This is my message to our divided industry in hopes of getting us all back to the truth of our work: our clients.
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In my 25+ years of serving the restoration industry as an expert, appraiser, umpire consultant, trainer, and C.O.O. for a full-service restoration firm, I've heard the following statement from counsel or carrier representatives (too) many times:

"I understand you train and teach contractor profitability".

I know the words sound innocent enough, but you would understand the nuance immediately if you were there. They say that 90% of communication is non-verbal. Yes, especially the eye rolls and sneers...

They didn’t say the “Quiet Part” aloud. But this is what they really meant:

"You teach companies to commit fraud, exploit insurance companies, and take advantage of unsuspecting insureds".

The tone and mannerisms are indirect and loaded with innuendo and sometimes stated directly with disdain. But the inference or outright accusation is clear - you (David) teach contractors how to inflate their bills and take advantage of carriers and insureds. The scope performed and resulting profit, or at least the level of scope/profit generated by the work performed, is assumed to be bad-- fraudulent even. Interestingly there is never any reference to carrier margins in these conversations, but I digress. Also, interesting to note, that I work for carriers too. Carriers are typically profitable, some very profitable, but the focus is not there. I do the same processes and valuations for both clients. But it is only in the context of representing the insured that the issue is raised.

The concern is the contractor's scope and profit - and it's too high in their opinion. We hear the same stock phrases; "I've never seen a bill that high", "equipment installed that long", No other contractor we work with insists on sampling for XXXX, and perhaps my favorite – “Our contractors only charge $X.XX”. Disbelief turns ugly and then we hear “Your invoice is "outrageous” and then by comparison to our vendors, must be suspected of fraud.

So, if you wonder why I am tackling such a red-hot issue, it's because someone needs to say the quiet parts aloud. We are at differing levels of “war”, and we should be on the same team; and not fighting for the same thing (the insureds’ indemnification) is killing us as an industry. It is one of the core “wars” in play and not only is a rift between the contractor and carrier, but also between the independent and network contractors. We are a divided industry, and it’s our mutual clients, the insureds, who are caught in the crossfire.

We all need clarity on this subject, and I need it on the record. I WANT my profit position known, what it means, and what it doesn't; all on the record - so there is no confusion and ambiguity.

So, let's get to it: I do not, nor have I ever, taught a contractor to do any unnecessary or fraudulent activities. I have never taught a contractor how to (unethically or ethically) take advantage of the carrier or insured(s). That's not what I do. Full stop. I invite you to listen to my training or come to a class and see. I start every event, for years, with the promise that if you use what I teach to defraud ANY party, I will gladly help prosecute the bad behavior--on any side, insured OR carrier. It's bad for industry, often illegal, and morally/ethically repugnant. As an industry, we should not tolerate it and I abhor it.

I DO help insureds get returned to pre-loss condition as a contractor (since the late 90’s) , and (for the last 10+ years ) as an expert/Appraiser/Umpire.

I DO help contractors grow into technical, operational, and business competency.

And finally, by performing or supporting the required work to restore the insured to their pre-loss condition, which is the recognized obligation of their policy (as generally written), I aid the carriers indemnity obligation to their insured. A function they desperately need. They need competent contractors to establish the amount of indemnity and practices required to ethically obtain them. We DON’T adjust claims, we just make fair and accurate claim adjustments possible and ultimately safer for an ethical carrier.

We (contractors and carriers) should be on the same team - the insured's. Should either side tolerate anything else?

So, let's define profit. Exact definitions vary, but are loosely defined:

Profit is the "excess of income over expenses."

Notice there is no evil, no recognition of intent in the definition itself. It's glaringly absent. It seems self-evident, but profit is necessary in our economic system! Without it, companies and market-based economies fail. It is imperative for carriers AND contractors.

So where is the issue? When there is an issue about profit, it is generally about either perceived over scope or margins but make no mistake it is the number at the end of the estimate/invoice that gets all the attention. The end number is BIG. But WHY is it big? That’s the right question. A quote comes to mind:

“Price is only an issue in the absence of value”.-- or the perceived lack of value.

In our industry, it is not just margins and unrecognized differences in scope that raises questions—more commonly, it’s the lack of understanding that frames the perception of charges that exceed the value delivered. When a party feels:

• the work doesn’t need to be done,
• should have been billed cheaper, or
• completed faster,
These feelings create a reason to contest the necessity and value of the work performed.

This difference between what's expected and ultimately provided creates the feeling that the services provided are overvalued. This becomes one of the beliefs at the core of the dispute; not because it is necessarily empirically correct, but because it “feels” wrong. While the focus is often directed elsewhere, the real issue is simple:

- Some party has gotten a bill that is larger in scope and/or price than they expected.

- That party does not understand the NECESSITY of the work performed and

1. - no one effectively explained it

- or –

2. - the recipient was not in the mood to listen and/or capable of understanding the explanation.

And a Through this process, a war is born.

Feelings vs Facts; Expectation vs Value.

Project valuation is typically determined by a party (the carrier) that will not suffer the outcome of the work if it is not done properly. Would a carrier provide sub-standard work if they owned the liability for the project for 5 to 10 years? My experience is NO. However, if they have not been informed of the liability the contractor is assuming in their work, they can hardly be responsible for poor behavior. It is often the contractors lack of exposition on the claim and its complexities / liabilities / risks / complications that exacerbate the issue. Without these facts, the carriers only approach is cost containment without the necessary context. We as contractors often author our own tragedies, or that of our clients by failing to say the quiet parts aloud. If we (contactors) do not provide the context for and necessity of our work, we have failed our clients and severely hindered the carriers ability to operate in informed good faith.

In the real world, the mix of money and a lack of interest in hearing out the full story/details to establish value, are potent accelerators in a dispute - fuel on a fire that is not easily quenched. The lack of understood and disclosed facts shifts the conversation to the only remaining available option - each party's opinion. Now we have an Opinion War and, believe me, no one wins.

Opinions are frequently fear motivated, un/underinformed, self-focused expressions committed to winning an engagement at any cost rather than driving the dispute toward understanding, agreement and fair resolution. There is a policy of indemnity at play here. If we continue to argue over scope and price, the conversation about performing the whole scope of work necessary, at a fair price due to the efficiencies of scalable will never happen – we will just keep fighting about who is the (bigger) crook, contractor, or carrier.

And worse, over time, these repeated, hostile, unproductive experiences morph into deeply held beliefs and expectations. They become biased: the unspoken opinion you, and everyone else, didn't know you had but are completely and utterly committed to—whether they’re factually correct or not.

As difficult as an encounter like this may seem, there are paths to overcome these entrenched positions and (often institutional) bias. There is truth to be found in neutral, unbiased frameworks. Truth can and should be leveraged: Statutes, Regulations, Codes, Best Practice(s) and, you guessed it, the Standards of Care available to the industry are the tools to be used. Lies cannot hide under the watchful and inquisitive eye (of truth) and I find most people will change their own mind if you can consistently show them both kindness and truth. George Washington got the gist of it when he said:

"Truth will ultimately prevail where pains is taken to bring it to light." (Letter to Charles M. Thruston | Sunday, August 10, 1794.).

As an adjuster, at the end of the last millennia (yes, I’m that old), I saw this industry divide coming and committed to face it head on. It is this path and its evolution that delivered me here, writing this today. I vowed to dig for the unbiased truth and repeat to all who would listen until it sinks in. If you have sat across a table from me in a deposition, in an appraisal or at trial, you can attest to this.

Profit isn’t Evil; not having ethics will eventually be. Without profit, our systems can’t work.
Employees don’t get paid. Investments aren’t made. Our issue is Greed.

Greed is profit without principle.

Greed is profit without equity.

Greed is profit without integrity.

I will be publishing this shortly, but in my heart and daily practice I value truth. I value integrity. I value competency. I value transparency.

Our customers, and society, need this from ALL parties. We have lost our way or are at least a couple of degrees off of our due north setting. It is a challenge to not be in the world we live in and the challenges we must co-exist with to survive.

This said, what are some of the “due north” anchor points we can rely upon as we create our business and its values? We can create our business processes and structures any way we want to. So, why not set up operations based on what the industry and standards identify as necessary? We are in good stead observing our industry standards (IICRC S500 ETC, OSHA, EPA, Regulations and Codes). Doing what the controlling documents and authority in our industry identify as right is, by definition, ethical. If doing ethical work produces a profit, then that profit is, by definition, ethical profit.

In closing, let me reinforce who we are at MIT Consulting. We are net profit consultants; because you cannot change the world for the better if you aren’t profitable. We teach restorers systems and processes that control your expenses and make your operations more efficient. We teach you what the whole job should be so that you can comply with Standards, statutes, and best practices to provide a service that makes your clients whole.

So, if you’re willing to be ethical, and honorable, follow laws, Standards, Statutes, and best practices as well as be ethically and morally grounded as a good actor in good faith, we were made for you! If you don’t understand the necessity of these terms, you desperately need us to help you grasp our current reality. The world is changing. We will make sure you don’t get left behind.
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