New Challenges Caused by Reduced Case Filings and NCBJ’s Greatest Recent Accomplishments

Past president of the NCBJ Mary Grace Diehl (N.D. Ga) ― President when interviewed for this article ― regards cost containment within the bankruptcy court system and within the NCBJ to be the two greatest challenges NCBJ faces today. Dramatically reduced bankruptcy filings nationwide have presented acute challenges. In an approximate 12-year period, new case filings declined 48.7 percent, comparing the 1,597,462 filings in 2004 with the 819,159 filings in the 12-month period ending June 30, 2016, after reaching an anomalous peak of 2,078,415 in 2005 as individuals filed bankruptcy cases to escape the impending grip of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005.

Keith Lundin
Keith Lundin (M.D. Tenn. Ret.)

The declines in bankruptcy case filings have resulted in a leveling off of attendance at the NCBJ’s annual conference by bankruptcy professionals in recent years, following an earlier decline, while at the same time the NCBJ faces ever higher costs for hosting the conference. The NCBJ’s partner organizations are similarly stretched with less ability to help underwrite the NCBJ’s costs.

The NCBJ has been up to the challenge, having made great strides in promoting sound fiscal policies. Jeanne Sleeper became the NCBJ’s new Executive Director in December 2013. Jeanne brought a new level of internal accounting to the NCBJ that has helped it manage costs. Jeanne and her team introduced new operating efficiencies within the organization and in the production of the Annual Conference, creating substantial cost reductions while improving service levels. One of those improvements is the NCBJ’s new, elegantly designed Annual Conference website, complete with its own blog, launched in 2014.

Cost containment pressures on the bankruptcy system exerted by the Judicial Conference continue to pose serious challenges. Reduced bankruptcy case filings, together with improvements in technology, have reduced the labor needed to handle the smaller number of cases. At the same time the decreased filings have reduced bankruptcy court fees as a revenue source for the judiciary. The Judicial Conference’s diminished allotment of funds to bankruptcy courts is a source of considerable tension. Presently, the Judicial Conference’s cost containment efforts for the bankruptcy system appear to focus, at least in part, on shared administrative services (“SAS”) (sharing clerk’s office personnel between more than one clerk’s office); initiating a pilot project to study consolidations of nearby bankruptcy court clerks’ offices across judicial districts (known as horizontal consolidation); and designations of bankruptcy judges to serve in any district adjacent to or near the district for which such bankruptcy judge was appointed, in accordance with a new Judicial Conference Policy adopted in September 2016. Also under consideration is the establishment of regional bankruptcy court clerk’s offices to perform certain clerk office functions with respect to bankruptcy cases pending within the region.

Mary Grace explains that “as an organization we need to stay vigilant with respect to actions that disproportionately impact the bankruptcy courts as opposed to the other court units. This requires diplomacy and fact development which the NCBJ must continue to muster.” For example, in the face of recent significant disproportionate SAS cuts to the bankruptcy system — reduced budget allotments that assume a certain level of SAS cost savings — the NCBJ’s cost containment committee developed statistics on savings achieved by SAS. The work of that committee together with the NCBJ’s encouragement of SAS, where appropriate, has proved influential in stemming the tide (as least for now) of SAS cuts to bankruptcy budgets. AO Director James C. Duff has recognized the NCBJ’s leadership (and that of the bankruptcy courts) on cost containment and technology issues.

Perhaps the NCBJ’s greatest accomplishment of the last several years was its salary restoration litigation. Spearheaded by Barbara J. Houser (N.D. Tex.), the NCBJ and its dedicated litigation committee developed a strategy, selected excellent counsel, and financed the litigation costs of the named plaintiffs in the commencement and prosecution of a class action in which the named plaintiffs mostly were the NCBJ leadership and former leadership. The litigation resulted in bankruptcy judges receiving up to six years of back pay, a pay adjustment of $20,092 per year, and linkage of bankruptcy judge cost of living adjustments (“COLAs”) with federal government civil service employee COLAs.

2016 NCBJ Annual Conference in San Francisco
Mary Grace Diehl (N.D. Ga.; NCBJ President 2015-16) and Robert E. Nugent (D. Kan.; NCBJ President 2014-15), taken at the 2016 NCBJ Annual Conference in San Francisco

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