Bankruptcy Courts Recognized for Their Efficiency

The Judicial Conference of
the United States recently noted that productivity gains in the
federal
courts have been relatively modest except for the bankruptcy courts.
The
Conference reported that during the past 10 years, bankruptcy courts
have
seen tremendous productivity improving 46 percent from 1994-2003.
During
this period, the number of bankruptcy filings nearly doubled while
staffing
levels remained flat. The number of deputy clerks per 1,000 cases
dropped
from 5.8 in 1994 to 3.1 in 2003.<small>^{<a href="#1" name="1a">1</a>}</small>

</p><p>The Conference credited the Bankruptcy Noticing
Center (BNC) as one of the reasons for greater productivity in the
bankruptcy courts. The number of notices sent through the BNC in
fiscal
year 2004 totaled approximately 130 million. By fiscal year 2009,
the
Administrative Office of the U.S. Courts (AO) projects that the BNC
will
send out approximately 200 million notices. In addition, the use of
electronic noticing, along with declining contract pricing over the
remaining life of the current BNC contract, is expected to decrease
the
per-notice cost from 13.8 cents to 12.3 cents.<small>^{<a href="#2" name="2a">2</a>}</small>

</p><p>Since fiscal year 2001, BNC production has increased
by about 60 percent, from 81 million notices to about 130 million
notices.
For the same time period, bankruptcy caseload increased by 18
percent. The
AO determined in a recent study that the underlying reason that BNC
production has exceeded the caseload increase is that bankruptcy
courts
achieved significant operational efficiencies when using the BNC and
have
aggressively sought ways to do so in a climate of diminishing
available
resources. As a result, the bankruptcy staffing formula was reduced
by
14.08 percent.<small>^{<a href="#3" name="3a">3</a>}</small>

</p><p>While the BNC eliminated the need for courts to
prepare and mail notices locally, other efficiencies were gained
through
the creativity of local court development. These efficiencies
include
automatic form production, automatic docketing and filing of PDF
certificates of service.<small>^{<a href="#4" name="4a">4</a>}</small> In fiscal year 2004, these features
resulted in
8.4 million automatic docket entries and eliminated the need for
CM/ECF courts to scan all BNC certificates of service.<small>^{<a href="#5" name="5a">5</a>}</small>

</p><blockquote><blockquote>
<hr>
<big><i><center>
The AO calculates that over the past decade, the bankruptcy courts
improved their case-processing times by an average of 40 percent and
saved more than $1 billion.
</center></i></big>

<hr>
</blockquote></blockquote>

<p>Significant efficiencies in the bankruptcy courts
were made by local, court-developed applications that filled
critical
needs. Applications developed by the courts include automatic case
opening,
automatic discharge and closing, calendar programs, cash register
and
trustee ledger programs, the case-upload module, credit card
extract,
e-orders and sophisticated calendar programs. Some of these
developments
have now been successfully integrated into the CM/ECF software.
Others are
still supported by the courts.

</p><p>The AO calculates that over the past decade, the
bankruptcy courts improved their case-processing times by an average
of 40
percent and saved more than $1 billion.<small>^{<a href="#6" name="6a">6</a>}</small> Additional savings are expected
through reengineering of work processes, reorganizing functions to
increase
efficiency and continuing to develop and share local applications.

</p><hr>
<h3>Footnotes</h3>

<p>^{<small><a name="1">1</a></small>} Cost Containment Strategy
for the Federal Judiciary: 2005 and Beyond. Report of the Executive
Committee, Judicial Conference of the United States, Aug. 12, 2004, at
25. <a href="#1a">Return to article</a>

</p><p>^{<small><a name="2">2</a></small>} Cost Containment
Organization Review Bankruptcy Noticing Center Program, August 2004, pg.
5. <a href="#2a">Return to article</a>

</p><p>^{<small><a name="3">3</a></small>} <i>Id.</i> <a href="#3a">Return to article</a>

</p><p>^{<small><a name="4">4</a></small>} <i>Id.</i> <a href="#4a">Return to article</a>

</p><p>^{<small><a name="5">5</a></small>} <i>Id.</i> at 7. <a href="#5a">Return to article</a>

</p><p>^{<small><a name="6">6</a></small>} The AO calculates that
the FY '05 formula for fully staffing the bankruptcy
courts would result in 5,737 positions. Under the formula in place
in 1994,
that number would be 10,624 positions. The savings is 4,887
positions.
Multiply this by the current (and reduced) national average salary
of
$39,000, and you get an annual savings of $190,593,000. Multiply
$190,593,000 times 10 years and it exceeds $1 billion. (These
calculations
are estimated because work measurement factors used in calculating
the
formula changed several times over the years.) The author wishes to
thank
Barry Lander, NCBC President, for his contributions to this article.
<a href="#6a">Return to article</a>