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Bankruptcy Courts Recognized for Their Efficiency

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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 2003.1

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.2

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.3

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.4 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.5


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.

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.

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.6 Additional savings are expected through reengineering of work processes, reorganizing functions to increase efficiency and continuing to develop and share local applications.


Footnotes

1 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. Return to article

2 Cost Containment Organization Review Bankruptcy Noticing Center Program, August 2004, pg. 5. Return to article

3 Id. Return to article

4 Id. Return to article

5 Id. at 7. Return to article

6 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. Return to article

Journal Date: 
Wednesday, December 1, 2004

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