Thursday, September 30, 2010

Alternative fee arrangements build relationships.

This September 27th article from the Daily Record struck a chord with me. Alternative fee arrangements are not new to me. They have been a topic of conversation in every firm I have been a part of for the last 20 years. For the most part, clients have been distrustful of alternate fee arrangements suggested by outside counsel. The unspoken suspicion was that the lawyer sought to "get over" on the client, and so the relationships continued to chug along on the basis of the billable hour.

Current economic pressures on our corporate and insurance clients now have the pressure for alternate fee arrangements flowing in the other direction. The trend now is for the sophisticated legal consumer to demand alternate fee arrangements. Whether the alternate arrangement is negotiated, or unilaterally imposed by the client, this article cites to the most important component of any fee arrangement---trust. Counsel must trust that he is being fairly valued, and paid for the value he provides to the client. The client must trust that its work is receiving the attention and care it deserves, and that the work is offered at a fair market rate.

Near the end of this article, an in-house counsel hits the nail on the head. Having practiced in the real world, he acknowledged the daily pressure of having multiple phone messages to return, and the need to prioritize among his clients. As in-house counsel, he now wants his calls to be returned first, "not because [he] pays a lot of money, but because the working relationship is good."

Both the client and the lawyer have a shared goal of prospering and coming out of this economic downturn. Neither will do this at the sole expense of the other. Let's build trust through a fair engagement.

GMAC decision to stop foreclosure does not apply to Maryland actions

Click the title to link to the Sept. 20th article. GMAC is unilaterally stopping foreclosures in 23 states (but not Maryland) because various documents and affidavits were incorrectly prepared and executed. One processor at GMAC admitted to signing off on 10,000 items per month without reading them. Amazing.

A more recent Washington Post article on September 29th reports that JP Morgan Chase is doing the same thing. JP Morgan is unilaterally asking courts to hold off issuing final judgments in 56,000 foreclosure actions. The article doesn't identify the state jurisdictions involved.

These reports dovetail nicely with Judge Pierson's recent admonishment to foreclosure lawyers practicing in Baltimore City to make sure the new rules are scrupulously followed.

Lawyers can't be two-faced on Facebook.

A New York ethics opinion says that lawyer can't create fake accounts and identities on Facebook and Youtube to entice contact with potential witnesses. When done by a lawyer, this is considered "dishonest" and is sanctionable.

But yet, a 30 year old male cop can pose as a 13 year old girl on-line to entice contact with the potential pedophile?

And what of the many ruses used to entice an evading defendant to accept service of legal process? This is done through an agency relationship with counsel, so isn't this effectively his dishonest behaviour?

Last minute rush to register ground rents.

I love this article's reference to someone dropping off a disk containing hundreds of registration forms. These folks had three years to register. I bet many delayed to the last minute intentionally to punish the State for requiring registration.

But if you are dealing with a ground rent issue, don't count on the registry to be accurate or up-to-date for many months. The better practice is to continue to collect three years of ground rent and hold in escrow.

Wednesday, September 29, 2010

Foreclosure practice in Baltimore City- pushing the "envelope."

On September 28th, I attended a meeting of approximately 40 foreclosure lawyers and Judge Michel Pierson, of the Baltimore City Circuit Court. While I don't conduct foreclosures, I was invited by the Court because my name appears in various foreclosure files as counsel seeking to alternately stay a case, consolidate with a quiet title/declaratory judgment action, or vacate a judgment improperly taken. This was a wonderful chance to catch up with old friends, and to hear how the Court and its hired staff intend to interprete the recent changes to how due process is administered in foreclosure cases.

One issue that seemed to confuse the Court, though, was the new rules' reference to filing of the "envelope" containing certain disclosures and notices to the borrower. The legislature didn't consider that the actual envelope gets mailed to the borrower. The clerk tells us that filing of a "copy" of the envelope will suffice as proof of mailing. However, this ignores the fact that many offices e-mail .pdf files to their process servers, who may then stuff their own envelopes. Jeff Fisher, a very practical fellow, suggested that the clerk accept an affidavit in lieu of a copy of the process server's envelope. Judge Pierson acknowledged the confusion created by our beloved legislature, but declared "the rule says 'envelope', not affidavit..."

The lesson of the day is that the Court and the clerks will demand strict adherence to the new rules. For those of use who routinely vette foreclosure files, we will be looking to the form of affidavits and every required notice described in the rules. Saavy foreclosure counsel will take a close look at the new rules and educate their staff.

Ameriquest- it's like jogging in deep snow.

The Maryland Court of Appeals decided this "bad affidavit" case on August 31, 2010. It has now been left to the bankruptcy court to deal with over 100 pending cases where Trustees are suing to invalidate, or "strip", liens. This office, alone, has over 20 cases, valued at close to $6 million. Each is a potential total loss under a title policy, as each lender may potentially be stripped of its lien and relegated to "general unsecured" status.

I have heard that Judge Kier, Chief Judge of the bankruptcy court, has assigned one law clerk to research the issue for all the judges. I think he wants to avoid potentially conflicting results from the four judges handling the cases.

It has become rather comical, though, to see both Trustees and counsel for the lienholders declare victory when the Ameriquest decision really does little more than amplify exisiting law.

But enough, for now. I have 20+ briefs to write!

Ground Rents come out of the shadow and into the light

The deadline for registering ground rents is here! By statute, an unregistered ground rent may not be sued upon or foreclosed if not registered with the State Department of Assessents and Taxation. However, the Anne Arundel County litigation by ground rent owners that are contesting the constitutionality of the statute has left settlement companies and title insurers to continue with the old practice--"escrow three years of payments."