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The Big Payback: Business Booms for Debt Settlement Industry Outsourcing Company
May 11, 2009
In these difficult economic times, John E. Ansbach’s company is facing a major challenge: managing its success.
Ansbach is the general counsel of EFA Data Processing, a Frisco-based business process outsourcing organization for the debt settlement industry.
The for-profit debt settlement industry negotiates with creditors on behalf of indebted consumers to settle debts, primarily with credit card companies. Basically, EFA helps debt settlement companies do nearly everything but market their services. EFA provides call center representatives, debt negotiators to work with creditors, and proprietary private label technology that can allow customers to follow and manage their accounts online.
Not surprisingly, business has been very good lately.
“The worse the economic conditions get, the more we’ve grown,” Ansbach says. “It’s a difficult situation to be in, but we’re pleased we’re able to help these folks.”
The people using debt settlement services are generally those who can no longer keep up with their credit cards, often because they’ve been laid off or are dealing with a serious illness and mounting hospital bills, Ansbach says. And they’re the reason EFA has experienced rapid growth since it was founded just two years ago. In the past year alone, he says, the company has gone from servicing about 10,000 consumers across the country to working with more than 20,000. That’s meant the company has hired more call center staff, he says, bringing the total employee count to around 100. It also means there’s more legal work to do, he says.
As EFA’s general counsel — and sole lawyer — Ansbach is responsible for anything and everything legal at the company, from drafting contracts to overseeing employment law compliance to responding to consumer complaints made to the company.
He’s also got a seat at the corporate governance table and is actively involved in forming EFA’s growth strategy, a strategy he says is based on accommodating the surge of new business without compromising the company’s “powerful and great customer service,” he says. “We just want to grow smartly.”
Ansbach didn’t take the typical big firm, corporate department route to his in-house position. Rather, he came at the job following a career spent honing his litigation skills.
After graduating from Texas A&M University in 1993 with a bachelor of science in economics and a minor in speech communication, the Texas native went straight to the University of Texas School of Law.
“It’s one of the best decisions I ever made,” he says of pursuing his J.D. “It’s not like I had a great time — it wasn’t fun, it was intellectual boot camp — but for me, it was some of the best education I ever got because it taught me how to think and how to approach problems.”
He gravitated towards the courtroom through moot court and mock trial involvement. Following his graduation in 1996 he became a plaintiffs lawyer.
“I really knew litigation was for me at that point,” he says, and that’s where he found the best job opportunities.
After several years with smaller firms in Dallas, he joined Baron & Budd in 1999 and spent four years working on products liability and toxic tort cases.
Ansbach was a talented advocate for his clients, says Caren Lock Hanson, who worked with Ansbach while she was senior trial counsel at the firm. Hanson is now regional vice president and associate general counsel at TIAA-CREF in Las Colinas.
“We were on a trial team together, and we would get sent out to try cases together,” she says. “When you get sent to a little town, you get to know someone well, and certainly I have seen his litigation skills. He is incredibly intelligent and a hard worker and never leaves any stone unturned. You can always count on him to have novel approaches.”
After Baron & Budd, Ansbach’s next major move was out of the practice of law to RECON Intelligence Services, a Traverse City, Mich.-based national real estate consulting firm. “My passion for law had evolved,” he says of his decision to move out of the courtroom.
At RECON, he says, he traveled all over the country, helping draft business plans for for-profit and nonprofit companies.
“It was fun; it was helping people to run their businesses,” he says. “That was actually my version of an MBA.”
It was through this work that he decided he wanted to try and combine his legal background with his business experience by going in-house, he says.
“My decision to go in-house was to pursue a combination of my passions,” he says.
He found the position at EFA Processing the old fashioned way, by sending out his résumé and working his network of contacts.
EFA seemed like the perfect fit of law and business, he says.
“We have a very collaborative leadership team,” he says. “I get the opportunity to participate in the decisions.”
Ansbach participates in weekly management meetings, says Paul Boyd, EFA Processing’s executive vice president.
Boyd says the company does have a strategic plan for growth in 2009, including adding “new, creative ways” to expand services to EFA Processing’s client companies and their clients, the consumers.
Boyd appreciates that Ansbach is in touch with what’s going on not only with clients and consumers but inside the company.
“I think that’s very important for a GC. You don’t want them to be isolated,” with workers too intimidated to approach them. “You want them to make the business stronger, and he does that,” says Boyd.
Indeed Ansbach is happy that he’s not kept “holed up in the back” but rather is able to spend time interacting with EFA staffers, working with human resources, and conducting training seminars on risk management and customer service, he says.
But there’s also plenty of law to go around, and Ansbach appreciates the variety.
“What I find most challenging is also what I find most rewarding, and that is the diversity of the work,” he says. “Because I am a small legal department, I do it all. On one hand, that’s fantastic because the learning curve has been tremendous, but on any given day, I will go from reviewing a contract to handling an employment matter to working on legislation.”
Ansbach says his litigation background gives him an edge in his GC position.
“I feel that I am uniquely qualified to address risk,” he says. “So if there is a customer who is particularly unhappy and they’ve retained counsel, that’s not foreign to me. If legislators are trying to craft legislation, I know exactly how it can be interpreted because I have used language like that to institute or defend a suit.”
Sherry L. Travers, a shareholder in Littler Mendelson in Dallas, agrees. She’s worked with EFA for several years and assists Ansbach with labor and employment issues.
“I love that he did trial work before he was the general counsel. That’s not often the case, and it’s really helpful in working on litigation with him because he’s been there and done that,” says Travers. “He has a good understanding of the risk - taking, the creative strategies that we may employ and the results.”
Supporting the Industry
Another important part of Ansbach’s position is the work he does on behalf of the debt settlement and negotiation industry as a whole. As a board member of the U.S. Organization for Bankruptcy Alternatives, Ansbach is helping to craft regulations to control this new, yet growing, industry.
Ansbach likens his industry’s business climate to the heady days of the real estate market in 2004 and 2005, when “anyone and their dog could buy real estate,” and he’s dedicated to avoiding that boom-bust cycle.
Although there are no Texas laws specifically regulating the debt settlement industry, aggrieved parties do have a remedy against allegedly unscrupulous debt settlement companies under the D.T.P.A., Ansbach says. But he and USOBA believe that additional measures are needed, he says.
By working with lawmakers and lobbyists, Ansbach says, he’s trying to ensure that these additional regulations “try to support consumers without being unfair to business,” he says.
“If you are an immature industry and at the same time there’s an explosion of your customer service base, I do think the combination of those things leads to bad actors” entering the market, Ansbach says of his support of industry regulation. “The goal is to erect appropriate barriers to entry to keep those bad actors out, but, again, don’t unfairly tax the honest, ethical players. That’s what I work on every day, trying to find that balance.”
On April 21, Ansbach testified before the Senate Committee on Business & Commerce in his role as a USOBA board member, advocating the addition of industry regulations and supporting the passage with some changes of S.B. 2233, the Uniform Debt Management Services Act.
On May 1, the Texas Senate passed S.B. 2233, which was sponsored by Sen. Kevin Eltife, R-Tyler. The bill sets forth regulations for debt management service providers, says Chuck Maines, legislative assistant to Eltife, and sets limited penalties for those providers and third party companies that break the rules.
The act includes provisions on how debt settlement company employees should explain the process to a consumer, the way fees are calculated and how consumers are to be informed regarding their right to cancel service contracts with debt settlement companies. There’s also a section that states that a debt settlement company can be held accountable for conduct of a third-party agent or independent contractor that violates the act.
The act also creates a private right of action against debt settlement companies and third-party contractors. It limits the punitive damages to situations where the conduct was unconscionable and then limits recovery to three times the actual damages.
The act has now moved to the House, Maines says, where it will “go through the committee process to a vote,” which he expects to happen in May.
When it comes to spare time, Ansbach devotes his to the study of generational dynamics and how to build workplace relationships based on generational differences. It seems far removed from debt settlement and even from civil litigation, but Ansbach says it’s applicable to every type of business interaction.
“We work in an increasingly diverse landscape, and whether it’s age or cultural, you can be much better at what you do — whether you’re the receptionist or the CEO or the GC — if you understand the people you’re working with better,” he says. “Every generation has assets and liabilities in the workplace, and if you understand those, you can heighten your performance,” he says.
Before joining EFA, he spent several years as a speaker and business consultant specializing in this area, giving speeches and seminars to corporations like Frito Lay North America, the National Association of REALTORS and even Littler Mendelson.
Since joining EFA, his speaking has become more of a side project, something he enjoys doing when time permits, he says.
He discovered the area of study back in 2000, while working at Baron & Budd, he says.
“I felt like I was good at my job from a legal standpoint, but many of my clients were older than I was, and I was having a hard time connecting with them,” he says. He discovered a book on the subject of generational dynamics and read it, “and then read two books and then all the books, and then someone said, ‘Can you give a talk on that?’ and now it’s nine years later.”
In a firm context, he says, generational dynamics can help lawyers better understand clients and also help in the recruitment and retention of young lawyers.
“It’s about promoting what I would call a ‘high performance workplace.’ Once you’ve got [the new lawyers] there, how do you keep them and empower them to work with bosses who are 10-20 years older?”
Hanson says that Ansbach’s understanding of generational dynamics during his years at Baron & Budd was a definite plus when it came to trying cases.
“We used to pick juries together, and one of the things you start to identify — and without sounding stereotypical — is that the younger people in their 20s and 30s tended to be a bit more apathetic about the judicial process,” she says, as opposed to people born before 1946, who were the most likely to be engaged. “Those are the types of dynamics we’d talk about while we were picking juries and trying cases together.”
It also helps when it comes to communicating with colleagues in the firm, Ansbach says.
“Generational dynamics is not a replacement for what you know about somebody, but it’s meant to supplement. If you’re in a firm and you have young lawyers working for you or you’re working for older lawyers, you may know something about them, but generational dynamics allows you to supplement that knowledge and allows you to understand why they do what they do.”
For example, if an attorney is, say, 55, that person “may want to walk down the hall to talk about something,” whereas a 20-something might be happier conducting that discussion electronically. The goal might be for the older lawyer to realize that “it’s not disrespectful to talk in e-mail,” he says. “We don’t want people to sacrifice who they are, but we do want them to get a better result in the workplace.”
It’s a message that was well received at Littler Mendelson, Travers says. Ansbach delivered a keynote speech to about 1,000 people at a firm conference last April in Phoenix, she says.
“He’s an incredibly dynamic speaker, he had people captivated, which is a very difficult thing to do at lunchtime as a keynote, to have people absolutely engaged,” she says.
Ansbach also taps into his generational dynamics expertise at EFA, holding seminars for call center staffers on how to best work with clients coming from different generations.
“We have people who are in debt who are in their 20s as well as in their 60s,” he says. “How different generations perceive debt can vary quite significantly. If you are in your late 60s there is a shame factor, whereas our generation understands that debt is a necessary evil.”
And it’s just another tool he can give to EFA Processing employees to help them succeed at a job that can be particularly challenging.
“Just yesterday we had a situation where one of our customer service reps was talking to a consumer and the consumer was indicating suicide,” he says. “For us, that is the gravity of this.”Continue Reading