Thanks Wendi.  I do think I take the side of the abstractor, but what is done is done.  Nothing at this point is going to help the abstractor in this instance, except for Contemporary to work its way out its current problems.  I suppose that it would be better for the abstractors if Contemporary were able to get an equity line to payoff their previous obligations.  However, that is beyond the abstractors' control... maybe contemporary is not in a strong enough financial position to do so, in which case it is beyond anyone's control.

I think the problem goes far beyond this particular situation.  It is an industry-wide problem.  In any business, clients or customers for some reason wind up not being able to pay their obligations.  In most business, losses, whether from customers not paying their bills or shoplifting, are a part of doing business and the potential costs are built into their fees.

What makes our business so difficult is that we operate on a "work-now, pay-later" system that has slowly gone from the standard NET30, to NET45, to NET60, and, the fees have been slowly decreasing, rather than keeping up with our rising expenses.  Just today I received a notice that our health insurance premiums are going up again this year, by another 12% to 14%.  Unfortunately, I cannot raise my prices.

This means that our profit margin does not allow us the flexibility to absorb losses of this magnitude.  In fact, we are often not in a position to wait longer than expected for payment.  I find this very disturbing.  Certainly, I do not think it is fair that the abstractors are forced to suffer these consequences, you are quite correct in your statement "Why are the abstractors the ones who suffer when we are the ones LEAST likely to be able to stay afloat."  However, I think this is a symptom of a greater problem than Contemporary's current situation. 

There are a lot of forces at work in this scenario... and unfortunately, we as abstractors have caused a lot of them.  I am not referring to anyone in particular, but the whole group of us.  We work in an industry where abstractors are completely unregulated.  There are no barriers to entering the abstracting business.  This has created a lot of competition.  In a down market it gets even worse because when abstractors get laid off from title companies, they go independent.  And everyone, in order to get new business (or keep existing business) is willing to accept lower fees.  This in turn puts more pressure on the rest of us to lower our fees. 

Now, we find that what may have been an "acceptable" fee when there was more work than we could handle, is not enough to pay our bills when things are slow.  Because fixed costs don't go down when the volume of work drops off, it gets tougher to make ends meet in these situation.  Unfortunately, that also means that when one client unexpectedly isn't paying their invoice the effect is felt even more so.

If our fees would have increased by the same percentage as our expenses over the past 5 years, I don't think that this particular problem would have had nearly such a dramatic effect on anyone.  Please don't misunderstand me, I still think this is a tragedy.  My heart really goes out to Loretta; I can certainly empathize. 

My only point here is that whatever the situation with Contemporary, or any other client  in the past that has not paid their abstractors in a timely fashion, that is a part of doing business (as lousy as that may be).  It is just sad that in our profession it has such a devastating effect.

(Sorry for the long post.)

Best,
Robert A. Franco
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