(logo) Attorneys' Title Guaranty Fund Inc.

The Trusted Adviser

January 2019 | Volume 12 · Number 1

The ATG Story: Serving Lawyers and Their Clients Yesterday, Today, and Tomorrow

Advocacy with an Impact

Beloved ATG Members,

I was asked to write a year in review. As I sat down to do so, I found myself reflecting not only on the past year but also on more existential issues. For the past 38 years (27 as President), it has been my pleasure to serve you. With the passage of time, I have come to increasingly appreciate this journey we have taken together. So, excuse the length of this article. I hope you will find the questions posed worthy of the deeper discussion that follows.

I think it is essential to ask and answer the five questions that appear below. They run to the heart of why ATG is distinguished as a company that serves lawyers and their clients while our competitors are mercenary at best, Trojan Horses at worst who view lawyers providing title services as necessary (and expensive) in the near term but expendable over time.

Make no mistake: But for ATG, lawyers would be out of the real estate practice. This distinction is at the heart of the journey we have taken together.

What is Our Purpose?

At our core, ATG is a lawyer service company: Our mission is to be the premier lawyer service organization for the benefit of the profession and the public.

But more broadly what drives us as employees, customers, and owners, in our values, in our impact and in our legacy?

ATG Values, Impact, and Legacy:

• Advocating for the long-term interests of practicing lawyers and their clients.
• Protecting the long-term interests of our shareholders. (We are owned exclusively by 2,700 attorneys, and their families, who purchased stock in ATG to capitalize and support the company.)
• Providing impeccable service to our member-agent attorneys, other lawyers, realtors, and lenders.
• Protecting consumers by being good corporate citizens. We hold ourselves to a high standard of ethics and honesty. We believe in being of service to our community and in leaving a lasting impact.
• Supporting our employees by providing a workplace where everyone is treated with dignity and respect.

Who Are We?

We are the ATG Family of Companies:

The ATG Family of Companies (click any logo for more information) generates on average about $90,000,000 per year. Of that, $50,000,000 are fees earned by and paid to our member-agent attorneys each year. Over our history, we have issued more than 3.5 million policies, and ATG agents have earned more than one billion dollars in fees from providing title services as an adjunct to their law practices. Thousands of lawyers rely on ATG to support their careers and their livelihood.

The ATG Family of Companies employs 225 people, many of whom have spent the majority of their careers at ATG. Twenty-one percent have been with ATG 20 years or more.

ATG's 2018 Double Decade Event celebrates employees who've been with ATG 20+ years. Front row, from left: Chris Burhans, Charlie Howard, Christine Sparks, Suzy Shaw, Lori Ray, Elaine Oldham, Jerry Gorman, Augie Butera, Mindy Ward, Mary Beth McCarthy, Robert Rivas, and Eric Hammond. Back row from left: Michael Moore, Joan Egan-Halpin, Donna Koss, Peter Birnbaum, Eileen Burns, Isabel Escotto, Rebeca Leibas, Michelle Hildenbrand, Yolanda McMullen, Ed Sudlow, Mona Stevens, Shirley Wagner, Dean Hasselgren, Anna Krumtinger, Gail Grazioli, Lori Gallagher, Sandi Allfrey, Marie Duhig, and Hank Shulruff.

We are keenly focused on building opportunities for our next generation of leaders. Many in current leadership positions came from the ranks of ATG. We have a diverse and talented young group of employees who have opportunities to grow within the organization.

What is Our History?

Stanley B. Balbach, Urbana, Illinois As ATG’s founder, Stan worked tirelessly as our first leader and served on our board until 2006.

1960s - 1970s: Early History

Attorneys' Title Guaranty Fund, Inc. was founded in Champaign, Illinois, on August 6, 1964. We opened an office in Chicago in the late 1970s. (Watch a short video of our early history.)

ATG's business model — allowing lawyers to provide title services as an adjunct to their law practices — was unique in Illinois when we entered the scene.

Before the advent of title insurance, as early as the mid-1800s, lawyers provided opinions of title as a part of their representation of a seller (who was obliged to convey clear title to the buyer). In the post World War II era, "commercial" title companies started forming in major cities and in the Western states. Almost immediately many of these companies attempted to push lawyers out of real estate transactions. These title companies argued that title insurance afforded greater protection for the consumer and covered risks that were more expansive than those covered by a lawyer's opinion on title. Within a very short period of time, lawyers were virtually eliminated from representing consumers in real estate transactions in the western states. The title companies started moving east.

The Fund Concept was the philosophical base upon which our founder, Stanley Balbach, along with other lawyers, John Satter, Richard Hart, Wilbur Capps, and Jim Elson, formed a title insurance underwriter owned by member attorneys who would provide title services in competition with these commercial title companies (a guaranty fund or The Fund, as we called it back then). The lawyer preparing the policy would charge for his time and pay a risk premium into The Fund to set up a reserve for future claims. The total charges would be the same or less than commercial title insurance. It was thought that forming an underwriter, owned by lawyers would preserve the lawyer's ongoing ability to represent sellers and buyers in residential real estate transactions.

A home purchase is the largest financial transaction of a consumer's life. We believed, then and now, consumers need legal representation in that transaction. The Fund, we argue, gives consumers the best of both worlds: legal representation and insurance protection.

Our mission was and is to be the premier lawyer service organization for the benefit of the profession and the public.

1980s: Our Success Precipitates Strong Reaction

We enjoyed explosive growth throughout the 1980s.

Some commercial title companies battled The Fund Concept from the outset. In 1981 (the year I joined ATG) an article from The Title News (a publication of ALTA, the American Land Title Association) entitled, "The Saga of the Bar Funds," was particularly telling. In that article, Thomas Jackson, erstwhile General Counsel of ALTA wrote, "Like a chronic infection, the bar fund movement has resisted all our efforts to eradicate it and, if left to fester, could ultimately contaminate the entire commercial title insurance market."

During these years, we confronted many challenges from competitors seeking to drive us out of the market. These included a price war launched by industry giant, Chicago Title, who dropped prices by 40% overnight in an attempt to drive our lawyer members out of business. There was also a campaign between a commercial company and a "consumer group" that argued ATG member attorneys limit competition and raise consumer costs by doing title work in conjunction with their law practices. We were also forced to defend several lawsuits and legislative battles wherein our competitors attempted to remove lawyers from the title services business by judicial or legislative fiat. We won all those battles.

1990s: Imitation...the Most Sincere Form of Flattery

By the mid 1990s virtually all other title companies began competing with us to provide title services through lawyer agents. At the same time, we opened more Illinois offices and expanded into Wisconsin. Today, lawyers providing title services is the ubiquitous business model in the Chicago area and other regions.

Bridge-Building. Despite many bruising battles, we made peace with both ALTA and with most of the big commercial companies. Many lawyers on the ATG staff have held leadership positions in ALTA, including my five-year stint on its Board of Governors and Jerry Gorman's 15-years of service to the Forms Committee. We have also had three ATG attorneys (Mike Brandt, Augie Butera, and Christine Sparks) serve as presidents of the Illinois Land Title Association (ILTA) and many others serve on ILTA committees. Our Wisconsin legal staff have done the same with the Wisconsin Land Title Association as Tom Cullen (WLTA past president) and Kate Marlin (committee chair) each recently received awards for their outstanding leadership. The tent, as they say, has gotten bigger.

Diversification. Beginning in the early 1990s we began diversifying both our product mix and geographical footprint. Today, ATG Trust, The Judicial Sales Corporation, ATG LegalServe, NLT Title, and ATG Legal Education provide services to thousands of lawyers across all areas of practice.

Where Are We Today?

Race to the Bottom

In today's market, with some competitors seeking to bolster market share, we have seen market conduct deteriorate in many respects. We have been vocal in our concerns to the regulators and the real estate bar. We believe we are witnessing a "race to the bottom" in terms of market conduct—be it in the form of improper steering or reciprocal trading by some real estate professionals, junk fees, or duplicative costs. We have opined that many of these problems find root in the hallways of some underwriters and regional agents who seek to garner market share no matter the legal or reputational risk nor cost to the consumer. We have also cautioned that the legal profession needs to be wary of these practices, offering our belief that lawyers will be the fall guys for this conduct. Or, in the words of Shakespeare: "The first thing we do, let's kill all the lawyers."

No doubt the market needs an awakening by the title industry as well as the legal profession. "Physician heal thyself," is certainly the best remedy for what ails the marketplace. In the absence of self-correcting behavior, the market needs some form of rational intervention by the regulators. But to lay blame on the hard-working and well-intentioned legal profession is not the cure. Lawyers, I would submit, are an easy scapegoat. I urge you to get active in supporting our legislative, regulatory, and other advocacy efforts to protect the public and the profession. It is not an understatement to say that your law practice and your clients' peace of mind are both at risk.

Today,a lawyer with a busy real estate practice will find a line of title company sales reps eagerly offering increasingly absurd inducements to sign-up as an agent: I ask you this: Would the practicing lawyer still provide title and legal services to consumers without ATG as its advocate? To ask this question is to answer it.

What is Past is Prologue: A Look Back at 2018

Events in 2018 mirrored the types of challenges we faced in our early history. As the saying goes, “Those who do not learn from history are condemned to repeat it.” 

There were more regulatory efforts to change the landscape for Illinois title insurance providers in 2018 than in any prior year. And disruptive technologies emerged that have the potential to change the processes for title insurance and settlement providers in the coming years. ATG is on the front lines advocating for the real estate bar and the clients it serves and ensuring that new technologies augment rather than undermine the value that lawyers bring to their clients.

Proposed DS-1 Disclosure. In April, the Illinois Department of Financial and Professional Regulation (IDFPR) issued a new DS-1 Disclosure of Affiliated Business which included, among many other bothersome features, the requirement that lawyers disclose to third parties their fee arrangement with their client. ATG stopped the implementation of that form by successfully filing a temporary restraining order (TRO) enjoining the State from implementing that form until the underlying issues are resolved. (See ATG's Recent IDFPR Victory: What Our Agents Are Saying.) The form also included language that we believe would have discouraged the use of lawyers in real estate transactions. That litigation continues into 2019 and we are working with the State toward an amicable resolution. We are hopeful that we can conclude that litigation and help the State develop a form that provides meaningful and easy to understand disclosures for consumers. We are also hopeful that the state will focus its attention on those in the business that operate dishonestly or in a way that harms consumers, rather than on the general population of talented honest title agents that serve their clients and customers well.

HB5935. State Legislator Jeanne Ives (R-DuPage) introduced legislation that would have prohibited lawyers from participating in the issuance of title insurance, diminishing the real estate lawyer's role in the transaction to the detriment of the client. In response to our Call to Action, House Bill 5935: A Shot Across the Bow, ATG agents, as they always do, defeated this bill by stepping up to the plate, contacting their local legislators, and highlighting that this legislation was an ill-conceived attempt to destroy the unique benefits that Illinois consumers receive from legal counsel in real estate transactions, and would benefit other special interest commercial title agencies.

Real Estate Agents as Title Agents. For years, many of our competitors have underwritten title agencies controlled by real estate brokers. In 2018 they expanded that idea by introducing a new business model that allows individual real estate agents to issue title insurance. This presents a serious threat to the lawyer's role in the real estate transaction and the quality of title work that consumers will receive. ATG will stand firm in its resolve to further its original mission to preserve and promote the role of the lawyer in the real estate transaction for the benefit of the profession and the public. Some real estate broker owners are increasingly pushing their captive companies (referred to as realtor captives in the marketplace) as a result of the same issue that's driving the bad behavior in our business: increasingly and unrealistic splits to agents.

We have eschewed joining forces with real estate brokers (believe me, early on we were approached by many) under the belief that reciprocal trading arrangements are not only illegal but unethical. But also, pragmatically we believe those practices could end in the demise of the practicing lawyer when realtor captives decide the lawyer title agent is expendable.

It is noteworthy that the Illinois Real Estate Lawyers Association (IRELA) was borne out of such a crisis. In 1999, Koenig and Strey, in an attempt to capture title business, tried to circumvent the practicing lawyer by having in-house lawyers who would destroy the "myth" that consumers need independent counsel. ATG stalwart John O'Brien boldly led the charge by filing suit to enjoin those practices and in so doing rallied the entire Illinois Bar behind those efforts.

What's past is prologue and again we are at the Rubicon.

We stand committed to protect lawyers and consumers and are prepared to file suit or pass legislation prohibiting illegal conduct. Sure, real estate brokers can compete — but not through secret deals with lawyers. It's truly no different than paying the traffic cop a gratuity to look the other way. Working with the ILTA , we hope to introduce legislation this session to address many of those issues.

Where Are We Going Tomorrow?

What Drives Our Success Now and in the Future, How Do We Embrace Challenges?

Collaboration and Shared Vision. The core strengths that served us yesterday also serve us today will continue to serve us tomorrow:

• Loyal and dedicated member agents.
• Devoted board members who are 100% committed to our mission through strategic planning.
• Knowledgeable, long-tenured, and energetic staff.
• Profitable subsidiaries with strong leaders and diverse products.
• Ability to react quickly.
• Collective vision and spirit of camaraderie, working toward a common goal.
• Shared desire to be a good corporate citizen.

Current Challenges. We also recognize and we are realistic about the challenges before us:

• Slowing housing market.- 
• Competition—see Race to the Bottom, above.
• Siloed legacy systems.
• Succession planning.
• Changing consumer expectations.
• Increasing market share at all companies.

Emerging Technologies. ATG is committed to developing technologies that make your practice more competitive. Digital closings, remote online notarization, blockchain, and automated searches are all becoming familiar terms within the title business:

• Mortgage companies, in cooperation with Fannie Mae have made strides toward making eMortgage closings a standard. As discussed at ATG's 2018 Harold I. Levine Real Estate Institute by Shane Hartzler, Fannie Mae's Director of eMortgage Strategy and Operations, these technologies can create efficiencies in the closing process and shorten the mortgage side of real estate closings.
• Several states throughout the country have passed statutes that allow for remote online notarizations and Illinois may do the same in the future. These technologies use audio-visual technologies and electronic methods to conduct a notarization.
• One of the major title companies recently announced a blockchain technology for the sharing of prior title insurance policies between title companies. This new technology could create a great opportunity for to add efficiencies in the creation of title insurance commitments.
• Automated search technologies allow users to conduct searches in minutes.

Each of these emerging technologies creates opportunities for title agents to work more efficiently, and ATG will be there with custom technology and support to help you navigate.

Watch for exciting news from ATG about its new production system, which will make use of many of the above innovative technologies to help agents compete and thrive in the coming years. The adage that nothing is permanent but change holds true today in our great industry. And whether it is fighting to ensure that change does not negatively impact the lawyer's role in real estate transactions or introducing new technologies to help lawyers compete in this changing market, you can be sure that ATG is there for you. See our short video featuring many ATG agents, There's Only One.

We Will Positions Lawyers for Success by Providing Consumer Empowerment with Attorney Advocacy

No matter what technology brings, we believe consumers will still desire a trusted advisor and will ensure that ATG lawyer agents have the tools to provide them.

In Summary

As an organization, the ATG Family of Companies has four main purposes:

Purpose 1:

Advocate. We were, are, and will always be the leading advocate for practicing lawyers in the marketplace, media, courts, legislature, and with regulators. There are many examples of our advocacy efforts over the last 50+ years, see Advocacy in Action.

In May 2012, ATG joined members of ALTA in Washington, D.C., to lobby on behalf of the industry. Organized by ALTA's Government Affairs staff, more than 200 delegates and staffers met with title industry representatives including Peter J. Birnbaum, ATG President and CEO, and Frank Pellegrini, then-Incoming ALTA President. Frank is a real estate lawyer and operates a title insurance agency in the Chicago area anad is an ATG member-agent.)

Purpose 2: Educate. We will educate and provide leadership not just for our members, but for all practicing lawyers, consumers, the media, and other real estate professionals. Attendees at ATG's 2018 Harold I. Levine Real Estate Institute in Oakbrook Terrace, Illinois.

Purpose 3:

Support and Serve. Our success is measured by how well we support our lawyers to help all of you serve your consumers clients. This includes our service to the community and our practice of being a good corporate citizen.

From a closing in the ATG Oak Lawn office. See Facebook post.

Purpose 4: Build Future Leaders. As we continue to develop and recruit talent at ATG, we will also mentor the next generation of lawyers. ATG Metro East Office employees, Bonnie Fietsam and Toni Sharkey, attended the ribbon-cutting ceremony of our newest member agents, Scott & Fiello Schwartz, LLC, Swansea, Illinois.

Conclusion

ATG has been an unqualified victory for the profession and the consuming public. Join with us as we embrace the future with an appreciation of our history and a vision for the great days ahead. I welcome your feedback and would love to hear from you. Feel free to contact me about any of these important topics. 

Peter J. Birnbaum
ATG President CEO

[Last update: 2-6-19]

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