A Debate About Attorneys’ Fees in Foreclosure Cases
In response to my recent blog entitled Paying a Foreclosure Defense Lawyer, I received the following response (below) from Richard Shuster, a bright foreclosure attorney out of Miami. I thought his post, and my reply thereto, were worth sharing, as they discuss pragmatic issues facing homeowners. The issue, as you’ll see, is essentially a debate about how much foreclosure defense attorneys should be charging to represent homeowners.
My point isn’t to say “I’m right” and Richard is wrong, or anything like that. Rather, my hope is that it helps homeowners understand where I’m coming from in my defense of foreclosure cases and how other attorneys with a different approach view things.
Richard’s Comment:
Mark… I really do not think you can lump an amazing foreclosure defense lawyer like Thomas Ice in with a factory like Ticktin. Our firm, like Ice Legal charges monthly. If we knock one out of the park and get somebody a free home (we have done it three times working on number four).. our retainer provides for a contingency bonus.. (usually $20,000) but to get it was not only need to get a dismissal with prejudice we have to file a new lawsuit for the client to quiet title. Only we get them the house free and clear are we entitled to the bonus. As I see it if we have a shot to get a dismissal with prejudice, but only by hopping on a plane to take a deposition, we can afford to do this for $500 a month if we have the potential for such bonuses. Thomas Ice takes half day depositions… when necessary to get the job done for his clients. If a lawyer’s fee is a one time fixed fee, or $500 a month it might be difficult to spend $1,600 of time (4 hours at $400 an hour) and $300 to $500 for a transcript to take a deposition
but lawyers like Thomas Ice can spend the money and time if the get a small portion of the benefit that comes form a contingency bonus for an exceptional result. That bonus when the amount is small not the shock the conscious high 40% charged by Tictin can align the lawyers interest with the clients and reward lawyers who go above and beyond to achieve a spectacular result.
My Reply:
Hi, Richard.
I’ve thought a lot about this since I posted this blog. Upon reflection, I agree that you and Ice shouldn’t be lumped in with Ticktin. If that’s how it came across, I apologize. I respect the work that you and Ice are doing.
That said, I’ve handlled a LOT of foreclosure cases and I’m confident that $500/month is not necessary to defend foreclosure cases.
My firm has handled many foreclosure cases. In my view, it doesn’t take $500/month to defend them, it just doesn’t.
(In fairness, it does seem the market for fees in Miami is higher than in my areas, so that is part of the disparity.)
Anyway, does that mean I think you and Ice aren’t doing $500 per month worth of work? No.
I tend to believe you are, particularly if you’re doing depositions.
(And that’s a big reason where you’re different from Ticktin, in my opinion.)
As you suggest, depositions are expensive, particularly if you’re paying/fronting the costs.
Respectfully, though, I wonder what that work accomplishes in the grand scheme.
Three dismissals with prejudice/quiet titles is great.
But out of how many cases?
That’s not meant to be critical, it’s really not.
Those three clients will love you for life, as they should.
It’s just that I have a handful of quiet titles in the works right now, without the $500/month.
I just don’t think $500/month is necessary, particularly when coupled with a four-figure retainer and a contingent fee.
As I see it, by charging less, my firm appeals to many homeowners who would otherwise not be able to afford an attorney. And for me, that’s a huge part of the point.
Many people just can’t afford $500/month. Many of my clients tell me “If I could afford that, I wouldn’t be in foreclosure.”
My business model is predicated on “what do I really *need* to collect from each homeowner to adequately and competently represent them?”
I’m sure I could (and arguably should) charge more.
But I’d rather put my firm in a position to help as many people as possible, particularly those who cannot otherwise afford a lawyer.
You may argue you do a better job than me. In some respects, maybe you are. I don’t have any quiet titles (yet). But for most of my clients, that’s not even a goal.
Personally, I don’t think that is a reasonable goal for any particular person. From a numbers’ perspective, sure, if any lawyer has enough cases, some of them are going to result in quiet titles. I just don’t think the chances of that are significant enough in any one particular case to justify extra charges.
As for the contingent aspects, I’m not arguing with the contingency if you get a quiet title. If you get a client a free house, a reward like that is reasonable.
My concern is with contingent fee contracts which call for a percentage even upon a dismissal without prejudice (or a dismissal with prejudice against the wrong entity).
I’ve probably gotten 20 dismissals without prejudice (without leave to amend), maybe more. It doesn’t happen every day, but it happens often enough that I consider it just part of the job.
I don’t see that as a basis to get a contingent fee. Why should I pocket five figures when the client may well get sued again? That doesn’t seem fair.
It’s particularly not fair when you combine that contingent fee with $500/month and a four-figure retainer, as many lawyers are charging.
I guess when it comes down to it, I want to represent my clients as inexpensively as possible, help them get back on their feet, and when they encounter legal problems in the future, I’m hopeful they’ll remember how fair and reasonable I was with them and they’ll come back to me.
These are just my opinions. Reasonable people can disagree. This is just how I’ve chosen to do business.
Mark Stopawww.stayinmyhome.com
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