good points, Chuck, all very good points. Wow. I mean, it sounds like you've got your handful over there in terms of managing, you know, I would say the largest debt collection law firm in the country. But it sounds like you've got everything systematically broken down in a way in which you're able to continue to supplement
Chuck Pona (28:01)
There you go.
Parents council, yep, yep.
you
Adam Parks (28:25)
new data sources and new opportunities and test and manage that process on.
Chuck Pona (28:31)
It goes to your people, right? And we're blessed in that we have a number of hardworking, dedicated employees. We're all moving in the same, we're rowing in the same direction, right? We value the clients that we represent because we realize if you're not providing a top notch service, they have options. These clients have other options, a lot of other options. So if you want to retain their loyalty, you best be performing.
Chuck Pona (28:59)
on all eight cylinders. that's sort of how we live. That's how we work every day. We value our employees because without them, we couldn't be as successful as we are.
Adam Parks (29:09)
Well, Chuck, sounds like you've got it. You've got it at least partially figured out here and you're doing some great things over there. I really do appreciate you joining me today and sharing your insights. I know you're a busy man and I really appreciate you taking some time to spend it with me.
Chuck Pona (29:13)
You
Thank you Adam for giving me the opportunity. Very much appreciated.
Adam Parks (29:26)
Absolutely. For those of you that are watching, if you have additional questions you'd like to ask Chuck or myself, you can leave those in the comments on LinkedIn and YouTube and we'll be responding to those. Or if you have additional topics you'd like to see us discuss, you can leave those in the comments below as well. And hopefully I'll be able to get Chuck to come back at least one more time to help me continue to create great content for a great industry. But until the next time I get to see you at one of the events, NCBA, TransUnion, whatever else is coming up next, I really do appreciate your time and insights,
Chuck Pona (29:53)
Thanks, Adam. Take care.
Adam Parks (29:55)
And thank you everybody for watching. appreciate your time and attention. We'll see you all again soon. Bye everyone.
