Florida Home Loan Modifications and Lawyers Draw Attention

Loan modification firms offering foreclosure defense services are under scrutiny, according to an August 23rd article in the Sun Sentinel.

Real estate lawyers have an established history of helping consumers who are facing mortgage foreclosure. In the past couple of years, some attorneys have been lured in-house by loan modification firms that are trying to skirt rules against collecting fees in advance of results.

The 2008 Foreclosure Rescue Act prohibits upfront fees for mortgage modification services, although legislators agreed that Florida lawyers doing foreclosure or modification work were exempt in some situations.

Consumer complaints are rising as loan modification firms fail to deliver as promised. Common issues include:

1. Work that should have been performed by attorneys was actually done by non-lawyers.
2. Loan modification firms collected money in advance for work that was never done.
3. Loan modification firms refused to issue refunds when requested.

From a legal marketing perspective, this means that real estate law firms need to take extra care to educate their clients about legal rights in foreclosures, and to set reasonable expectations for what will happen when in the loan modification process. It is actually a selling point for law firms to demonstrate why they are the right choice to assist consumers.

Louisiana Updates Attorney Advertising Rules

On Aug. 19, 2009, U.S. District Court Judge Martin L.C. Feldman signed a Judgment, in keeping with the Order and Reasons issued on Aug. 3 ruling on cross motions for summary judgment. The Judgment upholds most of the challenged provisions of the Louisiana advertising rules scheduled to go into effect on Oct. 1, 2009.

The Judgment grants the defendants’ Motions for Summary Judgment as to:

Rule 7.2 (c) (1) (D) – References to Testimonials of Past Results

Rule 7.2 (c) (1) (E) – Communications that Promise Results

Rule 7.2 (c) (1) (J) – Portrayal of a Judge or Jury

Rule 7.2 (c) (1) (L) – Use of Mottos that State or Imply An Ability to Obtain Results

Rule 7.2 (c) (1) (I) – Non-Authentic Scenes

Rule 7.2(c)(10) – Disclosures and Disclaimers

Rule 7.2(c)(11) and Rule 7.6(c)(3) – Payment by Non-Advertising Lawyer and Electronic Mail Communications

The Judgment grants the plaintiffs’ Motions for Summary Judgment in part and enjoins the defendants from enforcing:

Rule 7.5(b)(2)(C) – Additional Disclosure Requirements for a Non-lawyer Spokesperson

Rule 7.6(d) – Internet Advertising, and Rule 7.7 (as it applies to the filing requirements for Internet advertising).

Read the court ruling here.

Call for Speakers: Broward County Attorneys on Social Media

The Oct 16th Broward County "Bench and Bar" features several Internet marketing panels that I have the honor of moderating. If you are a local attorney who successfully uses Twitter, LinkedIn, Facebook, or YouTube, consider sharing some tips with your peers. Drop me an email this week if you are interested in speaking (mg@legalexpertconnections.com).

Click here for the 2009 Bench-Bar Convention site.

Seven Lost Secrets of Success

This book about advertising legend Bruce Barton (1886-1967) recounts his timeless marketing and copywriting techniques that continue to be relevant in legal marketing and other industries.

Unknown to many today, Mr. Barton was "the second B in BBDO," which remains an advertising powerhouse with 15,000 employees in 79 countries.

Mr. Barton's seven secrets to marketing and advertising success include:

1. Reveal the business that no one knows. Applied to a law firm, this means less emphasis on legal services per se and more of an emphasis on benefits realized by the client (i.e., increased market share when a solidly written patent application is approved, or family financial security from a well-crafted trust and estate plan).

2. Establish yourself as an expert in your field (which is exactly what we recommend in our book Courting Your Clients).

3. Learn to use "story selling" methods to demonstrate how you improve the personal and/or business lives of your clients.

4. Challenge clients to "travel the upward path," like the Marines who are looking for "a few good men."

5. Marketing won't work if sincerity is missing.

6. Give yourself away. This is particularly relevant in today's Internet environment. Offer value to your prospects and they will come looking for you when in need of your services.

7. Sharpen the knife. Intended for written marketing and advertising copy, it could apply to legal work as well. Polish your pitch until it is perfect, pruning unnecessary words and focusing on effectiveness rather than cleverness.

Those interested in legal marketing will find this to be an easy read. "The Seven Lost Secrets of Success," by Joe Vitale, Wiley 2007.

Bye, Bye to Billable Hour?

Pfizer, Cisco Systems and American Express are all expanding alternative billing arrangements as economic pressures force cost savings on legal bills, according to an article in today's Wall Street Journal titled, 'Billable Hour' Under Attack.

"I have told firms you cannot make your historical profit margins" on Pfizer work, said the pharmaceutical giant's general counsel, Amy Schulman.

The article cites a BTI Consulting Group study, stating that alternative billing arrangements totaled $13.1 billion this year, up 52% from $8.6 billion in the comparable 2008 period.

Law firms co-operating with flat fee billing arrangements include Orrick Herrington, Saul Ewing, and Sidley Austin.

While the move to alternate billing is not new or news, that fact that it appears prominently on the front page of the Wall Street Journal means that trends are accelerating and more Fortune 500 GCs will certainly follow their peers.

The leverage model within law firms, with less experienced associates billing relatively high rates and hours (from the client's perspective), is being called into question.

Law firms, like other business entities, are being forced to re-evaluate their value, pricing model, and client relationships. Proactive firms - those who initiate the alternative billing discussion - are likely to find a willing ear. More importantly, they may discover improved "client lifetime value" built on a mutual respect and shared commitments.

How The Mighty Fall

There are five stages of corporate decline, most of which are avoidable, according to author Jim Collins in his new book "How the Mighty Fall." The book is in answer to the question, "what causes an organization to fail?" Equally important, it helps leaders identify characteristics that put a successful firm on the slippery slope to potential failure.

The author of "Good to Great" and co-author of "Built to Last" identifies the five stages of decline as:

Stage 1: Hubris Born of Success
Stage 2: Undisciplined Pursuit of More
Stage 3: Denial of Risk or Peril
Stage 4: Grasping for Salvation
Stage 5: Capitulation to Irrelevance or Death

Matching similar firms with comparable early performance (Ames v. WalMart, Circuit City v. Best Buy) before history proved one a winner and the other a loser, the author documents these five categories as progressively responsible for ultimate failures if not reversed by a strong leader (i.e., Gerstner at IBM, Mulcahy at Xerox).

While law firms don't make or sell widgets like the corporate giants studied in this book, it has important implications for attorneys in two ways:

1. The elements of success and stages of decline apply to law firms also; and
2. Lawyers may gain increased insight into corporate performance factors as a result of reading this book.

Collins' recommendations resulting from his research include:

1. Talent. Make sure the right people are in the right seats. The right leaders and the right values can turn a company around (or presumably prevent it from going off course in the first place).
2. Core competency. Don't take your eye off the primary business line responsible for the company's success unless it is a conscious decision to move in a new direction.
3. Accept responsibility; avoid placing blame. Failure to tackle reality accelerates the rate of decline.
4. Build lasting greatness with succession planning, thought discipline, culture discipline and a focus on the customer.

Collins introduces the "hedgehog concept," an operating model that reflects understanding of three intersecting circles:
1. what you can be the best in the world at
2. what you are deeply passionate about; and
3. what best drives your economic or resource engine

This book is a quick read at 122 pages plus appendices, but rich in insight on organizational performance.