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:
- There was a troubling plan for distributing settlement funds.
- Small payout amounts were set.
- Regulators failed to supervise consultants who estimated borrower harm.
- They also tried to keep full information on the process from emerging.
- There was a decision not to allow appeals despite flaws in the process.
- Firms involved won’t correct wrong addresses.
- There was a 2 year wait for checks for often trivial restitution amounts; some ended up bouncing.