COLUMBUS, Ohio - JoAnn S. Barefoot hasn't always gotten the royal treatment.
In fact, when the queen of compliance first opened her consulting business here in 1982, not many bankers wanted her regal advice.
"It was a pretty hard sell in the early years," Ms. Barefoot recalls.
But in the late 1980s the government became obsessed with fair-lending and community reinvestment and the industry's need for compliance help exploded.
"Compliance has been on a near vertical growth curve for six or seven years," the 45-year-old president and founder of Barefoot, Marrinan & Associates Inc. explained.
When Ms. Barefoot started the company, it had three employees and one client. Today, its staff of 40 serves 4,000 clients from three offices: Columbus, Minneapolis, and Washington. Last year, Barefoot Marrinan's revenues nearly hit $3 million, quadruple its 1990 profits.
Until recently, the firm was a classic small business.
"Everybody did everything," Ms. Barefoot said.
But the firm got its big break in 1993 when a client ran into serious fair-lending problems.
The bank "needed all the help we could give them and more," said Ms. Barefoot. The company dispatched a team of employees to the bank who worked 16-hour days, seven days a week, for several months.
"The client came out beautifully," Ms. Barefoot said. "We meanwhile tested our folks by fire and walked out of the engagement with a tremendously deepened expertise."
The firm gained something else: respect and demand for its services.
"We were able to ... do similar projects with somewhat less drama," Ms. Barefoot said.
Today, the company has three divisions: consulting, training, and publications.
While Barefoot Marrinan trains federal bank examiners and publishes Compliance Advisor, consulting still brings in more than half the firm's revenues.
Interviewed at the firm's Victorian-era building here, Ms. Barefoot predicted that the firm's years of stunning growth are coming to an end.
"Compliance is going to change rapidly and radically in the foreseeable future," she said. "Our business will mature and grow at a slower rate."
By the year 2000, Ms. Barefoot expects bread-and-butter regulations, such as Truth-in-Lending and Truth-in-Savings, to be tamed. The fury over the Community Reinvestment Act and fair-lending, though harder to predict, also will ebb, she adds.
Ms. Barefoot's partner, Timothy D. Marrinan, who joined the company in 1991, envisions the firm broadening its focus a bit to encompass general risk management issues.
"I wouldn't be surprised if in five or so years compliance will be much more broadly defined," to include other risks such as credit, liquidity, and investment, the 49-year-old Marrinan said. "Bank compliance units are increasingly being reconfigured as part of a larger risk-management unit.
"It's being recognized that regulatory exposures need to be managed in a risk-based manner."
Ms. Barefoot said banks are beginning to outsource compliance, a trend that will be spurred by the mergers resulting from interstate banking.
"Most banks are using a compliance management model that was created in the 1970s," she said. "An awful lot of the compliance work can be done more efficiently outside the bank."
The firm is betting that executives of merged banks, facing the daunting task of melding separate compliance departments, will sit down and reevaluate the way they handle regulatory duties.
"It's the perfect time to say, 'Do we really want to have people on staff doing this job,'" Ms. Barefoot said. Outsourcing will be attractive to banks, she said, because complicated regulatory issues are becoming too much for compliance officers to handle.
"You don't get all that knowledge and all that talent under one hat," Ms. Barefoot said.
The between-the-lines message: You can buy that expertise at Barefoot Marrinan.
Interstate banking also will be a boon to the firm's business because to be a successful acquirer, a bank must have a clean community reinvestment record.
A number of the firm's consultants, including Ms. Barefoot, are CRA and fair-lending experts.
Will these issues remain hot?
"The political situation is such a wild card," Ms. Barefoot said. "CRA and fair-lending are going to be bound up in the larger political battle over civil rights and public policy toward the disadvantaged."
Today, she said, Congress is challenging the sea change of the 1960s and 1970s, when laws were passed to protect consumers, minorities, women, and the poor.
"We are seeing attempts to recast the basic role of what the government is," Ms. Barefoot said. "CRA and fair-lending are in the middle of the most explosive political and philosophical issues of our age and banks are going to be impacted by how those answers are made."
The larger changes in society, especially in technology, will fuel tremendous small business growth, she predicted.
"In banking, winners are going to be those that can serve niches really well, using better technology, using better information systems," she said. "Part of our future lies in helping banks serve these markets on a profitable basis."