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Vol. 60 — The Farce of E-filing “Audits”

A legal note from Marshal Willick about the farce of the “audits” of the Clark County e-filing system being used as a cover for the excessive fees being paid by every lawyer and litigant to the continued enrichment of an out-of-state corporation.

When the Nevada Supreme Court set up rules for State-wide e-filing, the counties were left pretty much to their own devices to implement such systems, in service to the Byzantine funding scheme for courts in Nevada. Which would be swell, if the county bureaucrats actually cared about the populations they “serve.”

As a fig leaf of accountability, the rules provide for mandatory “audits” of both technical adequacy and economic “reasonableness” in each county’s system. In Clark County, that process has been perverted into a self-serving empty exercise designed to provide an inevitable approval of the continuing looting of Nevada litigants – and nobody in a position of authority really cares.

I. BACKGROUND: THE REQUIREMENT OF AUDITS

From the time they were enacted in 2006, the Nevada Electronic Filing Rules included NEFR 5(i), stating that e-filing should be publicly funded (i.e., free to users), but if a county insisted on using an outside vendor for a fee, it was required to perform an “annual audit” to determine whether the fee charged by the outside vendor is “reasonable,” and at minimum, a biennial “performance audit” to determine whether the service provided is adequate for the court, the public and the Bar, specifically to include reliability, integrity, security, timeliness of access, and privacy.

Back in November, 2011, legal note Vol. 45 (Use and Abuse of Ex Parte Motions, and More on E-filing), posted at https://www.willicklawgroup.com/newsletters, observed that if any such audits were being conducted, they were being kept under wraps by Clark County court administration, despite repeated requests for information as to what was being done, and by whom, and noting that it was impossible that the existing system could survive any audit conducted in good faith given the huge fees and questionable functionality.

The same note pointed out the glaring loophole in NEFR 5, permitting such audits to be performed by “internal staff or external experts,” and suggesting that since the foxes were given permission to audit the henhouse, there seemed no real hope of transparency, honesty, or meaningful improvement.

The note requested court administration to make “a public announcement of who, exactly, is doing the audit, and a promise that it will be published to the Bar.” All requests for information were ignored. It took having a judge reiterate the request to court administration to have the audits begrudgingly released, without explanation.

The truth is even more ghastly than expected.

II. WHAT REALLY HAPPENED

The Nevada e-filing system is being rented from Tyler Technologies – they get a few hundred thousand a year from Clark County for “maintenance” – plus $3.50 from every person seeking access to the court for every document filed electronically in Clark County – and the current rules make e-filing mandatory. It’s a sweet deal for the company, but a lousy one for Clark County lawyers and litigants, as detailed in legal notes 21, 27, 38, and 45.

Tyler – with the ready cooperation of the county bureaucrats – allegedly conducted self-congratulatory “audits” in 2006 through 2008 (all efforts to date to get copies have failed). In any event, by 2007, the county “forgot” to ever do any more – until “coincidentally” after legal note 45 was posted in late 2011 complaining about it. No explanation for the multi-year gap in required audits has ever been suggested.

In 2012, the Tyler folks in Texas created an “audit” of their own system, which was immediately approved by the County bureaucrats, but not submitted to or vetted by anyone neutral, or published, publicized, or made available to the Bar, to the courts, or to the public.

And it’s no wonder. The “audits” were farmed out to accountants in Michigan – who have a profitable business working for Tyler – to which they actually report (more on that below).

The Michigan accountant who signed the audit reports was called for verification. He answered preliminary questions as to what he did, and how he did it, but when asked to release his raw data – such as who he had allegedly talked to in his “interviews with Tyler customers,” and what precisely their answers had been, he said that he had to get permission from Tyler to release any information about the audits performed for Clark County. He said he would call the person at Tyler in Texas to whom he reported, and would then call back.

That was four months ago – he has never called, sent an e-mail, or provided a jot of further information, suggesting that he was told to clam up and say nothing further.

Preliminarily, using an accountant to review the efficacy of an e-filing system located thousands of miles from the accountant’s office does not comply with NEFR 5. The “audit procedures” were cooked up by Tyler itself, consisting of 8 points.

III. THE “AUDIT” CONTENTS

The 2012 and 2013 audits are identical, with changed dates. They are posted on the Clark County Bench/Bar page of our website, at https://www.willicklawgroup.com/clark-county-bench-bar-committee. The “reports” from the accountant reference an “Appendix A” of procedures, which were “agreed to by Tyler Technologies, Inc. and the Clerk of the Eighth Judicial District Court of Clark County, Nevada solely to assist you [Clark County] in assessing compliance with Rule 5 of the Nevada Electronic Filing Rules (NEFR).”

The first of the 8 points was a “review” of the fee schedule and alleged “comparison” to “the fees to those charged for similar services.” The report states that “based on interview with Tyler customers regarding the overall savings realized by using the [e-filing program] and a comparison to fees charged for similar services, the fee schedules used by Tyler . . . are reasonable.”

Asked what “similar services” had such fees, the accountant responded that he compared the cost to the price charged to accountants to file tax returns with government agencies. In other words, the comparison of e-filing in Clark County was to unrelated tasks in an unrelated industry in another state.

He reluctantly confirmed that no comparison was made to the cost of e-filing court documents in Washoe County (the obvious comparison for e-filing court documents in Clark County) and no comparison was made with filing court documents in any other County in Nevada, but that fee comparisons were to (unspecified) other Tyler installations in other states. In other words, what the “audit” claims is that Nevada filers are not over-charged for e-filing any more than the same company over-charges consumers in other places (that is not the question asked by NEFR 5).

The accountant refused to say how many, or which “Tyler customers” provided the reported feedback. They may be entirely made up; it is impossible to know from what was provided.

The second point was confusingly phrased, but when decoded what it actually said is that Tyler did not charge users more than it said it would charge. Which is peachy, but entirely useless.

Points 3 through 7 consisted of reports that the accountant asked the folks at Tyler to whom he reported to tell him whether the hardware and software was adequate, reliable, and secure, and was told “Why, yes it is – thanks for asking.”

And in #8, the “audit” compared the cost of e-filing with supposed responses from a “random sample of customers” as to the pricing for filing documents without e-filing, and the accountant supposedly received identical information in identical words from those “random customers” in both 2012 and 2013 that the “cost of filing a document without e-filing” was “$20 to $80.”

Asked what could possibly go into that answer, he explained that he counted the hourly rate of sending legal personnel to the clerk’s office to file documents (which, as discussed below, is pretty much never done). When asked which “Tyler customers” had said such things about “savings,” and when, and where, he would not answer any further.

IV. THE “GIFT” OF “FREE” E-SERVICE

Legal notes 45 and 38 (E-FILING 3 – The Contracts the Math and What Should Happen Next, May 10, 2011), both posted at https://www.willicklawgroup.com/newsletters noted that the rules had made e-filing, and e-service, mandatory, and that the effect of the court rules would be to extract and send to Tyler an additional $2 million dollars a year over and above the $3.5 million the company vacuums from the wallets of Clark County lawyers and litigants each year for the “privilege” of filing court papers.

Those notes indicated further that free service of unlimited numbers of documents was already the rule in Washoe County, and in the Supreme Court, and in federal court, and elsewhere, and that imposing a mandate of e-service for the profit of a private corporation raised equal protection, due process, and access to justice issues.

On May 9, 2014, the Chief Judge of the Eighth Judicial District Court issued “Administrative Order 14-2” which declared that the court had “requested that the private vendor examine its cost to provide electronic filing and service” and that Tyler – out of the goodness of its corporate heart – had eliminated the $2 per document service fee effective June 1. The press release (er, administrative order) further crowed that the change “reduced the cost to file and serve by 36%.”

Both court administration and Tyler have treated the incremental reduction in the magnitude of Tyler’s profits after public identification of the obvious constitutional violations as a coincidence.

V. THE DECISION TO GIVE AWAY MILLIONS OF YOUR DOLLARS WAS VOLUNTARY

NEFR 5 states that e-filing “should be publicly funded to eliminate the need to impose surcharges for filing of or access to electronic documents.” The rule continues, however, to have the escape clause permitting courts to impose charges “when sufficient public funding is not available.”

The official position of the Clark County bureaucrats – repeated in last May’s administrative order, is that “sufficient public funding [is] . . . not available . . . to pay for the expenses of mandatory electronic filing and service.”

The official position is a lie. The decision to give away millions of dollars of OPM (“other people’s money” – yours) to Tyler every year was and is entirely voluntary.

There are several ways to obtain and provide e-filing to the courts – by way of software license, by subscription, or by voluntarily choosing (as the Clark County bureaucrats did) to sign a “transaction” contract requiring you and me and everyone else to pay money to Tyler every time a document is filed. Tyler really can’t be blamed for doing whatever is in its own corporate interest – it is a for-profit company, after all – and it has played its cozy relationship with court administration to extract multiple tens of millions of dollars from the lawyers and litigants of Clark County; continuing at the rate of at least $3.5 million per year.

For a tiny fraction of that cost, we could have long ago paid for a license giving everyone entirely zero-cost e-filing (as done in Iowa and places in Utah) or a modest subscription cost per user (as in the annual $300 per lawyer per year in Washoe County, which covers the county personnel cost of tech support, as well) providing otherwise free and unlimited e-filing and e-service.

That should have been done years ago. The Clark County bureaucrats who selected the give-away to Tyler knew all about that option – but chose instead to make every lawyer and litigant bleed per-document filing fees indefinitely. E-filing could be made cost free at any time. But the County bureaucrats choose to make us keep paying millions each year to a Texas corporation anyway.

The one question I get asked over and over when people learn what really happened – and is still happening – is “Who in Clark County court administration is getting an extra paycheck from Tyler?”

I do not have an answer to that question, but it certainly looks as if the court – at the request of its administrative personnel – is much more determined to act as apologist and P.R. instrument for the company (as in last May’s administrative order) than to look out for the lawyers and clients of Clark County. Bragging about elimination of a never-justified additional surcharge (for e-service) to make the peonage more accepting of being overcharged for the remaining services that should be free exhibits a level of institutional duplicity and arrogance not often seen since Soviet times.

VI. ASIDE REGARDING LAYMAN’S GUIDE AND ALIMONY CALCULATIONS

We’ve received some inquiries about our layman’s guide to Nevada family law described in Legal Note Vol. 58 (Video Conference Rule, Nov. 19, 2013). The book, Divorce in Nevada: The Legal Process, Your Rights, and What to Expect, is out and available on the firm web site, at https://willicklawgroup.com/shop/.

The long-promised Alimony Manifesto: How Alimony Should Be Calculated, and Why – well received as a CLE presented to Nevada and national audiences last year – is set for publication in volume 27-1 of the Journal of the American Academy of Matrimonial Lawyers within the next month or two, under the apparently more politically correct title of A Universal Approach to Alimony: How Alimony Should Be Calculated, and Why. Those desiring copies, or assistance in applying the flowchart and worksheets at the heart of the analysis to real-world alimony cases, should contact me directly.

VII. CONCLUSIONS

The “audits” of the Clark County e-filing system are outright frauds that ignore the only relevant comparisons, use outlandishly irrelevant comparison “pricing” data without ever revealing what is actually being compared or how, and obviously seek to evade the intent of NEFR 5. The 2012 and 2013 audits are identical, with changed dates, and are equally useless for their intended function.

The “audit procedures” were cooked up by Tyler itself, with all the validity of a North Korean one-candidate show election. Tyler’s self-serving “audits” of the Clark County e-filing system are either meaningless, or deliberately deceptive; they were obviously designed to produce precisely the requested result: that “everything is just fine the way it is, yes sir, boy howdy.”

In the several decades I have practiced law in Nevada, filing documents has never cost “$20 to $80 per document,” – not even once. Attorney and paralegal cost to prepare and file a document is identical regardless of how it is filed, and the actual cost of filing a document before e-filing was zero.

This law office has a flat rate service that delivers and picks up dozens of documents at a time, making the cost per document to file papers $1.00 or less, not tens of dollars per document. Most firms pay $10 per day for runners to file, serve, and deliver to other offices, whether they take one document or 50 of them at a time. Some use in-house runners to serve thousands of documents on a minimum-wage salary.

It is worth remembering that the pronounced purpose of the switch to e-filing was not to ease the life of the bureaucrats, nor to enrich an out-of-state corporation – it was to make filing documents easier, cheaper, and more convenient for the users – the people filing documents – you and me. The judiciary of Clark County has failed miserably in that task.

The Nevada Supreme Court should revise NEFR 5(i) to require express written – and published – justification of exactly how public funding is “inadequate.” It should also require independent auditing of e-filing throughout the State – either by its own personnel or by a committee of the State Bar – because continued inaction in the face of the existing evidence of incompetence or fraud, if not corruption, is to condone and facilitate it.

VIII. QUOTES OF THE ISSUE

“Truth is such a rare thing, it is delightful to tell it.”
– Emily Dickenson

“Be always sure you are right – then go ahead.”
– Davy Crockett

“To serve man . . . it’s a cookbook.”
– Damon Knight, Galaxy Science Fiction (Nov., 1950); The Twilight Zone episode 89 (Mar. 2, 1962).

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For the archives of previous legal notes, go to https://www.willicklawgroup.com/newsletters.

If there are any problems with or suggestions for these newsletters, please feel free to email back to me. Thanks.