1 in 4 Court Reporting Companies May Be Unprofitable

In my Collective Power of Stenographers post, we explored how court reporters collectively out-earn every company in business today. In Aggressive Marketing — Growth or Flailing, we took a look at VIQ Solutions, parent of Net Transcripts, and saw how a transcription company could be making millions in revenue but be unprofitable. This all set me down a path of learning about zombie companies, companies that are not making enough to meet debt obligations, or just barely enough to make interest payments. You can watch Kerry Grinkmeyer describe how that happens here. This isn’t very rare. A Bloomberg analysis of 3,000 publicly-traded companies found one in five were zombies. The main takeaway? Companies can make lots of money and still be taking losses.

I had the pleasure of looking through the Kentley Insights June 2019 Court Reporting and Stenotype Services market research report. I do want to be upfront about it: I have some reservations about the methodologies and some of the reporting. Very much like the Ducker Report, as best I can tell, it’s based off a sampling of respondents from in or around the field. There are parts of the report that are arguably a little incomplete or unclear. For example, being industry experts, we all know the vast majority of the work is done by independent contractors. Independent contractor isn’t a term that appears in the report. Unsurprisingly, when we reach the job pay bands and employment section, it says there isn’t detailed data on the industry and compares us to the telephone call centers industry. So this report is not a must-have for court reporters, but it does have some interesting insights.

Those remarks aside, when we get to the profitability section of the report, we get to see something pretty striking. Based on their data, more than 1 in 4 court reporting companies are not profitable. Average net income as a percent of revenue for the ones that are profitable? About 9.3 percent. For the ones that are not profitable, a loss of about 9.6 percent. And a pretty chart that says as much.

I never want to see the term capital benchmarks again.

On the following page, there’s a forecast for operating expenses and industry revenue. That’s summed up in another pretty chart.

This was pre-pandemic, by the way.

If we look at the trends here, it’s pretty clear that the forecast is for expense growth to eclipse and outpace revenue growth. If that keeps up, the unprofitable companies are going to be looking at bigger losses year after year. Given all the information I have today, I surmise that the smaller court reporting companies are the more profitable ones and the bigger ones are the ones struggling. There are sure to be some outliers, like small court reporting shops that go bankrupt and leave their independent contractors unpaid. But overall, the smaller companies can’t afford to remain unprofitable for very long, so it’s probably the “big dogs” eating that 10 percent loss. If I’m right, that may also mean the push to go digital is the dying breath of companies that can’t figure out any other way forward. In February, I wrote “…we only lose if we do not compete.” That is becoming more evident with time and data. It is a great time for the stenographic reporter to open up shop and be a part of the 74%.

Speaking of data, if everybody that read this blog donated $1.50, we’d have enough money to stay ad-free for the next two decades. To all donors we’ve had to date, thank you so much, put your wallets away. To everybody else, check out this cool song from M.I.A. about taking your money.

List of New York Agencies

Some will remember that in 2019 I put together a list of associations that offer mentoring. I now took the time to create a list of New York court reporting agencies and their office locations. Generally I erred on the side of inclusivity and pulled names and numbers mindlessly off Google. Please feel free to let me know about more firms that have New York coverage. I envision this as a resource for students and working reporters. Back when I was in school, we tended to gravitate towards a very limited selection of agencies, and it was probably to the detriment of some of us. Here’s the list. It’s available to share or download. You cannot edit my master copy, but you can edit any copy you create.

I put aside my personal feelings and included anything that came up as advertising court reporting services. Some entries on there are not stenographic-reporter friendly. Hope springs eternal that they’ll change their tune and embrace the unmatchable efficiency of stenographic reporting. Great example, stenographic reporting could probably bring up Cutting Edge Deposition’s rating from 1 star to 5. Our stenographic reporters across the state are going to be competing directly with the businesses that don’t use steno, and this is really a golden chance for those businesses to turn things around. Regardless of how that goes, let this stand as a reminder to students how valuable your skills really are. There would not be over 200 offices for over 150 businesses across the state if there was not money there. The vast majority of these are stenographic reporting agencies or utilize primarily stenographic reporters. Hone your skills and get ready for a bright future not only in the courts, but in freelance and the private sector.

Also a tip for students, if someone says they can’t afford XYZ but they have 9 different offices, they might be pulling your leg.

Interesting trivia, Southern District Reporters is actually a corporation for the officials of the United States District Court, Southern District of New York. Last I checked, you need Eclipse to work there. I’ve heard great things.

Holding Companies Explanation

One of our readers reached out to me recently with a really interesting and important question. I took some time to answer the question personally but I’d really like to make sure everyone can be on the same page. In my experience, if one person has a question, ten people had the same question and didn’t ask it yet.

The reader asked: How can Diamond sponsor a NYSCRA event when they were bought by Veritext? Great question. Basically I would break it down like this: When you create a corporation, the state grants that corporation, or the corporation’s founder(s), stock or some form of ownership. When a company buys another company, it becomes a holding company or parent corporation. The company being bought is generally referred to as a subsidiary corporation.

So the subsidiary company still exists as its own company and is free to make its own choices as to what to support. The holding company technically has power over it, but doesn’t have to interfere with its day-to-day operations. The two companies both exist, at least until the holding company dissolves legally or the subsidiary company dissolves legally.

Notably, I have read that Veritext itself is owned by a private equity firm. That’s more or less a company that invests in companies and tries to flip them for profit or sell them out on an IPO, taking the stock from private to public ownership, and hopefully for them getting a payday on their investment and exiting.

I do not know if Diamond made the decision to sponsor the event independently or if Veritext gave them permission, but regardless, we’re always happy to see corporations put some time or money into stenography. As harsh as our opinions can be here on Stenonymous, we do acknowledge the value that corporations have and their place in industry. Many of them may yet show themselves to be huge allies, and hopefully every time they do readers will come out and say hey, you need to acknowledge XYZ. At the same time, we will not hold back from calling agencies out when they’re working against stenographers.

Thank you readers! You help me write with every question or correspondence. On that note, if you have information or documentation related to steno news, feel free to write me at ChristopherDay227@gmail.com.

NCRA just made a really awesome announcement, so look out for that article Monday!

Stenographers, US Legal Is Not Your Friend

As some quick background, I received an anonymous email that basically said “US Legal is shifting to ECR and having stenos train them, your mileage may vary but your days are numbered.” Hit up two of my favorite friends and mentors about it. One said, “they sent it to you because you blog everything, don’t give them any air time.” The other said, “look into it, verify whether or not it’s true, and there’s not much you can do about it.”

So anyway, I took the second option, and I surveyed some people using Google/Facebook, and like me, people had heard this before. A dear friend sent me a mailer that was received from US Legal CA. They want people to transcribe from home. Then I went looking on the careers page of the website and found their New York listing for Electronic Court Reporter. Probably because we are 1099s, there’s not the slightest mention of stenographic reporter.

But this inspires some critical thought. Why would a company push so hard for transcribers and electronic recorders? My opinion? They believe that the alternative methods are where the almighty dollar is. But they rely on us not speaking about it. They rely on us not sharing this message. They rely on us continuing to work with them using our infrastructure and experience that stenography has built over the last six decades. So I have an honest message to any stenographic reporter: Leave them in the dust. Don’t take the jobs, take the clients. It’s one thing if you want to work with us and pay us well. It’s another thing entirely to position yourself to do away with us. These aren’t your clients, they are our customer base, and we’re taking it back.

Consider too that these companies have shown the willingness and desire to not play by the rules. In a recent decision, Holly Moose v US Legal, US Legal argued that it should not be bound by state rules because it is in the business of connecting customers with independent contractors. The court said that this logic was unpersuasive at best.

Our ability to stay vibrant and the viability of this field rely on being visible and profitable. Nobody is going to educate stenographers if we’re making transcriber money. If a company offered you double your money this year but no more jobs after that ever from anyone, would you take it? That’s what we’re looking at on a grand scale the more we put our heads in the sand. Companies exist out of convenience to their investors. Reduce that margin, watch them pull out, and let the work flow naturally where it needs to: Stenographic court reporters.