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.

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