Market Efficiencies Come to Legal Practice

Dustin A. Zacks has posted a fascinating article on the role of “foreclosure mills” in bringing a more corporate, bottom-line oriented mentality to law firms:

The recent housing crisis increased demand for attorneys to process foreclosures through state courts. [High volume foreclosure firms developed; they] differ in makeup from traditional large law firms. Notable characteristics of these foreclosure firms include lenders and servicers’ relentless demand for increased speed and low costs, lack of firm-specific capital at foreclosure law firms, and a factory-like atmosphere of legal practice.

[As they developed] the fastest and cheapest legal services available. . . .these firms consistently generated complaints about their conduct, including questions about their ethical decision-making and about the veracity of the pleadings and documents they filed. . . . The Article accordingly examines the curiously muted reaction from state bar associations, judges, and state legislators.

I highly recommend reading Yves Smith’s blog (and ebook) on some of the fallout from the rise of high speed foreclosure processing. There was a settlement, but it appears to be quite inadequate. To summarize:

  1. There was a troubling plan for distributing settlement funds.
  2. Small payout amounts were set.
  3. Regulators failed to supervise consultants who estimated borrower harm.
  4. They also tried to keep full information on the process from emerging.
  5. There was a decision not to allow appeals despite flaws in the process.
  6. Firms involved won’t correct wrong addresses.
  7. There was a 2 year wait for checks for often trivial restitution amounts; some ended up bouncing.
All in all, the banks’ handling of foreclosure & robo-signing scandals show just how adept contemporary lawyers have become at advancing certain clients’ interests.  They also show why the advancement of client interests is far from the only role of the attorney.

Frank Pasquale

Frank is Professor of Law at the University of Maryland. His research agenda focuses on challenges posed to information law by rapidly changing technology, particularly in the health care, internet, and finance industries.

Frank accepts comments via email, at All comments emailed to may be posted here (in whole or in part), with or without attribution, either as "Dissents of the Day" or as parts of follow-up post(s). Please indicate in your comment whether or not you would like attribution, or would prefer your comment (if it is selected for posting) to be anonymous.

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4 Responses

  1. Jennifer Taub says:

    Frank, thank you for providing a concise summary of the foreclosure settlement problems. Also, looking forward to reading and discussing Zacks’ article at Law & Society in June. See you soon.


  2. Lawrence Cunningham says:

    Jennifer: I’m looking forward to your excellent book on this topic being published! Hope it is coming out soon. lc

  3. Master KupuKupu says:

    A very informative post. Thanks for sharing a summary of the settlement problems. I’m looking forward reading to future posts. Thank you.
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  4. Jennifer Taub says:

    Thank you for your kind words, Larry. The pub date is now early 2014 (February or March) and we have a new working title/subtitle. All is well in the editing process, so galleys by fall.