New Jersey Case Study

New Jersey Insurance Company

Nina Rajaratnam Mishaal Hamza

NJIC
 The law division of NJIC was responsible for all legal matters

relating to the company’s operations.  It advised company management on current and prospective developments in tax and other legislation, among other things.

 William Somersby had as much freedom of opinion as an outside

counsel would.  Law division was divided into 5 sections. The case is concerned with 2 of these sections.

Individual Loan Section
 Responsible for legal processing of loans made to individuals

and secured by mortgages on real property.  The company made no loans directly to individual borrowers- the loan instruments were submitted by independent companies situated throughout the country.  The major function was to perform the legal work necessary on all new loans purchased and on all existing loans.

Contd
 Department had 5 lawyers and 26 mortgage examiners.  Work standard- 12 transactions per examiner per day.

Revised to 15 transactions.

Corporate Loan Section
 Much Larger amount than Individual loan

 Amount of the loan, Interest rate, Timing of repayments made by

Investment division  Responsibility of the division to protect the interest of NJIC  Borrowers to pay all expenses in employing outside counsel

Q1 -In what way does Mr.Somersby control the operation of the sections of his division? In what ways does top management control the operation of the law division?
 Same tasks; different operational and control mechanism
 Individual companies batch together a number of loans and sell

them to NJIC in a package.  After loans get approved by the investment division, it gets forwarded to the law division for legal procedures.  Loans were batched on the basis of geographical locations as they had similar transactions

Question 2
 Comparison of budget with actuals will have to be done on a

regular basis, so as to exercise more control.  Monthly