10. Commitments and Contingencies

Litigation

We are involved in legal proceedings from time to time arising in the normal course of business. Management believes that the outcome of these proceedings will not have a material impact on our financial position, results of operations, or liquidity.

Lease Commitments

We lease office space under non-cancelable operating leases that contain rent escalation clauses and renewal options. We recognize rent expense on a straight-line basis over the lease period and have accrued for rent expense incurred but not paid. We are also committed to pay a portion of the actual operating expenses under certain of these lease agreements.

Rent expense under operating leases was $1,156,000 and $1,201,000 for the three months ended September 30, 2016 and 2015, respectively, and $3,390,000 and $2,949,000 for the nine months ended September 30, 2016 and 2015, respectively.