Executive Q&A: Amy Perkins Talks With Brad McCurnin of Harvest Strategy Group

In this episode, Amy Perkins, insideARM President, interviews Brad McCurnin, President of Harvest Strategy Group. Watch Amy's conversation with Brad, or read it below.

Amy Perkins:

Thank you for joining us for today's executive Q & A. We're really excited to have Brad McCurnin, President at Harvest Strategy Group, with us today to talk about what's going on in the litigation industry. Brad, I'm so happy to be here talking with you today. Let's jump right in. What has Harvest Strategy Group been up to and what do you guys do?

Brad McCurnin:

Thank you. We were formed in 2007 with the idea of being an accounts receivable management company. We had a real emphasis from the beginning on the management part of that name because we really saw an opportunity in the marketplace to emphasize meaningful engagement in the whole process from beginning with our clients to the ending results of the portfolios that we manage. And we really had a unique offering at the time. And it's still unique today in that we outsource 100% percent of our recovery to third-party collection agencies and third-party law firms. So we're able to pick the best in the industry to develop, deliver the best results and really produce superior results for our clients. We also had a focus from the beginning on compliance and accountability. So, we knew with delivering outsourced providers and working with so many outsource providers who really had to document those results and report on them and have everything written so that we could monitor and manage the compliance of those results back to our clients.

Amy Perkins:

Yeah, absolutely. And I know compliance is such a huge part and has evolved a lot over the last few years in the litigation space. Can you update us on where that stands and how Harvest Strategy Group has adapted through the years to the change in regulation around litigation and other aspects?

Brad McCurnin:

It's a really dynamic area, a changing area. When you look back to 2007, when we started, it's an entirely different business, it's an entirely different compliance perspective. I mean, today we have three certified compliance officers on our staff. It's a critical component of the services that we deliver. And the CFPB really helped drive all that. I mean, it was 10 years ago that they were formed and really for the better. Our mission is zero defects compliance, delivering results for our clients. And, one other unique part of how we put that together is that we are focused on just management. We're not a debt buyer. We weren't from the beginning, and we still are not today.

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Brad McCurnin:

We're not an agency and we're not a law firm where we're trying to serve certain footprint states and outsource the other. We're offering end-to-end compliance management, where we can really come up with the best solution for our clients to have zero defects in compliance and maximum results. And it's really compliance which has now become the number one focus of our clients and has been for years now, whereas prior it was recovering. So this remains our most important objective today.

Amy Perkins:

It's hard to believe it's been 10 years since a lot of that started. I said a few years, but wow. I guess time really does fly by! So I know, from my years of leading strategies, when we thought about litigation, we always seemed to think of it as litigation or sell. And sometimes we would have a blended strategy, but certainly, there were a lot of internal conversations and debates about the pros and cons of going down either of those routes. So how do you advise your clients in that area when they're debating between those two strategies?

Brad McCurnin:

Yeah, we have those conversations a lot and it's interesting to me. We're, frankly, agnostic as to which of the strategies that we would employ, whether it's agency litigation or debt sale. Not that we would employ...that our clients employ, and how we advise them on that. What we have is 13 years of data and 13 years of experience to work with our clients to come up with a unique strategy that is best suited to their objectives and to be compliant. And really when I look back on everybody we've worked with, there are no two strategies that are the same. No two scenarios are the same. Everyone has unique objectives, unique inventory. And since we're not debt buyers and we don't fall into these other categories, we're truly portfolio managers. We're able to help them come up with a strategy that meets their overall objective. And often wind up with a strategy that starts with a few agencies that are post-charge-off, then splits into a second tier, some going to litigation strategy, some going to an agency, and some of our clients also integrated debt sale at that point. So it really depends on their needs and objectives.

Amy Perkins:

Absolutely. I know when we would have those conversations internally, one aspect of looking at litigation versus sale is the timing of when you see something back, and that doesn't necessarily equate to the overall value. If you look at the big picture, short-term versus long-term. But one thing we did get hung up on is really looking at how we picked the right accounts to go through potentially the litigation process or the sales process, or any of the other processes post charge-off for that matter. But litigation was always a little bit trickier. And at the time it was because we had a lot of judgmental overlays that we would put on top of the things we were able to know with data. And so it just became costly sometimes to even figure out who is the best choice to potentially go down that route. How do you help your clients? Or how do you advise them in that area?

Brad McCurnin:

Yeah, we have a product called ProScore, and it is designed to help identify the accounts that are best suited to go through a litigation strategy. That question was the first question on our minds 13 years ago, because you have to pick the right accounts. Putting the wrong accounts into a litigation strategy can be incredibly costly and, really damaging to the consumer relationship. The accounts that are best suited for litigation in our view are those that have gone through an agency strategy. They have been unwilling to pay and we want to pick those accounts that do have the ability to pay. Unwilling and the ability to pay are two critical factors there. Having gone through the financial crisis, and now the COVID crisis, there needs to be a strong element of listening to consumers, of being respectful of consumers who have a hardship or have a difficult situation.

And that all has to be part of the compliance and oversight process. ProScore is designed to identify those accounts that go into that right strategy. And what we're trying to do is improve the net lift to our clients by using this technology and continuing with zero defect compliance as well. And it's been a core part of our business. It's a free scoring solution offered to all of our clients. And it's been critical to navigating those very decisions that you just talked about.

Amy Perkins:

It sounds like you nailed both sides of that equation. You're really figuring out who's best to go through that process and how to make sure that you're picking the accounts in a way that is compliant. So certainly lots of great things are happening across all the different channels, but you definitely have some great tools that have solved some challenges that I know have been out there for a while. So what now? What's on the horizon for Harvest Strategy Group?

Brad McCurnin:

Well, we're growing, we're investing. We're really looking for 2021 to be a very interesting year after an interesting year. Lots of challenges I think are ahead. You know, just a few months ago, we were looking at perhaps an explosion of charge-offs coming around the corner. I tell you looking at the data today, I think charge-offs might remain low for the rest of the year. We've got the new stimulus package just approved. I think those stimulus checks are going to be hitting consumer accounts as early as this weekend.

A lot of consumers are going to use those funds to pay off debt. We're seeing it not only on the charge-off recovery side, but overall credit card balances are going down and that's a counter-trend. Usually, credit card bills are going up as a whole, but now they're going down. So we're looking for an interesting year in that regard. We're just having to monitor it and work with our clients to advise them on what we're seeing on the recovery front, monitoring closely bankruptcy rates and foreclosure rates as those will inevitably start to come back at some level. It's just going to be, I think another challenging year to be in touch with what's actually happening in the marketplace.

Amy Perkins:

Absolutely. It should be interesting. It's been a wild 12 months and I could see another 12 months, as you said. Well, thank you so much again for being here. Is there anything you would like to add that we didn't touch on throughout our conversation?

Brad McCurnin:

I would just invite any creditors, banks, debt buyers that want to contact us to talk about their strategy and just get our input. We're always open to discussing those and providing our input on how results and compliance can be improved.

Amy Perkins:

Very good. All right. Well, thank you again.