Outsourcing to India

This month's ABA Journal has an article on the trend of outsourcing legal work to India. The process is basically that an attorney here in the US takes in a case, then sends all the work of drafting pleadings, contracts, discovery or the like to the outsourcing firm in India where it is handled by an attorney who is admitted (or whatever they do there) in India.

The article was silent about the ethics of this type of arrangement. I can see many issues - are you obligated to tell the client about the arrangement (if not, why not) - can you mark up the fees you pay to the Indian attorney? - are you being deceitful if you file the work as your own (see the previous posts on the topic of 'ghost lawyering?'

Personally, I don't care much for this type of arrangement. I think that if a client hires me to do a job, then they should get me and the staff that is under my immediate control, not someone halfway around the world who may, or may not, be familiar with the laws and rules under which we operate here. While I am sure that the law schools in India do a great job of educating their graduates on general principles of law, there is no substitute for the experience of practicing in a jurisdiction. I think the quality of work would suffer. I think that clients would choose another lawyer if informed of the arrangement and I think there is a duty to inform them.

I am going to post an opinion poll. Chime in and let me know your thoughts on the ethics of outsourcing.

~Tim

Proposed Bankruptcy Law Changes

Congress is currently considering two bills, one in the Senate and one in the House, designed to alter the bankruptcy code to help homeowners who find themselves in the mortgage crunch. I have read both versions of the bill and think that the House version probably goes the furthest toward fixing some of the problem.

The basic problem hasn't been that the failing mortgages are "sub-prime." The problem has been that the mortgage industry has consistently made loans in excess of the value of the property. This has been litigated time and again, but it never seems to make the press. The mortgage brokers work with appraisers to get the property valued so that the loan can close. That value may be far in excess of the fair market value of the property. When it is it becomes impossible for the debtor to sell the property in the event the payment becomes too much. The debtor simply can't sell the property for enough to obtain a release of the loan.

What the House bill does is permit a bankruptcy court to cram down the mortgage to the value of the property. This would result in two things - first, the debtor could possibly then sell the property and pay off the mortgage - second, the debtor could perhaps obtain financing on the realistic value and remain in the property.

Now, this probably doesn't go far enough, but it's a start. I don't think it goes far enough because it requires a bankruptcy filing in order to cram down the amount of the loan. Congress should pass a law making it possible to cram down the loan outside of the bankruptcy process. If you ask our congress people they will tell you that the threat of bankruptcy will make the mortgage lender more willing to work with the debtor, pre-bankruptcy, but I don't see that happening. When someone is struggling to pay the debt load on a property, or is behind, it becomes an adversarial process fairly quickly. If a debtor is unable, or unwilling, to file bankruptcy he would have no better bargaining position under the proposed law than he has under the old law.

Still, it is a step in the right direction. Please write your congressman and ask for support for this bill. The bill numbers for each version are - House : HR3609IH Senate: S2136IS

~Tim

Up and Running

I finally have things up and running in the new office space in Lebanon. The final piece, internet access, was installed yesterday. Last week was the first week that I was actually open here and seeing clients. I had several, which is encouraging. I think this office will be productive.

I am currently developing a marketing plan. In this month's ABA Journal there was an article that gave tips for marketing a small law firm. I am happy to report that I was already following most of those tips.

Perhaps the biggest marketing item on the agenda is that I am writing a column for the Wilson Post, the newspaper with the highest circulation in Wilson County, Tennessee. That column will focus on legal news that is of interest to the lay person, such as rights under the Federal Fair Debt Collections Practices Act, credit reporting laws, consumer protection laws, landlord/tenant, criminal law and the like. The column should be available online and I will post a link here when it is. The first appearance will be Wednesday, November 7, 2007.

I also have a long list of topics to blog about, compiled during my absence. There have been some interesting developments in lawyer marketing online and I have some cases that pose novel legal questions that make for interesting discussion.

My most major project right now is moving into the house that I leased in Wilson County. That gets accomplished at the end of this month.

~Tim

Physical Office Space

Well, it looks like my experiment with running a practice with no office space is drawing to an end. The problem became keeping up with client meetings. I found myself running all over middle Tennessee, from Starbucks to Starbucks, to meet clients. As things grew, I found myself spending more time in the car than I did actually working.

So, I decided to open an office. I spent some time last week looking at space in the town I want to practice in - Lebanon, Tennessee. I am happy to report that I have found what I was looking for. I am going to move into a second floor office suite on the town square. The offices used to be occupied by an established law firm that build a new building a little further out Main Street. It has pretty much everything I need and is reasonably priced.

I should start the setup process this week, with the idea of having it fully up and running by November 1, 2007.

~Tim

Bathroom Advertising

On a trip to Tennessee to see clients last week, I happened to stop at a gas station outside the small town of Lebanon, TN. While in the men's room, I noticed an 8 1/2 x 11 one page ad for a law firm over in Nashville. It brought a chuckle as I thought that was an interesting place to put an ad and wondered who their target demographic might be.

Then it became clear when I read the line under the attorney's pictures. It read:

"Don't let your starter wife run off with your dream home."

Isn't that repugnant? The whole concept of a "starter wife" is morally bankrupt, in my opinion. And, to top it off, in Tennessee marital property is normally divided 50/50, absent some finding of waste of marital assets or other financial wrongdoing on the part of one of the parties. So, the lawyers are generally promising something they can't deliver. You can keep the dream home, but you will have to even it out by giving up every other marital asset.

This is what has gone wrong with the profession. We (and mostly mean the big firms who can affort the slick advertising campaigns) have sold our professional souls in the pursuit of the dollar. Our advertising reeks of used car ads. We're not a respected profession anymore - because we don't act like one.

But what can we do? From the small lawyer perspective, not much. Small lawyers generally don't get placed on the committees that are making and interpreting the rules. That honor is given to the big guys, and it's the big guys who are doing this kind of advertising.

All the small guy can do is carve out his niche and practice law with all the honor, integrity and dignity that he can muster, and hope that the public can see the difference between us and what they see in the advertising.

~Tim

Selling a Cause of Action

The Sixth Circuit announced an interesting decision yesterday. The case is Parker v. Goodman, No. 06-5940. The opinion permits a bankruptcy trustee to sell a cause of action of a debtor in order to realize assets for the benefit of creditors. Here are the facts:

The Debtor filed bankruptcy then had a falling out with his bankruptcy attorney. The debtor sued the bankruptcy attorney for malpractice in Kentucky state court. The debtor's bankruptcy trustee sold the cause of action in the malpractice case to the bankruptcy attorney's malpractice carrier for $10,000.00. The debtor was then enjoined by the bankruptcy court from prosecuting the malpractice case.

Isn't that interesting? Despite Kentucky's strong public policy against selling causes of action, the Sixth Circuit says that it's ok for the bankruptcy trustee to sell the debtor's claim against the attorney because the cause of action is property of the estate and the bankruptcy code, which trumps Kentucky law, gives the trustee the right to sell property of the estate.

But what makes this particularly onerous is that the trustee sold the cause of action to the attorney/defendant's malpractice insurance carrier, arguably for a fraction of its value had the case gone to trial. The malpractice insurance was able to extinguish the claim without the debtor ever having his day in court or even having had a say in the settlement.

Admittedly, the Sixth Circuit gives us an out - the debtor could have contested the actual sale, instead of waiting to contest the injunction against proceeding in state court - but that's of little comfort since the Sixth Circuit basically says that the sale was ok, giving trustees who want to engage in these transactions a green light.

This is another decision that is going to wind up causing issues down the road as a public, already lacking in confidence in the legal profession, will have yet another way to claim that "the lawyers screwed me out of my case." The judges of the Sixth Circuit ought to reconsider their position on this one, after thinking through all of the ramifications.

~Tim

Specialization

Recently, I have had occasion to discuss specialization with attorneys from both Tennessee and Ohio. Readers and clients know that I am a general practice attorney. I am not in the least bit interested in specializing. I am, however, interested in people's opinion on the topic.

One lawyer thinks that, within 10 years, everyone will be a specialist and that attorneys who do not specialize, or who take cases outside their specialty, will be liable for malpractice. My response to that is to say that it won't come to that but, if it does, count me out.

Personally, I think that specialization is bad for the profession and doubly bad for clients. It's bad for the profession because it spells the end of the small town, country lawyer who represents all clients, big and small. The lawyer on the Atticus Finch model. In years past, this was the predominate type of lawyer and in years past, people respected lawyers much more. As firms (and fees) have increased in size, the public's attitude about our profession has changed for the worse. This isn't a coincidence. The big firm specialization model does not breed public confidence. It breeds the idea of law as a business, not a profession. It breeds advertising models in which lawyers appear to be no better than used car salesmen (one ad that I particularly detest shows a lawyer who morphs into a tiger and the same firm has the back of the phone book with an ad that says "As Seen on TV" - are we lawyers or do we sell the Popeil Pocket Fisherman?).

Specialization is also bad for the clients. What happens when a lawyer specializes? Well, his client pool shrinks to encompass only those who need that particular legal specialty. When his client pool shrinks, what does the lawyer do? Well, most likely he relocates to a larger population center where the bigger population means more clients for his particular specialty. Clients who live in smaller communities now must travel longer distances to find a lawyer. Their costs are increased and one reason for that is that the lawyers overhead has increased (it's more expensive in the city). Fewer clients can then find, or afford, legal services. This is a bad thing.

I also tend to think that the lawyers I know who have specialized are not happy people. One reason for that, in my opinion, is that they get bored. Every day is the same thing. One bankruptcy petition looks much like every other. One complaint for divorce or mortgage foreclosure is much the same as any other. People thrive on variety. And people who are constantly learning new things stay sharper than people who are not learning new things.

As a profession, we should resist this urge to specialize. We may make more money, but it's about more than that.

~Tim