Juristec

Debt Collections Legal Solutions

5383 South 900 East | Suite 103 | Salt Lake City, UT 84117(801) 361-0502 | www.juristec.com

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Table of Contents• Juristec Overview

– Comparison to Traditional Solutions– Value Proposition– Proven Results– Why Juristec?

• Appendix A: Market Direction– Increase in Debt to Household Income– Increase in Delinquency Rates– Increase in Debt Write-offs– Debt Collection Industry

• Appendix B: Juristec Details– Juristec Technology– Juristec Features– Security & Confidentiality– Juristec Tenets of Excellence– Management Team– Frequently Asked Questions

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Executive Summary

• Juristec automates the process of collection litigation to efficiently and cost effectively manage high volumes of bad debt.

• Our goal is to provide solutions for debt that is currently not being effectively collected including late-stage and small-balance bad debt.

• Our focus is on the needs of our clients and how we can enable them to capture value lost through bad debt.

• Our team has tremendous experience in collection litigation, strategy planning and consulting, and technology implementation for ASP services.

• Our mission is to provide best-in-class technology and services that will enable clients to better manage and collect their bad debt.

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Advantage in Debt Collection Over Traditional Law Firms

LowLow

High

High

Bad

Deb

t Bal

ance

Ability To Pay

$500

$5,000

$50,000

Clients Using Juristec

High-balance debtors have a greater likelihood of filing for bankruptcy and defaulting on their debt. Law firms typically settle for what they can get.

Low-balance debtors have a greater capacity to pay off their debt and can make manageable installment payment rather than defaulting.

Clients using Juristec are fundamentally better at collecting on bad debt because clients can collect on “affordable” debt.

WrittenOff

(“The Can’ts”)Juristec pushes the cost of each case down making it possible to pursue low-balance debtors that traditional law firms can not pursue

“The Won’ts”

Traditional Law Firms

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Current solutions for collecting late-stage debt are inadequate. Juristec significantly improves the effectiveness of collecting older debts.

*Based on five-year average of Peterson & Simpson’s debt collection law practice. Cases received by Peterson & Simpson are late-stage (8-14 months) and low-balance ($1,000-$1,250 average) and are focused mainly in Health Care. **Average reaches 35% when excluding skips.

A) Industry average for collections is 14% (ACA international).

B) The probability of collecting late stage debt is 72-87% less than collecting at an earlier stage.

C) With Juristec Clients/Attorneys utilize the effectiveness of litigation with the high volumes of collection agencies.

4%

15%

25%

Collection Industry

Late-Stage/Secondary Placement

Collection Industry

TotalEarly Stage/Primary

Late-Stage/Secondary PlacementCollection Through

Juristec*

10%

20% A

B

C

35%**

Advantage in Debt Collection Over Traditional Collection Firms

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The FTC continues to receive more complaints about third-party debt collectors than about any other single industry. The number of these complaints has been increasing steadily for a number of years, reaching nearly 70,000 in 2006. - Deborah Platt Majoras, Chairman, Federal Trade Commission

Complaints to the FTC

0

10

20

30

40

50

60

70

80

1999

2000

2001

2002

2003

2004

2005

2006

3rd-Party

In-House

Complaints to the FTC, In Thousands

Nilson Report (835, 857, 880)

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Collection Agency Traditional Law Firm Client Using Juristec

Collection Capabilities

Calls, Demand Letters (non legal), Credit Checks

Demand Letters, Litigation, Garnishment, Bench Warrants

Demand Letters, Litigation, Garnishment, Bench Warrants

Regulations Tightly regulated by FDCPA

Partially regulated by FDCPA but has many more options

through litigation

Partially regulated by FDCPA but has many more options

through litigation

Obstacles Under FDCPA, collectors can no longer contact if

debtor requests no contact. Does not take legal action.

Bankruptcy Bankruptcy

Contingency Fees 50% 33-50% 25-40%*

Collection Stage Early: 60-180 days Any Any (Typically late-stage: 180+ days)

Case Load 10,000-25,000 per year 200-500 per year 10,000-25,000 per year

Average Case Size 1,000 5,000 1,000

% Collected 10-15% 20-30% 20-30%

Comparisons

*By increasing volume of cases to a law practice and providing the means to process them, client can better negotiate legal fees with attorney.

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Juristec adds value to clients, attorneys and debtors. Enables clients to maintain a professional relationship with debtors through litigation.

Client

Attorney Debtor•Permits debtor to pay manageable installments without undue cost.

•Allows debtor’s payments and costs to be accurately posted and tracked.

•Reduces Attorney’s fees, for which debtor is liable, through efficiency.

•Provides due process to debtor through court.

•Allows debtor inquiries to be quickly and accurately handled.

•Allows client to capture 20-30% more of their bad debt.

•Lowers costs and minimizes losses.

•Retains control over handling of individual cases.

•Enables the collection of small-balance and late-stage cases.

•Includes checks to prevent legal errors, malpractice, and missed deadlines.

•Increases professionalism and decreases risk of counter suits.

•Allows attorney to handle greater caseload.

•Tracks all money transactions for auditing.

•Collates similar cases for efficient work distribution.

•Automates repetitive procedures to reduce processing costs.

•Informs client through real-time reports.

•Provides full audit trail of case work and payments.

•Enforces client’s procedures and policies.

•Extends the statute of limitations allowing client longer time to collect.

Value Proposition

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Compiles cases and generates batch of

demand letters. Demand letters sent

Summons and Complaint are

delivered by legal officer to debtor and is

filed with the court.

Debtor files answer with firm/court.

Summary Judgment

Pre-Trial / Trial

Judgment

Default Judgment (Debtor doesn’t

appear)

Supplemental proceedings:

Judgment extends statute of limitations from 4 to 8 years.

Attorney can garnish wages/bank account if

debtor is non-compliant.

Legal Process is Complicated

Judgments place liens on real property and can prevent debtors from obtaining further

credit.

Attorney

Debtor

Court

Client

Debtor receives demand letter

Payments made. Debtor is encouraged to pay off debt or set up payment plan at any

time during the process. Attorneys can move case along without undue cost or loss of

efficiency if payments are missed

Firm files with court.

In-House collections contact debtor

Debts not paid sent to legal team

Payment Received

Client can forgive the Debtor’s debt at any time in the process

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Juristec is the Solution

Juristec updates case proceeding quickly and

easily, assigns ticklers for further proceedings.

Juristec tracks time intervals and generates

filings for the court. Attorney has several

litigation options to obtain judgment.

Juristec tracks payment and creates ability for periodic payment from

debtors.

Juristec creates error-free pleadings completed in

one-step process. Cases can be sent electronically

to the court.

Client has access to Juristec database with all

case information. Database is backed up on a secure

network daily.Client

Attorney

Debtor

Courts

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Demand LetterJuristec automates all litigation procedures, tracks deadlines and payments.

Greater effectiveness when demand comes from an attorney.

PleadingsMost responsive debtors settle or make payment arrangements before going to trial.

Legal officer serves pleadings directly to the debtor. FDCPA prohibits other collectors from personal visits.

Trial/JudgmentCourt orders debtor to pay. Attorney can question debtor about personal finances.

Most cases are ruled in favor of the creditor.

Judgment allows attorney to take appropriate action against the debtor.

Post-JudgmentAttorneys may garnish wages or place liens on property to compel debtor to pay.

Judgments can prevent debtors from obtaining future credit such as home/auto loans.

43% Collected Pre Judgment* 57% Collected Post Judgment

Proven Results

*Based on five year average of Peterson & Simpson’s debt collection practice

When demand letters are no longer effective, litigation should begin.

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Proven Results – Case StudyJuristec ASP is a proven technology that has been used to collect over $75 million in late-stage collections.

Collected: $75 Million

Collected: $75 Million

Collections for Peterson & Simpson, Attorneys at Law

Total Remittances:$300 Million

Peterson & Simpson was a small, but very effective legal practice with two attorneys, one paralegal, a few administrative assistants and part-time file clerks.

The firm received 500 new cases per week with an average case size around $1,000, with $500 as the minimum. Cases were received between 8 and 14 months past due after several collection attempts had been made.

Each case was prosecuted to judgment and a debtor's exam unless paid or settled. Cases that warranted it were garnished. The office staff created a series of pleadings and letters with minimal input and without resorting to word processing, which provided a complete audit trail of pleadings and transactions. The firm allowed debtors to make installment payments; the program calculated a per diem interest rate. The firm was able to move forward on those who defaulted in payments without any loss of efficiency.

The platform allowed the firm to maintain a high level of professionalism in their practice, enforcing the office standard forms, eliminating human error, and automatically calculating interest, costs, attorney fees and balances. Judges appreciated the firm’s pleadings because of this efficiency.

The client received monthly reports including payments, costs, and important status changes. Development of the first electronic filing system with the Sandy Court in Utah increased ease of filing cases. The firm collected 20-30% of outstanding debt per year, double the average of traditional agencies.

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15%

25%

Collection Industry

With Juristec*

10%

20%

20%

Current Attorneys

Collection Volume

AB

CA) Most traditional collection attorneys are not able to handle large volumes nor low-balance debt. Because high-balance debt is often difficult for debtors to manage financially, attorneys face less actual collections and more bankruptcies.

B) Average collection for industry players is approximately 15% (ACA, 2005).

C) Only with Juristec can clients/attorneys utilize the effectiveness of litigation with the high volume practice of collection agencies.

*Based on five-year average of Peterson & Simpson’s debt collection practice. Cases received by Peterson & Simpson are late-stage (8-14 month) and low-balance ($1,000 average).

Proven Results“There is a unique power in utilizing the court; however, it’s certainly fair and effective to use a court to collect a debt which has not been paid after years of debt collection efforts in many cases.”- Adam Olshan, Past President of the National Association of Retail Collection Attorneys

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Juristec enables its clients to:– Capture revenue that has been written off to bad debt by the

client.– Focus on collecting a higher volume of small-balance and

late-stage debt.– Collect 20-30% of qualified delinquent debt through

litigation.– Increase the ease and professionalism of their debt

collection process.– Maintain oversight of the collection process. Allows client

to have adequate communication with customers and prevents over-zealous collection practices.

– Track and document each case and efforts for collection.

Why Juristec?Juristec provides both technology and services that allow clients to cost effectively litigate on a high volume of low-balance and late-stage bad debts while maintaining control of the case.

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Outstanding debt to Income“The household sector is much more exposed to consumer credit than it has been for a long time; in fact, than it ever has been. We are at a record level now of the ratio of total debt outstanding to household income. - Bill Hampel, Senior Vice President, Credit Union National Association

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Innovation in the financial services marketplace has given consumers many more choices, including an array of options for paying for goods and services, and these innovations, of course, have an impact on the willingness and ability of consumers to borrow money.

Federal Reserve Flow of Funds, Commerce Department

-

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

1980

Q119

80Q4

1981

Q319

82Q2

1983

Q119

83Q4

1984

Q319

85Q2

1986

Q119

86Q4

1987

Q319

88Q2

1989

Q119

89Q4

1990

Q319

91Q2

1992

Q119

92Q4

1993

Q319

94Q2

1995

Q119

95Q4

1996

Q319

97Q2

1998

Q119

98Q4

1999

Q320

00Q2

2001

Q120

01Q4

2002

Q320

03Q2

2004

Q120

04Q4

2005

Q320

06Q2

2007

Q120

07Q4

Debt to Household Income

Mortgage

Consumer

18

3.10%

7.40%

12.30%

19.50%

15.10%

42.70%

3.30%

7.40%

14.90%

23.90%

18.20%

32.40%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

1st Quintile 2nd Quintile 3rd Quintile 4th Quintile Next 10% Top 10%

Income All Household Debt

Debt to Household Income

Federal Reserve, 2004 Survey of Consumer Finances

“If all of the debt is held by people with really high incomes, it’s much less of a concern than if it tends to be concentrated in lower income groups.” Bill Hampel, Senior Vice President, Credit Union National Association

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Commercial Banks Delinquency Rates

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

1985

Q119

85Q4

1986

Q319

87Q2

1988

Q119

88Q4

1989

Q319

90Q2

1991

Q119

91Q4

1992

Q319

93Q2

1994

Q119

94Q4

1995

Q319

96Q2

1997

Q119

97Q4

1998

Q319

99Q2

2000

Q120

00Q4

2001

Q320

02Q2

2003

Q120

03Q4

2004

Q320

05Q2

2006

Q120

06Q4

2007

Q320

08Q2

All Business Residential Credit Cards Other Consumer

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Commercial Bank Charge-offs Rates

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

1985Q11985Q31986Q11986Q31987Q11987Q31988Q11988Q31989Q11989Q3199

0Q11990Q31991Q11991Q31992Q1199

2Q31993Q11993Q31994Q11994Q31995Q11995Q31996Q11996Q31997Q11997Q31998Q11998Q31999Q11999Q32000Q12000Q32001Q12001Q32002Q12002Q3200

3Q12003Q32004Q12004Q32005Q1200

5Q32006Q12006Q32007Q12007Q32008Q1

All Business Residential Credit Cards Other Consumer

The Federal Reserve Board

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Commercial Bank Charge-Offs

(5,000)

-

5,000

10,000

15,000

20,000

25,000

1985

Q119

85Q4

1986

Q319

87Q2

1988

Q119

88Q4

1989

Q319

90Q2

1991

Q119

91Q4

1992

Q319

93Q2

1994

Q119

94Q4

1995

Q319

96Q2

1997

Q119

97Q4

1998

Q319

99Q2

2000

Q120

00Q4

2001

Q320

02Q2

2003

Q120

03Q4

2004

Q320

05Q2

2006

Q120

06Q4

2007

Q320

08Q2

All Commercial / Industrial Real Estate Consumer Residential Credit Cards Other Commercial Real Estate

In Millions $$

Q2 ‘08: $20,461,000,000

The Federal Reserve Board

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Debt Collection“Debt collection plays a vitally important role in this system of consumer credit. Collecting on a debt, of course, benefits individual creditors who are repaid money they're owed, but it also has much broader economic benefits.

If consumers don't repay their debts, then sellers will seek to increase the prices of the goods and services to those of us who are paying to cover the cost, and if consumers don't repay their debts, creditors will be less willing in the end to lend money to consumers, and that will decrease our future purchases.

So, obviously debt collection plays a key role in keeping prices low and ensuring that consumer credit remains widely available across sectors of our economy.”- Deborah Platt Majoras, Chairman, Federal Trade Commission

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Juristec TechnologyJuristec Utilizes Cutting-Edge Technology to Provide Greater Security and Flexibility

•Oracle has proven to be the most reliable and most secure database in the industry. Used by more than 50% of the top Fortune 100 companies and the American Hospital Association.

•Combining Sun's Enterprise Servers with the latest Solaris Operating Environment delivers enhanced security, manageability and performance. Sun™ Open Net Environment (Sun ONE) is based on Health Insurance Portability and Accountability Act (HIPAA) regulations regarding encryption for privacy of patient records.

•The Java™ platform is the foundation for networked and Web services. Java's "run anywhere" technology provides a highly flexible and highly scalable solution.

•Intellivex: Through our Security Solutions Co-location Provider, Juristec provides a veritable fortress for our clients protected data.

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Juristec is a feature-rich application that allows attorneys and clients to manage the process of bad debt litigation.

Full record of all cases, payments and per case costs for auditing and reporting to attorney/client

Automated Transaction Archival and Reporting

Error-free summons, summary judgments, etc. completed in one step process

One-step pleadings

Tracks information on judges and courts and matches judges to cases

Court/Judge Database

Legal/non-legal staff can create error-free pleadings and updates though a secure access.

Easy-to-use, Multi-User Access

Debtor Management/Cost and Payment Management

Stores case work and allows instantaneous tracking and manipulation of cases on screen.

Case Management

BENEFITSSYSTEM FEATURES

Tracks payment and creates ability for installment payments from debtors.

XML Court Filing Court cases can be directly filed to the courts over the Internet

Juristec’s provides:•Security and reliability

•Increased professionalism and decreased errors of legal documents and pleadings

•Flexibility to handle high volume of cases with smaller debts

•Easy and rapid implementation with low maintenance

•Low-scale investment in technology or in-staff training

•One-step pleadings processing

•Real-time operating statistics and customizable reporting

•Auditable payment and transaction tracking

•Seamless integration on any operating system

•Secure and automated data backup

Juristec Features

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• Administrative Procedures to Guard Data Integrity, Confidentiality and Availability.

– Virus Checking– Security Testing– Awareness Training– Incident Reporting

• Technical Security Service to Guard Data Integrity, Confidentiality and Availability

– Role/User based access– Data Authentication– Automatic Log Off– Audit Trail

Security & ConfidentialityJuristec facilitates compliance between the Client and Attorneys to protect customer information.

• Physical Safeguards to Guard Data Integrity, Confidentiality and Availability

– Access/Biometric Security Controls– UPS (Uninterruptible Power Supply) – Protected data backup and storage– Data and equipment monitoring

• Technical Security Mechanisms to guard against Unauthorized Access to Data Transmitted over a network.

– Encryption Technology– Virtual Private Networks– Dedicated Firewall– Unique User Names and Passwords

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Juristec is an Application Service Provider (ASP) that provides technology to both Clients and Attorneys for the purpose of collecting bad debt through litigation.

•Enforces Client’s procedures and policies.

•Increases communication between Client and Attorney.

•Provides full audit trail of Debtor payments

•Includes checks to prevent legal errors, malpractice, and missed deadlines

•Greater Client control of individual cases.

INCREASESPROFESSIONALISM

GREATER SECURITY & SUPPORT

SIMPLIFIESCOLLECTIONS

BEST-IN-CLASSTECHNOLOGY

•High-level encryption standards

•Secure and automated data backup.

•Easy and rapid implementation with low maintenance.

•Real-time operating statistics and customizable reporting.

•24X7X365 monitoring and comprehensive contingency infrastructure.

•Provides document automation and one-step pleadings, which speeds the litigation process, eliminates errors and reduces costs.

•XML/EDI standards to import/export cases through a secure Web site.

•Attorneys work cases to collection and Clients monitor the progression.

•Payment and interest tracking system allows Debtors to make installment payments.

•Juristec provides a full technology solution for collection litigation.

•Manages all technical aspects including data and database management, firewall protection and encryption.

•Provides flexibility to handle high volume of cases with smaller debts.

•Proven technology currently in operation for 15 years managing 20-30,000 cases per year.

Juristec Tenets of Excellence

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Lawrence R. Peterson – Founder, President• Founding Partner of Peterson & Simpson Attorneys at Law• 30-year member of Utah State Bar Association • Member of the Utah Collections Bar Association• Certified Solaris/Sun Systems Administrator• Juris Doctorate from University of Utah

Brent Peterson – Director of Business Development• Manager for the Cicero Group• Manager at Bond Street Limited, LLC• Chief Analyst for Blackford Capital, LLC• B.A. from Brigham Young University, degree in Economics

Management Team

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Frequently Asked QuestionsWill we be subject to counter-lawsuits if we litigate on our bad debt?Juristec provides greater professionalism and eliminates errors from prosecuting each case. Client also has the ability to filter out any cases they feel may be in question.

What about those individuals that don’t have the ability to pay for economic reasons?Those individuals who do not have the ability to pay are virtually unaffected by the process because they typically do not have assets that can be placed under lien. Often times they can qualify for charitable contributions by the creditor.

Why aren’t collection agencies able to collect as much as we can with Juristec?Consumers know that collection agencies tend to make idle threats in suing the consumer but never do, and therefore, collection letters are typically ignored. With Juristec, consumers will receive a demand letter from an attorney and will be summoned to court if payment arrangements are not met. Consumers are much more compelled to pay when faced with a lawsuit and can be forced to pay when judgment is rendered

If we use Juristec, will we stop using our collection agency?Juristec is typically utilized for late-stage (greater that 180 days) consumer debt. Most collection agencies see their results fall the longer the debt is outstanding.

Documents

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