For courts, attorneys, and legal clients alike, the practice of securing surety bonds can be time consuming and inconvenient. Though necessary to keep court proceedings moving and to protect both people and assets, the bond purchase process can be a significant sticking point.
Court-mandated bonds are ordered to guarantee that clients fulfill payments and other legal obligations. As with insurance products that are more familiar to laypeople, sureties are purchased in order to transfer risk and protect certain parties. The key difference is that while insurance protects the policy holder, surety bonds protect a third party by keeping the policy holder to their obligation (legalclarity).
Let’s take a look at the court-ordered bond purchase process and how courts, attorneys, and clients are impacted by the current structure.
Types of Court Mandated Bonds
In what situations do judges mandate court-ordered surety bonds?Court-Appointed Role Bonds
Courts require bonds for those appointed to act on behalf of another party or manage assets. Examples include conservator, estate, guardianship, trustee, and VA fiduciary bonds (NAEPC). Examples include Fiduciary and Probate.
Litigation & Judicial Process Bonds
Bonds required during legal proceedings to 1)pause the enforcement of a judgment while court proceedings move forward, 2) protect opposing parties, and 3) secure claims. Examples include appeal and supersedeas bonds, attachments, replevin, and temporary restraining orders (NASBP). Examples include Appeal and Supersedeas Bonds.
Court-Appointed Oversight & Administrative Bonds
Judges order court-appointed professionals (typically neutral third parties) in charge of overseeing assets or other aspects of legal proceedings to secure bonds in order to prevent mishandling of funds and assets. Examples include receiver and referee bonds (USLegalForms).
Securing a Surety Bond: The Current System
The current system for purchasing court-ordered surety bonds is routine and expected, and at the same time it is entirely inconvenient. Before filing the necessary paperwork with the court, law firms typically go about helping clients proceed in one of two ways, depending on the case matter, the size of the bond, whether the bond is individual or corporate, and other factors:
Even though the legal system has modernized exponentially within the last decade with more than 75% of attorneys using cloud computing vertical software (ABA), the structural process of surety bonds hasn’t changed since the late nineteenth century. At that time, the system shifted from individual guarantors to backed surety companies, but since then, the structure has remained much the same (historyofsuretybonds). This largely manual process is yet to be integrated within modern day legal software.
Issues with the Current System: Inconvenience and Delays
We’ve touched on the fact that the underlying structure of surety bonds hasn’t changed much in the last century. This clunky process causes issues for courts, attorneys, and clients, the largest issue being delays in court proceedings.
Client Procrastination
Those who apply for bonds too close to the scheduled hearing may not leave enough time for the underwriting process. (NAEPC)
Insufficient Documentation
Tight Deadlines
Surety Bonds Orders Cause Gaps in LPMS Workflows
Above growing the firm, improving efficiency was the top goal for attorneys in a 2023 study. While this positive trend shows time spent practicing law has increased since 2021, many attorneys cited “spending too much time on administrative tasks” as one of the main challenges they face day to day (2023 State of U.S. Small Law Firms, Thomson Reuters Institute).
We’re here to pose the question: What if surety bond shopping wasn’t a separate, outsourced aspect of numerous court proceedings, but a native, integrated, natural step in an optimized legal workflow?