Compliant Civil Process Service Part 3 of 3: Cost of Compliance

• October 16, 2014
• by Stephanie Irvine
• Business Tips
• Technology

Compliance has continued to be a trending theme among civil process service industry professionals. Whether clients are asking for increased transparency, process servers have decided to increase security measures, or the courts or banks are dictating more strict regulations, it’s clear that compliance has been on everyone’s mind and will continue to be in the foreseeable future.

In an effort to help educate the civil process service community and to promulgate a more complete understanding of compliance changes, we have produced a three part series examining the regulations, technology, and cost required to stay compliant in an ever-changing civil process world. In our final installment, we are reviewing the oft-overlooked cost of maintaining compliance for civil process service firms.

• Part 1: Compliant Civil Process Service Part 1 of 3: Rolling with Regulation Changes and Conducting Audits
• Part 2: Compliant Civil Process Service Part 2 of 3: Technological Requirements

Raising Standards

To briefly summarize what we uncovered in the first segment, many changes have hit the civil process service industry, causing civil process servers to raise their standards. And as clients, courts, and banks have created additional requirements and implemented audits for process servers, it is evident that many process servers are forced to jump on board or be edged out by others offering premium services.

Ashley Keeney of Professional Civil Process explained, “Our company has gone through a couple of client audits and we welcome them. It helps us find out where we can improve and where we are excelling at. It can come with a financial cost when we have to change or add something. We recently built a new corporate headquarters with security cameras and key access codes to name a few. We have also had to create contingency plans and beef up our computer security. It may have come at a cost, but it has given our clients an extra sense of security.”

[Compliance] can come with a financial cost when we have to change or add something. We recently built a new corporate headquarters with security cameras and key access codes to name a few. We have also had to create contingency plans and beef up our computer security. It may have come at a cost, but it has given our clients an extra sense of security.

Ashley Keeney, Professional Civil Process

That cost to be audit-ready, which is different for every civil process service company, is certainly a significant one. Sandy Walker of Jackson Civil Process acknowledged that “It's been a challenge. Have not had an audit yet, but we are CFPB compliant. Extra costs with insurances and such.”

Additional personnel may also be required to stay compliant (e.g. compliance officers, people to develop educational materials, people to review logs, etc.), which would certainly be a significant additional cost to a process serving company.

Keeney also stated that “The CFPB requires our clients to perform audits. It is in the best interest of our clients to comply given they are high volume clients.”

The other option to not jump on board with compliance changes is incredibly risky. Non-compliance not only jeopardizes a process server’s reputation, but it also is costly in and of itself. For example, penalties for noncompliance in New York come at a hefty cost; each violation is subject to not less than $700 per violation (although, I suppose the bright side is that it cannot exceed $1000). 

It seems that even doing the minimum to stay compliant will raise the cost of serving process.

Implementing Technology

Previously, we discussed the changes in technology, from GPS to creating data bridges between clients and process servers. Today, we are looking at how these changes affect process servers’ bottom lines. It is evident that changes to implement new technology are also not without increased expense for process servers.

For example, civil process service software and apps have proven to be an excellent resource for process servers. However, creating an app from scratch is expensive— it requires IT professionals to develop the app, smart phones to use the app, and the proper technology to link the data on the app to computers in the office. With smart phones retailing upwards of $50 per device, process servers still have to bear the cost of the data plans to use it. And all of this doesn’t include insurance on the devices or troubleshooting. For civil process firms that do not have IT professionals on staff to create their own apps, there is another option available for process servers. Third-party apps, which would not be customized to their specific business but would still allow process servers to take advantage of the technology, are available at a lower cost. Many of these apps also include IT help in the event there are issues with the app or program.

While process server apps may increase efficiency and decrease some internal costs, some process servers believe that the benefit is limited to larger civil process service firms that can incur expensive costs. Despite this perception by some, large firms may still find the costs to update to newer technology too high, and some smaller operations could find ways to stay on top of things at a lower cost.

In a process server discussion, process servers took to the forum to discuss technology and costs, a hot topic which incited quite a bit of debate among process servers. Some process servers find that it’s absolutely necessary to stay up-to-date with the latest technology, while others hold on to ways of the past simply because their clients require it.

Process server Lee Griggs of Seekers Process Service commented that his firm “still receive[s] documents from some clients by FAX machine. Yep, there are some folks that still have them around. Here- we use a scanner AND have a FAX machine online just for that client that may still use one.” Another perspective was brought by Jonathan Levy of Nationwide Private Investigations, who explained that his firm does not use fax machines at all, citing that facsimile technology is obsolete.

Improving technology is a difficult choice that process servers must make as technology changes every day— is it worth it to leave old-school clients in the past or hold on and keep them? Process servers are split on the decision.

Process Server Rates

And with all of the increased costs associated with maintaining compliance and implementing new technology, process servers are left to determine whether or not they should increase their rates for civil process service. To increase or not to increase— it really is the big question for many process servers. Rate increases could cover costs, but would it potentially cause clients to bawk and walk? It’s a choice that process servers all over the nation are facing.

Additional add-on services, such as court filing and data bridges, are services that some attorneys have voiced should be value-added, at no extra cost. Some process servers have no issue with this as it is what they have done all along, but certainly, others are questioning whether or not it’s time to make a change.

Michael Rancilio of Rancilio & Associates stated that “We have always done 95% of what’s being asked, and now it’s just mandatory. I like that they are requiring this because it forces my competition to raise the bar. [...] In addition, we always had to charge less with those higher expectations. So, I don’t mind it at all, and in fact, I believe it should have been done a long time ago[...]”

We have always done 95% of what’s being asked, and now it’s just mandatory. I like that they are requiring this because it forces my competition to raise the bar. [...] In addition, we always had to charge less with those higher expectations.

Michael Rancilio, Rancilio & Associates

Regardless of the financial and technological challenges that the increased compliance regulations and scrutiny have caused, it is imperative that process servers understand that these changes won’t be getting easier any time soon. At ServeNow, we try to stay abreast of issues that are affecting process servers across the country, and from our perspective, the best thing to do just may be to embrace change and be ready for the next wave.

More on Compliance

• Part 1: Compliant Civil Process Service Part 1 of 3: Rolling with Regulation Changes and Conducting Audits
• Part 2: Compliant Civil Process Service Part 2 of 3: Technological Requirements

What do you think? We want to know what other process servers are thinking. Sound off in the comments to voice your opinion.