Ep 25 - How To Get Paid w/ Ed Cross

0:02 Welcome back to another episode of the MRM Podcast. I'm Chris. And I'm Brandon. Join us as we discuss business, life, and legacy. It's business time. Christopher. Yes. You realize there's now really one person in my life that calls me Christopher. Well, and I did this once before. And it's pretty rare, actually. It's been a while since she's called me Christopher. Now we're talking about your mom? Yeah, I'm talking about my mom. Okay. All right. I don't mind it, though. You can call me Christopher. Christopher. So today's guest, I'm friends with a lot of attorneys. I like attorneys. Oh, man. I've never been on the wrong side of the table with an attorney. I think that's, you know. This guy's a hoot.

0:43 Yeah. Bye. I think this was really the first time that you and I've had a personal conversation with. Yeah, absolutely. Yeah. Yeah, for sure. And I think I was very pleasantly surprised at just how funny and... He loves his job. Oh, man. Like it just, it comes out, it's written all over him. And we are not saying any of this to take away from the seriousness of what he does and the value that he and his team bring and what he does for our industry. I mean, quite honestly, it's like you listen to this show, you're going to end up, I think kind of coming out at the end and being like, man, I just, I want this guy in my corner. Oh man. You know, it's a, without a doubt. I mean, anytime you hire a professional, right.

1:24 You want the one that is just, they, they salivate over the work. Yeah. And that comes out a little bit. Like Ed is passionate. He's passionate. So yeah, that, and of course, towards the end of the podcast, we were just like, um, I think people are going to want to reach out to some of you after listening to what my rights are and some of the legal levers that I can proactively pull to put myself in a better position come invoicing and collection time. Because boy, we see it all the time amongst clients and prospects and the conversations happening online.

2:04 We, speaking to the restoration contractors, are frustrated. Yeah. Right. And some of you that are going to listen to the show, right? You've had this experience over and over and over again. You invoice $100,000 and the insurance company comes back and says, we're only paying 70. Really? Based on what? Right. And we get into that with Ed. It's a lively conversation. And he tears it up. I mean, in the best way possible, he tears it up. So obviously, you guys, it's Ed Cross is going to join us today. Attorney, a very gifted attorney, an attorney that makes it his profession and his focus to represent us as restorers when the time arises. And then, of course, plays just a monster role with the AGA.

2:46 And for many of us, we may not understand the AGA and the role that it has in our industry and for us and on our behalf as restorers. And so we're going to dive into that with each other. Just a huge resource of that that's been developed by the RIA. I think the other thing that really stood out for me is I think we get a very simplified view of what attorneys do. And I think just the dollar signs start to fly. Right. So I think we just perceive we either don't have the resources to hire somebody to advocate for us. And, you know, that comes up. this isn't about suing every client that won't pay your full invoice. There's some tactics and some approaches he talks about that I think are a lot more accessible and can get the same thing accomplished without all the headache and cost.

3:32 So it's kind of funny to hear about that too. No, I loved it. Now, he did talk about RIA and their convention in April. So we will throw some notes, some details on that in the show notes. But do you want to just kind of give the... Yeah, because he's passionate about RIA and I understand it. Sounds like the resources and tools they provide are pretty rad. Yeah, RIA's 2022 convention, April 11th through the 13th. Apparently a pretty nice resort, the Pepper Mill Resort and Spa in Reno, Nevada. So I think that's something you and I are probably going to want to be at and probably something the rest of you should look into as well. Yeah, in general, get online, check it out. Again, it'll be in the show notes. some amazing resources that he notes during the show that you can take advantage of.

4:12 But sit down, buckle up, lots of information and it comes quick. Yeah. Admittedly, we had a tough time keeping up at times in this conversation. I mean, Ed is just... He's a firebrand and a real fun guy to talk to. So absolutely. Let's go. Here we go. All right. Hey, thanks so much for joining us, Ed. We're excited to have you on the show. Now, you're the scrappiest... of our guests so far. And the reason I say that is that you're the first guest that we've had on the show that I think at least from our perspective, tends to be a bit more on the offensive. You're doing battle for the industry. So we're excited to get your perspective. I think so many of us at Restorers feel like we tiptoe around some of these subjects.

4:54 And you've got the freedom to be a little bit more aggressive. And I think we're excited to hear that. So welcome. Oh, yeah, you'd have to work pretty hard probably to disappoint us. So, hey, let's get started by... I know a lot of people probably that are listening, they have at least some perspective on your background. But let's start there. Give us an idea of what it is that you do day to day because you're a businessman, you're an attorney. What are you doing there? How is that tied into your relationship and your role with the AGA? Let's start there. So I'm an attorney and I represent restoration contractors and I've done that since 1997. That involves the drafting of contracts and the enforcement of contracts.

5:37 My mission is to help restoration contractors get paid and I deal heavily with pricing issues, fair market values, policy exclusions, all that kind of stuff. And then when we go to enforce these contracts, then we often have to end up defending things such as workmanship claims. So I'm kind of working both sides of that. I started on the other side suing contractors on behalf of homeowners, did that for a bunch of years, handled a lot of mold cases. And now I'm doing this and I'm very active with the Restoration Industry Association as its advocate on behalf of the Advocacy and Government Affairs Committee. So what brought you to the other side of the table?

6:18 So you said you started coming after Restore. So what was the switch? Yeah. So I had filed a couple hundred mold indoor air quality water damage lawsuits. And in a bunch of those, restoration contractors were the defendants. And so what they did is they offered an opportunity for me to to come and speak at some of their conventions. They said, come give a presentation as to what we need to do so that you won't sue us. And I did. And I got to know them and they started offering me work. And I liked that. I kind of pictured myself eventually getting onto the corporate side of things because I worked for my dad, who was a contractor for 10 years before I went to law school, So they offered me work.

6:59 I really liked the mentality. I liked the practical way that restoration companies approach business and approach legal issues in an unemotional and professional kind of way. They're great to work with. They're fun people. And I'm really blessed. I get to work on interesting issues with people I like. Right on. That's solid. I don't know that all of us can say that we're always doing just that. So that's cool. One of the questions I had leading up to this, I was really excited to have this conversation because I come from the insurance background. So I actually spent roughly eight years working with State Farm companies. Five of those years owning an independent agency with State Farm.

7:41 So I left State Farm back in 2012. And there's a lot of changes happening in the industry around that time I left. But one of the things that I was always really proud of as an agent was State Farm's claims handling. I was out there selling promises. And consistently, for about five years, I saw just one happy customer after another. As an agent, you only see a handful of major structure losses a year. But I was really proud of the fact of the way I saw State Farm handle those claims. In fact, there was this old adage that got batted around within State Farm in terms of their claims culture. At the time, it was, we'll pay every cent we owe and not a penny more.

8:24 And I was proud of that. I was like, hey, basically State Farm does the right thing. And that was the culture I was raised up in in the insurance industry. And ultimately, I decided to leave. But I was really proud of that. And I still every once in a while encounter customers that had claims and they were really grateful for my role in that. Little did they know I had a little role in it. But I'm curious. That's nine years ago. From your perspective, what's changed in the industry? Yeah, so there is increased difficulty on the part of restoration contractors to get paid a fair amount for their work. And we can debate what the genesis of that is.

9:04 Things have become unnecessarily adversarial. One of the things that makes my work nice and gives me access to a lot of information is I do a lot of speaking engagements and I go in front of a lot of groups of various team restoration contractors and I conduct these informal polls. And I will ask them by a show of hands to tell me, for example, are they really seeing an increased difficulty in getting paid in recent years? And I did one of these a couple of months ago to a very esteemed group of contractors. 98% of them raised their hand in response to that question. 20% of them thought that the problem was severe.

9:46 And they said, almost all of them reported, about 99%, that there's a widespread problem of insurance companies actually ending up being the ones to make the decisions about what work is going to be done to restore a property and, and what's going to get paid for it, where we know that that should be an agreement between the contractor and the owner of the property. So we're not here to pick a fight with the insurance companies. We're here to see to it that a fair price ends up getting paid. There are bad actors in every industry, in my industry, in your industry, in the insurance industry, And those are the ones that I really focus on, trying to get some of these problems corrected.

10:31 And the insurance industry has gotten away with these practices more and more. And it's like a kid who cuts class in high school. He may do it the first time and be kind of scared, but once he's done it two or three times, he kind of becomes desensitized to it and it becomes normal. It becomes accepted behavior. And then you get things like Seth Harrison was reporting in your excellent interview with him. We've got insurance companies saying, well, we don't pay for that. That's their explanation. Whereas the claims handling regulations require them to give reasons. They have to give factual and legal bases. for their claims handling decisions.

11:12 And I want to encourage everybody to take a hard look at the insurance policies that are at play on those particular losses and see if there actually is an exclusion. So I'm litigating a case right now against Allstate insurance. This is in the public record. And the Allstate adjuster said to my restoration contractor client, Allstate does not cover overhead and profit on mitigation and contents. And my client has a bunch of claims where Allstate did cover overhead and profit on mitigation and contents. And so we've got some of these adjusters who are kind of cutting corners, don't necessarily understand the nuances of the policy, and are just kind of sui sponte making up exclusions that don't even exist in the policy.

12:03 And so that's really a problem. And then another problem that the vast majority of restorers have reported me in response to these polls that I take is that they do not believe that the policyholders have the money, the wherewithal, or the energy to pursue their rights under the policy to force the insurance company to pay the fair market value of the work. The problem is particularly bad where the property has already been restored. My house is brand new. My house looks great. It smells great. And I don't need you anymore. All right. I needed you. And I was on my best behavior on day one on the claim. Boy, I was desperate and you came to my rescue. Thank you so much for that.

12:43 But gosh, you know, this insurance company, I don't know how to deal with them and I don't want to hire a lawyer. And it puts the restoration contractor in a difficult position of having to decide whether or not to sue a valued customer or are they really valued if they're not paying? That's another question. Oh boy. That's probably a whole lot. series, right? But I want to hang there for a second because... Let's hang there. You're not wrong, man. That poll that you're doing where we're hearing these 98% of contractors are saying, no, it is a fight to get paid. And that seems to just be this most common... common complaint, frustration, whatever that we're dealing with. And it's funny, it's so true in the sense of, but where are these things actually written out in contractual language?

13:29 Where is it that they've got this kind of dog in the fight or this data that they can use to support that decision making? And I think most of us as contractors know that in our mind, we're like, I know it's not written in that language. I know it's not there. I have my own homeowner's policy. I know there's no such thing in there. But what are we doing? You talked about this breakdown possibly in the relationship with the client. Over time, they've gotten what they need from us. That relationship's not quite as vetted as it used to be at one time. What... what are we supposed to do? Like, we know it's not right. We know that that's not contractually based those decisions, but what is, what is a restorer do in those fights?

14:11 Like, is there something besides just bringing in Ed and the team to go to war or what other things can we be doing now? Yeah. Right. So a big part of my practice is actually litigation avoidance. And that's something that I found as fertile ground in a way that I could really help my clients and build sustained relationships with them. And what we want to do is be able to put information in front of the senior executives at these insurance companies to help them understand what their people down in And a necessary factor of large industry is that the people at the top don't understand what the boots on the ground are doing.

14:54 And there's a major disconnect, particularly at the insurance companies, between the C-suite and the adjusters. And, for example, Mike Fulton of Exactware has assured us in a recorded RIA industry briefing. that the message has been conveyed to the senior executives at the insurance companies that Xactimate is not intended to be used as global pricing, but there is, in fact, a problem that that's not trickling its way down to the adjusters, who are then carving a wide swath through these claims, sometimes overly aggressively and making these kind of overly simplistic decisions that they shouldn't be making.

15:38 And so we see this problem. And the best way that I have seen in my practice to deal with it is when we have an assignment of insurance rights. The insurance policy will indicate that it cannot be assigned, but What the courts in almost every state say is once a loss has occurred, the right to collect money under that claim can be assigned. That gives the restoration contractor the ability to step into the shoes of the policy holder and enforce the provisions of the policy that require the insurance company to pay the reasonable and customary value of the work. In other words, the fair market value of the work.

16:21 And that's the discussion we want to be having. We want to be understanding what the prices are in the market and making sure that the insurance companies understand that and that they are hearing the word directly from Exactware that Exact domain prices are... not intended to be global prices. And if you take a look at the ExactWare end-user license agreement, it makes very clear, ExactWare doesn't guarantee the accuracy of its pricing. What they are doing is reporting on their interpretation of data that they collect. They are not... stating that they are collecting all data for all, what is it, 20,000 line items for the thousands of markets across the country?

17:04 Think about that for a second. Is that really possible? Is it feasible for a company? As of a couple of years ago, Xactimate had 750 employees. Let's assume they have 1,750 employees now. Is it conceivable for them to collect data on 20,000 different line items for thousands of markets across the country and update that every single month? I don't think so. I don't think that's feasible. I think you'd need an organization almost the size of the federal government in order to be able to do that. Yet they put out these monthly price lists, which adjusters misinterpret as a monthly price update. What you have to do is you have to go into exact analysis and pull an industry trend report and you can see what the prices have been over the last five years.

17:50 And for a number of items, you'll see that the prices have been flat, that they haven't moved. indicates that there hasn't been a survey. And we need to have frequent surveys and adjusters need to understand that just because that price list has come out this month doesn't mean that those are the brand new recent prices, particularly when we have major cat losses, big weather events, like we had the big freeze in Texas. this year. And it changed everything with materials and the availability of labor forces and whatnot. And so what exact where is reporting naturally has a lag. And what they put in their license agreement is they're reporting historical data. And that may be old information, but the insurance adjusters don't always understand that or don't want to understand that.

18:36 Out on top of that, the fact they're inventing their own exclusions, like we don't pay for that. And restorers need to unite and get together to fight back against these things. So the Restoration Industry Association published a reference guide to the law of assignments of benefits and insurance bad faith for all 50 states. And that's something that members of RIA receive as part of their membership so they can be armed with the law that helps them. So they can take that to a lawyer and formulate decisions. their own strategy that's suitable for their company to decide how they're going to approach these issues. And you want to take into account any existing contracts you have in place, what your franchisor, for example, has committed you to contractually, if that limits you.

19:25 in some respect, your ability to get an assignment or TPA agreements, those sorts of things. But it's something that restorers in my law practice have enjoyed a lot of success with because then the insurance company cannot refuse to speak to you and say, oh, well, this is something between you and the insured. No, I am the insured now and you need to respond to me and I'm prepared to enforce my rights. Wow, that's an interesting topic. So before we go there, though, You made a distinction between decisions being made in the field by adjusting staff and C-suite executives. My impression, right, from limited perspective, I'm sure, has always been, I find it hard to believe that adjusters are making decisions like this independent of influence of leadership within the organization.

20:14 Is your perspective that no, this is literally just individuals, different personalities, things like that, making off the cuff decisions or experiential decisions from their careers that are independent of leadership and direction from the chain of command within these carriers? Well, according to the president of ExactWare, the message that ExactWare is presenting to the leadership of the insurance companies isn't always making its way down to the adjusters. And I've seen that, I mean, in companies in different areas. industries where, again, the guys at the top don't know what's happening down below. So maybe they don't want to hear it in the C-suite or maybe they convey it down to middle management and something gets lost in translation before it gets to the boots on the ground.

21:01 It's like one big telephone game, right? But I know some former adjusters who talk about the very, very limited training that they receive when they got on the job. And do they really have the skill to engage in this policy interpretation that's so incredibly important to people's lives? I have a friend down the street who just had a major crisis. water loss in her house. And the adjuster is giving her the runaround every which way from Sunday. It's terrible. Kind of inventing things, wielding a very heavy hand, refusing to pay the fair market value for the work, making extremely unreasonable limits on additional living expenses, saying you've got to finish the job.

21:43 By the end of next month, when there's no contractors available, we're going to cut off your ALE. I mean, it's a problem. And so it needs to be addressed on two levels. One is on a claim-by-claim basis, and some policyholders benefit from having a public adjuster or an attorney deal with that. And then it needs to be dealt with on a national level as well with organizations like the RIA and, most importantly, for restoration contractors to get together. to unify and to compare notes, come up with a cohesive, logical, focused, step-by-step method, a plan to deal with these things and then carry out that plan. Is that a big part of what AGA is doing, or at least is that a part that they're playing in this unification or starting to get these voices more aligned in what we're saying?

22:28 That is the centerpiece of the AGA movement, yes. What drew you to that? Well, I was invited to start the AGA. And I was very humbled to receive that invitation. I was interested in it because it directly addressed the issues that I was dealing with day to day in my law practice. And I really liked the idea of being able to address this stuff online. on a national level because I was getting a call every day or every couple of days from restoration contractors and different ones had different ideas about how they were pursuing these problems. They were going in different directions. And some of them had strong arguments and some of them had weaker arguments.

23:12 And I thought, you know what? If you guys could get together, compare notes, and come up with some consensus positions to present on this, you're going to be in a much stronger position. And so they did that, and we formed the Advocacy and Government Affairs Committee, and then we formed a number of subcommittees to deal with certain issues. And we brought in subject matter experts on pricing, on third-party administrators, on third-party consultants like independent adjusters and bill reviewers who come in, people who are dealing with these issues on a high level, on a day-to-day basis, and are truly experts in those particular fields. And I had the incredible feedback benefits and honor to be able to be part of all of these meetings and listen to some of the best people in the industry talk about these problems and the best ways to address them.

24:03 And then we create position statements that restorers can use in their discussions with with all of the various stakeholders in the ecosystem. And these position statements are heavily vetted, they're heavily researched, they represent the consensus of a large group of people. The task force, the subcommittees that do the research, they put it all together. I help them write those, I help them edit those, then it goes up to the AGA committee for further review and analysis and feedback. And sometimes there's more editing and revision that goes on at that point. Then once the AGA approves it, then it goes up to the RIA board of directors for more review. And each time we're drafting a position statement, whether we're dealing with pricing, third-party administrators or third-party consultants, we bring in those third parties to look at these.

24:51 We are about to publish this paper. This is our position. Take a look at it and give us feedback. And they do. So, it's not just a process of a bunch of contractors coming up with a wish list. This is what we'd like to have. It's something where we've collaborated with the stakeholder who is the subject of the position statement. And we're very grateful, for example, to JS Held, the prominent consulting company, for the feedback that it provided to us and that we incorporated into our eight position statements as to how contractors can deal with third-party consultants, independent adjusters. And bill reviewers who come in to take a look at these invoices and scopes of work and sometimes play Monday morning quarterback and give them the restores some tools to deal with that and to push back against that.

25:39 And those position papers are all included with an RIA membership, which pays for itself on day one. Yeah, no kidding. So I guess that's probably the other question there. I don't know that many restorers know this information is available, which is silly, especially in our day and age with so much information available. But literally, what I'm hearing is RIA members, to beat this horse, they've got access to this stuff. And this is stuff that teams can literally take to the field with them and deploy in a professional way to support arguments or their stance or for them holding their ground on their invoicing practice. Is that accurate?

26:20 Yes. And RIA is taking it to a new level thanks to the generous support of the AGA investors. we've developed what's called the AGA Academy. The AGA Academy is the training program where we teach restorers how to use the position statements, the surveys, the reports, the videos, all the different pieces, and incorporate that into their daily practice. as part of their routine. And in some instances, it'll be as simple as just pasting a paragraph out of a position statement in an email that's going to an adjuster. Sometimes it consists of sending the entire position statement to an adjuster.

27:01 Sometimes it's something to have handy as a script, something to look at when speaking to an adjuster. If you've got, for example, our 50-state reference guide for the law of assignments of benefits, you can look at it and you can see some of the things that the insurance companies are allowed to do and not allowed to do. And so many adjusters across the country do not understand the law relating to assignments. They're just dismissive of it. And I think in their defense that their supervisors have said, oh, no, we don't honor assignments of benefits, and they just reject it. It's like, oh, no, that's between you and the customer, not even realizing what the law is. And I know this is true because in many instances, even with big insurance companies, when I submit an assignment of benefits to them and I say, OK, the contractor now holds these rights, I get letters from very...

27:52 very accomplished veteran insurance litigators who say, I have never heard of the kind of sweeping rights that you're asserting in this letter. Please send me your authorities for it. And I send up multiple citations to California statutory law and case law. There's robust authority and it's old. It's multiple decades old that are in support of this. And they're like, wow, I didn't even know. And they changed their position. This has happened many, many times over. Wow. So they may not be the same, but AI, Actionable Insights, also is treating their role similarly in the sense that they're looking for getting professionals from both sides of the table to talk about pricing, to talk about what's fair, to build into our scopes.

28:35 And they are also providing things like white papers and documentation to include in F9 notes support and things like that, which I think is also super powerful for people to use. But there's this expectation, I feel like, that us as restorers, we need to understand is that our responsibility for becoming more technically competent in regards to how the legal language affects our processes and our tools and our resources, that bar is getting raised, it feels like. Do you see that happening from your perspective? Is that what we need to adopt as a mindset of, we just need to be better prepared to support what we're submitting because the cowboy days are over?

29:20 It's absolutely true. I mean, I couldn't agree with you more on that, Brandon. And people really need to get educated because they're up against very, very organized forces. The insurance industry does a lot of things, in my opinion, not very well. But one thing they have done well is to organize their apparatus in a way to create as many obstructions as possible between the restoration contractor and the money. And there's all of these hoops that they need to jump through. And then you add the TPA component on top of it. It makes it even more difficult. So education is key. And people on both sides of this, the restoration side and the adjuster side, are undereducated on a lot of these points, like primarily the assignment of benefits and the fact that an insurance company is responsible for paying fair market value for the work.

30:15 And so we want to fight the fear with the facts. and get as educated as possible. And Actionable Insights is a phenomenal organization. I very much enjoyed listening to the podcast interview that you guys did with Watley and Seth Harrison. I have the utmost respect for those guys. I thought you did a phenomenal job questioning them, did the deep dive. I learned a lot from that. I'm like taking notes and stuff like this. This is This is really good. And I know those guys. I work with them quite a bit. I learn a lot from them every single time. And they're fantastic. And other people like Ben Justison and Chris Resnowski and just so many others who are involved. I think that these are great sources of information that people need to turn to for learning.

31:00 And it's changing. The circumstances from six months ago are not the same circumstances we're dealing with today. All right, let's take a minute to recognize and thank our MitResto Mastery sponsor, Accelerate Restoration Software. And I'm fully aware, by the way, that when I say those last two words, restoration software, that that instantly creates heartburn for some of you out there, right? Because we probably all fall into one of two camps when it comes to software. We've either cobbled together kind of a version of free website tools and spreadsheets just to make our business work Or we're in the camp where we've adopted one of these existing restoration platforms, you know, one that has all the bells and whistles and supposedly does it all.

31:48 But we can't get our team to consistently adopt it and input information to it. Yeah, and that's really where Accelerate has honed their focus. They've created a system that's simple, right? It's intuitive, and it focuses on the most mission-critical information, i.e., guys, your team will actually use it. Let's talk about sales. After years of leading sales and marketing teams, the biggest trick is getting them to consistently update notes about their interactions with referral partners and clients. And the essential piece there is there's got to be a mobile app experience. The solutions that were previously out there were just too cumbersome and tricky to use.

32:32 Yeah. Imagine, guys, how your business would change if your entire team was actually consistently using the system. Do yourself a favor. Go check these guys out at xlrestorationsoftware.com forward slash MRM and check out the special offers they're providing to MRM listeners. All right, let's talk about actionable insights. Owners, GMs, you can't be your business's expert on all things estimating. You might've been three years ago when you were writing sheets in the field, but the industry's always changing and so are the tools. If you're the smartest person in the room when it comes to Xactimate and Matterport, how does that scale? You're the bottleneck.

33:13 I know I'm preaching to the choir, but this is where actionable insights comes in. They're a technical partner that can equip your team with the latest bleeding edge information and best practices and then update them with webinars and training resources when the game inevitably changes again. For this reason, we recommend actual insights to all of our clients. Yeah, three of the kind of big things that stuck out to me when being introduced to AI and their team. First off is this consistently updated training. I mean, at the end of the day, these guys are the experts. They're out front all the time. They're constantly learning new trade secrets and ensuring that your team's got access to those things. A 3,700 plus page database of Xactimate templates.

33:56 I don't know what else to say here other than don't reinvent the wheel. It's already available. Download it, copy it, use it, bam. database of commonly missed items. I think this is huge. So many of us can change the numbers by just moving the needle a couple points and those commonly missed items can make all the difference in the world. So go check them out at value.getinsights.org backslash fcg. In terms of your informal polling that you're doing at your various events and things like that, in your experience, how many companies are routinely leveraging that assignment of benefits action in order to take a more direct approach with the carriers.

34:42 Because we hear this all the time. It feels like normalized language now that we'll hear contractors say, Well, we just invoiced for $1 million of work we did in the Gulf or XYZ location. But who knows how much we'll get, right? They're fully expecting that that invoice, that AR, is going to ultimately only collect, say, 70% or 75%. I mean, it's just something I think that much of the industry is just accepting that that invoice is going to get whittled down. In your experience, though, how quickly is this changing? How many contractors are you finding that are consistently using this assignment of benefits to be able to have more authority in that collections process?

35:25 So before the RIA rolled out its 50-state reference guide to the assignment of benefits, which is available to the members on the website, it was a pretty small number of companies. But what a lot of people don't realize is some of the biggest names in the restoration industry have had assignments of benefits in their restoration contracts for years and years and years. They do thousands of jobs every single year across the country using these contracts. I know because I wrote… And a lot of them had them in the drafts of their contracts before I started writing them.

36:05 And they're not very public about the fact that they're doing it. But take a look at some of these contracts from these larger companies. But the issue has been awareness. People don't understand it. What is this? How is it going to work? Is it going to make me look bad in the eyes of the insurance company? This isn't something that should make you look bad in the eyes of the insurance company because it's exactly the same thing that doctors do. If you have medical insurance, your doctor gets an assignment of your health insurance benefits. This is a normal thing. It's okay. The doctor's allowed to build a health insurance company directly. I see that as a benefit. I see that as a convenience. I don't want to chase the insurance company for money. I want them to go do that.

36:47 I don't pay anything to a doctor until I get my explanation of benefits, my EOB in the mail. And it shows this radical discount that they took off the doctor's price. It's like, cut the price in half. And then they pay a piece. And then there's a little piece left at the bottom. And that's what I pay. And I like it that way. And I fill in my credit card number on the little form and I send it in and it's relatively clean and easy. And people trust doctors because they wear a white coat, right? So therefore they are trustworthy. That's why I wore white today. White shirt, that's right. Everybody will believe every word that I say. I noticed the two of you are in black. I'm not gonna get into that, but that's fine.

37:29 So now the RIA has published this far and wide. And in Orlando, I taught the first session of the AGA Academy. And that was all about the ways to implement assignments explaining what they are and ways that these can be used to still protect the restoration contractors' reputation with the insurance companies. And with the policyholders, there's just nothing nefarious about it. You're just trying to get paid. And the biggest problem of all is the policyholder runs off with the insurance proceeds. They go to Hawaii or they use it to pay off the mortgage. Thank you very much, Brandon and Chris.

38:09 I appreciate your help. The house looks great. Terrific. So sorry, I got no money to pay you. And you're kind of stuck in a bad spot. So you don't want the policyholder to be able to do that. If you own those insurance proceeds and the policyholder does that, you can go back to the insurance company and make them pay a second time. And that's really, really powerful. I've done it a bunch of times with some major... insurance companies. And furthermore, you're not letting the policyholder out of it either. And you actually have a tort claim against the policyholder at that point in the potential right to recover punitive damages. So they're stealing your money. Once you get the assignment, you own the claim. It's your personal property right. And if somebody takes it, okay, that's a theft.

38:52 You can sue them civilly for theft. And most importantly to some, The debt to the restoration contractor cannot be discharged through bankruptcy because it's a debt that's procured by nefarious means. It's essentially a theft. And bankruptcy law does not exist to protect people from debts they incur when they have stolen money. That's not what those laws are for. Okay. So there's this powerful information that's being slung around here, Ed. So I'm going to say this is for my sake. I'm sure there's probably at least one or two listeners that need some of this dialed back to, but what steps do I take for right now? So let's think about this for the average restorer.

39:35 This is a smaller, privately owned organization, handful of employees. Maybe they're doing a couple million bucks a year. And they are continuing to face this confrontational negotiation table where it's just a matter of, look, I don't need to pay that. And I'm more than fine hanging in this space of gray for a long period of time. You, however, have to sit on this $22,000 invoice with your appropriate costs already leveraged. And quite honestly, I can outweigh you. So what do we do? I'm the average confrontational stage that's been set. What do I do tomorrow to start having a healthier and more positive impact on these negotiations?

40:20 How do I protect myself? What do I do tomorrow? Yeah. Well, tomorrow, what you should look into is your rights to obtain an assignment of benefits. and an assignment of insurance rights as well, which includes the right to sue the insurance company. Not that you want to sue the insurance company, but the fact that you can sue the insurance company gives you an entirely different amount of leverage in these negotiations that take place. Get together with a lawyer who understands these issues, the ins and outs of it. In the And Louisiana, there's some limitations on what you can do.

41:01 If you're in those states, you want to understand those nuances. And if you're in a situation where you have a friendly relationship with your customer, but the insurance company simply has not paid the full amount and you do not yet have an assignment of benefits, you're not going to have a friendly relationship with your customer. You've already done the job. You sent the invoice. They chopped it by 30% or 40%. You're trying to figure out what to do. If the insurance company has underpaid, if the insurance company has not handled the claim according to the claims handling regulations, if the insurance company has unreasonably delayed or unreasonably underpaid on it, then the policyholder may have a right to legal action against fraud.

41:43 the insurance company for breach of the insurance policy or for insurance bad faith, potentially. And in many states, you can recover your attorney's fees for those. And so you can present that to the insurance company and say, look, we need to negotiate a better solution because this doesn't work. And then the other thing they need to do is they really need to get educated about pricing and how to price their jobs and go to some of these great trainers like we've referred to in this discussion here and make their own prices and stand by them. Get the research about what's happening in your market about what the real prices are. and do that with respect to materials as well.

42:27 And I received a spreadsheet from Mr. Anthony Nelson, who is a very skilled restoration contractor operating out of Hawaii with Premier Restoration. He's one of the thought leaders in this industry, in my opinion. And he has created a spreadsheet of links where you can go on to check from Home Depot and Sunbelt and others to see what their prices are for materials. And you can compare those to the prices for materials that are in the standardized price list to see if the price lists are actually giving the right information. And you can include a link to that particular site, that page in your F9 note.

43:09 And restorers are getting success with that. They're getting movement. And there's some material prices that are way, way off. And if you include this information, what I'm being told is insurance companies are looking at it. They're saying, you know what, you're right. And we are going to pay more than the price that's in the standardized pricing platform. I think that should be motivating for people is that there are decisions that we can make. There's tools available. There's resources that we can use to start having a much more proactive engagement in this negotiation process. And I think what's hard is that a lot of people, they're getting that pushback, they're feeling that pressure, and then they feel that stone wall that comes up in communication with the other party...

43:55 And they're just frustrated. They don't really legitimately feel like they have options to pursue. So I think just those two, three, four things are very valuable for people to consider and take advantage of. And I think it would probably just really reshape what the experience they're currently having, let alone to even dial in on some of these larger, more impactful things. Maybe as we wrap up here, I know your time is really valuable. We're coming up on our hour with you. How does an operator know when to engage someone like yourself? When should they call you and your team? What level of severity or is there a threshold where it makes sense to actually retain an attorney to go to bat for you in a situation?

44:41 Can you give some guidance on that? Sure. One of the problems that I've seen on a number of these cases is when the door gets slammed in the face of the restoration contractor. they really get aggravated, understandably so, and the email correspondence gets a little bit nasty. And so what I do to keep the door open is I create an insurance information authorization and release form. This is a document that's signed by the policyholder that instructs the insurance company to release claims information and a copy of the policy to the restoration contractor at the contractor's request.

45:25 We want to form an alliance with the policyholder and encourage the policyholder to allow our project manager to be present during all of the communications, the meetings, and the phone calls that take place with the adjuster when anything is happening with respect to the structural or restoration project so that nothing gets lost in translation. Now, what I have been doing a lot lately is ghostwriting emails on behalf of restoration contractors very, very early in the process. And a lot of my clients have understood that if they wait until things get totally unraveled, it's kind of hard to undo it after the fact.

46:10 And so it's a good idea. when you get a troubling email from an adjuster that really pisses you off to stop and count to ten and take a deep breath and not respond out of anger and go to a consultant or go to a lawyer and say, okay, I've got this issue here and how do I respond to it? One of the things that insurance adjusters do remarkably well, and you won't hear me put a lot of things into that category, is they write letters in a very unemotional, factual basis. Now, I disagree with their factual contentions and their conclusions a lot of times. But the one thing they are, one of the things they are really well trained at doing is writing these letters that are really succinct and pretty professional to the extent that.

46:58 that they don't involve a lot of shouting and a lot of adjectives. And so when restoration contractors wait too long to get a lawyer involved, they might start making personal attacks against the adjusters and doing this sort of thing. And so there are a bunch of claims. I'm letting a cat out of the bag right here, but I don't care. There are a bunch of claims that are being negotiated right now across the country where adjusters are being too heavy-handed and they are engaged in communications with these restoration contractors. And what they don't realize is that I'm writing the text of these messages that are going to the insurance adjusters, which my clients are adopting as their own statements.

47:42 And I'm using certain words to steer it in a certain direction to try to get a good result. And over and over and over, we get these radical outrageous, unlawful responses from these insurance adjusters. Cause I know kind of where the Achilles heels are. I know where to zero in on and they come back and they, it's become one of the most fun parts of my practice in the last six months. Cause these adjusters keep giving me these, these Christmas presents. You know, it's like, here's another statement. And we've got a couple of cases going right now. And I haven't come out of the bushes yet. They don't know I'm involved. They don't know I'm existing. And we've got one instance where they breached the contract in writing.

48:23 And then another one where they've acted in bad faith. And then. another one where they've interfered with the restoration contract. We got multiple torts, multiple admissions of breach of their legal duties right in writing directly from the adjuster. And then I come back with a follow-up question. We send that over and they come back with more. They double down on it. They triple down on it. These are really good files and we're going to be unleashing a bunch of them next year. And we're going to be doing a lot in my private law practice with respect to... to interference with contracts. And I think that's going to be something that insurance adjusters need to be aware of because a lot of restorers are losing business because the work is getting steered away from them for wrongful reasons.

49:07 reasons. So don't be afraid to have a short chat with a lawyer early on in the process and just kind of formulate a strategy. Just because you call a lawyer doesn't mean you're going to file a lawsuit tomorrow. I mean, I have files that I've worked on for a year and we haven't filed a lawsuit on them. The vast majority of files in my office, we never end up filing lawsuits on. And with some good phone calls and some letters, Most of the time, if there's a reasonable lawyer on the other side, we can get these resolved without having to go to court. Court's very expensive. It bogs down the system. It raises the stakes. It creates a whole lot of formalities that shouldn't be necessary. Are you seeing like when folks are submitting some white paper documentation or they're taking these links and adding them to their F9 notes, is it pretty common then normally?

49:54 Yeah. for that adjuster to kind of give in once there's some really good data that's being presented with your argument? Is more times than not, is that what's happening? Or do they tend to escalate once they've kind of started wrong, I guess? It kind of depends on what the issues are. And hopefully, we'll be able to take some polls on that once more companies have started to use these position statements and stuff. What I'm hearing is that there's good results getting adjusters to reconsider material prices once they get an F9 note that includes a link to like the local Home Depot, which shows, hey, the cost. of that material is 25% higher than that or whatever.

50:35 But on other issues, they're continuing to push back. And one of the reasons that we have a civil litigation system that some people don't realize, it's not just for the purpose of getting one particular plaintiff a result. It's also for the purpose of keeping big wrongdoers in check. If we didn't have products liability, if we didn't have trial lawyers to go out and prosecute these cases against the manufacturers of dangerous products, there would be way more dangerous products out there, way more injuries, way more tragic deaths that never needed to happen. Yeah, that makes a lot of sense. Okay, so this whole TPA thing, it just seems like it's the topic of the century.

51:17 Give us your 30,000 foot view of what TPAs are doing to the industry. And I'm not necessarily looking for the complaints of the TPA system, but it's more of a, just from your professional perspective, what's the impact? In light of that, what do we need to be cognizant of as restorers? Not just getting frustrated, but how's the game got to change a bit for us as we understand it based on this role of the TPA? When a loss occurs, there is a pie, to use a metaphor. And you can only cut that pie into so many pieces. The amount of money that the insurance company is going to pay is a finite amount of money.

52:02 And they are not going to pay more money as a result of the fact that a TPA is involved. And I do not believe that a TPA can present a strong value proposition to an insurance company unless they're representing it that the TPA program is going to save the insurance company money on some level. So let's keep that in mind for a second. When a loss occurs and the fair market value of that loss is $100,000, but the restoration contractor does not receive that $100,000 and there is a discount because there's a middleman involved who's getting a piece of the action, okay?

52:48 What should really happen? Let's think about that for a second. The policyholder is entitled to that $100,000 in value. And if the insurance company is getting a discount on that, who should enjoy the benefits of that discount? Well, guess what? The insurance policy does not say that the insurance company is entitled to a discount. And a strong argument can be made that the policyholder should be the one to get that discount. There is a real concern, what I believe is a legitimate concern, that the insurance company which is that the policyholder is not getting the full restoration project that they would get in the event that there were no TPA involved.

53:35 And I sit here and I wonder to myself, what would happen, God forbid, if I had a flood or a fire at my house? Who would I call? How would I handle it? How would I prevent so many of these problems that I hear people complain of day in and day out? Well, I would call my homeowner's insurance company and they would tell me what they wanted to do. And I would listen and I would try to be cooperative with them. If they propose to send out a contractor, which they probably would, I want to find out, is there going to be a TPA involved? Is that contractor part of a TPA program? And I'm going to go way out of my way to make sure that my claim to restore my house is It's not handled through a TPA program where there are considerable discounts being given and restoration contractors are being forced into this hole to comply with carrier guidelines.

54:29 Do the carriers come up with guidelines to benefit the policyholders? Do the carriers come up with guidelines to benefit the restoration contractor? and make sure that the property is returned to its pre-loss condition and done properly with materials of like kind and quality? Or could it be that the insurance company comes up with its guidelines under these TPA programs for reasons that lead to some sort of financial benefit to the insurance company? Well, if that's the case, the insurance policy already has a financial benefit to the carrier built into it. It's called premiums. I pay the premiums. I pay them religiously. And in exchange, they have a contractual obligation to me to pay the fair market value to return my property.

55:12 to its pre-loss condition. And I don't want somebody in here who is having to pay out a percentage and do the job on a discount kind of basis. When I refer a case to another lawyer here in the state of California, If the lawyer wanted to pay me a referral fee, which they usually don't, but if they did, they have to disclose that to the client. The law of the state of California requires lawyers to disclose to their clients when they are paying a referral fee to another lawyer because they want consumers to have that. This is part of transparency. It's like, okay… I have somebody coming to mow my lawn or file my lawsuit or fill the cavity in my molar, and they're working for less than the regular market value or what they would normally charge.

55:58 I want to factor that into my buying decision as a consumer. So you're a huge fan, Ed, is what I'm hearing. Well, so, Ed, I think, obviously, there's a whole industry that is frustrated with this dynamic. And I think listening to particularly your example of the ghostwriting service that you provide, there's probably a lot of contractors that are salivating. They're like, you know what? I want Ed on my side. what's the best way to engage you and your team? Like a contractor's listening. They've got some challenges that they want help with. They want you ghostwriting on their behalf. What's the best way to reach you and your team and to engage you guys?

56:39 You can take a look at therestorationlawyer.com. You can send an email to ed at edcross.com. Or you could just give us a call the old-fashioned way, but we still have telephones. 760-773-4002 is the number here in the California office. And we also have an office in Waikiki. You choose them well, my friend. You choose them well. So RIA as well, right? Folks need to go and participate in that group, be a part of that association and get the benefits... Get those resources. ...that come along with it. Yeah, I think that that's important for us to say as well.

57:20 Yeah. Ed, dude, thanks a lot, man. Thank you. I think the reality of it is I kind of want to keep geeking out. I'd like to connect with you again. I think so much of what you say takes me a few minutes to take in and then it has to bounce around in the globe for a little while before I fully understand what you've laid down. So folks, this one might be one that you go ahead and print out the transcripts on and probably come back and hit it with the highlighter because there's a lot of benefit for you and And feel free to let us know if there's questions. I have a competent team here who's ready to help and fill in the blanks. And I spend quite a bit of time talking to restorers and not billing for that time much to the chagrin of my CPA and my COO.

58:04 It's like, we got to collect on some of this time here. I genuinely enjoy it. the issues and the process of all of this and really enjoy the opportunity to be able to talk with guys like you who have an authentic interest in this and are really putting some thought into it. So thank you for doing this. Thank you for putting the podcast together and picking such a great slate of guests. And I hope everybody will check out the other podcasts you've done because it really looks like a terrific menu of information and data there. Awesome. Thanks. We appreciate you, my friend. And we'll try to get you back on pretty soon. Maybe next year we'll come to an on-site on the island. Yeah.

58:44 Now you're talking. Right on. Aloha. All right, everybody. Hey, thanks for joining us for another episode of the MRM Podcast. And if you got something out of it, share it with a friend, hit subscribe, hit follow, leave us a five-star review. Thanks a lot.