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Law Firms Cash In On Foreclosures
Associated Press File Photo
A surge in foreclosure filings has Florida law firms scrambling for more staff.
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Published: April 1, 2008
TAMPA - Their work can be so repetitive that some are known, disparagingly or not, as "foreclosure mills." But the niche field of foreclosure law is profiting enormously from the boom in Florida home foreclosures and is on a hiring spree.
One Tampa law firm, Florida Default Law Group, filed more than 400 foreclosure lawsuits in Hillsborough County in February alone, according to a Tampa Tribune review of Hillsborough County Clerk of Court records.
Because many law firms file foreclosures across Florida, the biggest firms' monthly foreclosure caseload can grow to a thousand or more, with each case carrying a potential attorney fee of up to $1,200 - although it's not clear what the firms' profit margin is.
To keep up with the workload, foreclosure specialists have ramped up their hiring. One foreclosure lawyer, Jim Albertelli of Tampa-based Albertelli Law, estimated that the biggest firms in Florida have grown to as many as 200 clerks, paralegals, lawyers and other staff, based on their case volume.
The foreclosure business is so strong that it has caught the eye of private equity investment firms, which buy companies using equity and debt financing. Private equity firms have begun buying the back-office foreclosure-processing operations from big law firms and are offering law firms outsourced foreclosure help.
These outsourcing companies are keen on moving into Florida.
"As you know, Florida has very high foreclosure rates because of the boom in real estate in Sarasota and in Tampa," said Ken Goins, chief executive of foreclosure processing firm Prommis Solutions, which is seeking to expand into Florida. Prommis Solutions is owned by Boston private equity firm Great Hill Partners.
Because of the subprime mortgage mess, foreclosure filings by banks and mortgage servicing companies in Hillsborough County Circuit Court - as in other courts in Florida - have more than doubled since this time last year. According to clerk records, there were 1,475 new mortgage foreclosure suits in Hillsborough County in February compared with 562 cases in February 2007 and 271 cases in February 2006.
Workload Threatens Efficiency
Over the years, foreclosure firms have adopted an assembly-line approach to filing and following mortgage foreclosures as they work their way through the court system, said Susan Etheridge, whose legal recruiting and consulting firm, Professional Placement Services, helps foreclosure firms with their efficiency.
But the firms' efficiency is being put to the test under the current flood of foreclosures.
Typically, clerks, paralegals and other support staff do much of the legwork for foreclosures, such as setting the court hearings and, if necessary, coordinating a foreclosure sale of the property. A small number of lawyers typically oversee them.
For example, Albertelli Law of Tampa has about 30 people working on foreclosures in Tampa. Five of them are lawyers, though they get help from lawyers in the firm's other offices in Florida. In February, Albertelli filed 61 foreclosure lawsuits in Hillsborough County Circuit Court, according to clerk of court records.
Albertelli said he's hoping to increase staffing in his Tampa office on Harbour Island to 100 employees in the next several months to deal with his huge new caseload.
To determine which law firms are filing the most foreclosures, the Tribune analyzed 1,734 lis pendens documents from February filed in Hillsborough County's circuit civil and county civil court divisions. Lis pendens documents tell interested parties that a property is subject to litigation, said Andrew Baldwin, a lawyer who does some foreclosure work for Tampa's Solomon Law firm.
Although some lis pendens filings relate to foreclosures of liens, the vast majority are for mortgage foreclosures. According to the Tribune's research, the Tampa law firm Florida Default Law Group filed at least 415 foreclosures in Hillsborough County Circuit Court between Feb. 1 and Feb. 29.
The Law Offices of Daniel J. Stern of Plantation filed at least 263 foreclosure suits, and the Law Offices of Marshall C. Watson of Fort Lauderdale filed 182. It's not clear how many foreclosures these firms filed in other counties.
Michael Echevarria, head of Florida Default Law Group, did not return calls or e-mail messages in recent weeks. Watson declined comment when reached by phone, and a lawyer in Stern's office also declined comment, saying the firm's financial service clients request that Stern not speak with the media.
Not All Cases Finish Process
It's not clear how much the firms are earning in attorney fees because those fees vary according to whether a case goes through the entire foreclosure process or settles early.
Lawyers say they try to put homeowners in foreclosure into payment plans so they don't lose their homes. Albertelli, however, said the majority of his foreclosures result in the debtor losing his or her home. For example, of the 61 foreclosures he filed in February in Hillsborough County, he estimated 35 to 40 would go through the entire process.
Processing foreclosures efficiently is crucial because of the huge volume, said Etheridge, who has consulted with law firms on their foreclosure operations' efficiency. The firms' big fear: that they will have to hire so many support people that their overhead costs will spiral out of control, Etheridge said.
Processing mortgage foreclosures may not seem like the most satisfying area of law, but Albertelli insisted foreclosure work gives lawyers exposure to a broad range of law.
"I don't ever think of it the foreclosure mill nickname as bad or not bad," said Etheridge, the industry consultant. "It's just such a commonplace term now. To say that in a derogatory way, because it's foreclosure, is just not right. That's done in all types of law firms."
CATCHING CASES BY DEFAULT
Documents called "lis pendens" are filed in conjunction with mortgage foreclosure lawsuits. The Tribune researched more than 1,700 lis pendens filings in Hillsborough County Circuit Court from February to see which law firms are filing the most foreclosure suits. Number of lis pendens filings by firm in February:
Firm Main Office Filings
1. Florida Default Law Group — Tampa.......415
2. David J. Stern — Plantation....................263
3. Marshall C. Watson — Fort Lauderdale.....182
4. Shapiro & Fishman — Tampa..................133
5. Smith, Hiatt & Diaz — Fort Lauderdale......75
6. Albertelli Law — Tampa...........................61
7. Daniel C. Consuegra — Tampa................47
8. Adorno & Yoss — Miami...........................41
9. Ben-Ezra & Katz — Fort Lauderdale..........33
10. Spear and Hoffman — Miami..................33
Sources: Hillsborough County Clerk of Court Web site, Tribune research
Reporter Michael Sasso can be reached at msasso@tampatrib.com or (813) 259-7865.
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Reader Comments
Posted by ( northfla ) on April 1, 2008 at 10:08 a.m. ( Suggest removal )
How nice to know someone is making a killing while others are losing their homes. Maybe next week you can run an article on the repo guys. I'm sure their business must be booming.
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Posted by ( Sharona ) on April 1, 2008 at 10:30 a.m. ( Suggest removal )
People shouldn't have bought houses they could not possibly afford. Now the government will bail them out, and those of us who work hard, pay our mortgages on time every month, won't get any "assistance"
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Posted by ( NotPlayin ) on April 1, 2008 at 11:20 a.m. ( Suggest removal )
Sharona, Just thank God that you are able to make your monthly mortgage payments and have compassion for those that cannot.
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Posted by ( RobKay ) on April 1, 2008 at 12:54 p.m. ( Suggest removal )
A good tip for people in the construction industry. When one set of jobs leaves another opens. If you can position yourself to work in either you've got it made. You'd have a job no matter which direction the market is going.
I think someone should report these law firms to the Florida department of agriculture. I thought they were supposed to protect us from envasive species that had no natural predators.
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Posted by ( boilercolts ) on April 1, 2008 at 2:21 p.m. ( Suggest removal )
I hear that Darth personally gives low interest rates to those in need. He is such a good blogger
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Posted by ( DarthRandall ) on April 1, 2008 at 4:55 p.m. ( Suggest removal )
I have to agree with Sharona. I know a lot of people who bought well over-priced homes and condo. Most of them thought, as a lot of people who bought houses, they would purchase the house with an interest only loan and then flip the house and make a tidy profit. When the housing market collapsed, so did their chances, and for some - their futures. These people made their own problem, but yet, we the tax payers have to bail them out.
Now, good, hardworking people who bought a house and lost a job or whatever - they have my deepest sympathy.....
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Posted by ( Salt ) on April 1, 2008 at 5:29 p.m. ( Suggest removal )
Lawers are bottom feeders, When people are at their worse, they feed
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Posted by ( nprvoice ) on April 1, 2008 at 5:38 p.m. ( Suggest removal )
________&________...For the people
Yeah...right
The lawyering business is the only "Made in America" industry to be thriving any more.
Would the last person (lawyer) standing please turn out the lights when things all come crashing down?
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Posted by ( ebb ) on April 1, 2008 at 10:16 p.m. ( Suggest removal )
I lived in pinellas county for 40years. I made a few friends during that time , some of them started buying 500,000.00 homes and condos - on 50,000.00 yearly incomes. most are now very sorry. I cant figure out how they qualified for such homes to begin with.
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Posted by ( tzeital ) on April 16, 2008 at 7:24 p.m. ( Suggest removal )
Well "Salt", at least we can spell...l-a-w-y-e-r-s.
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Posted by ( gmckinney626 ) on April 18, 2008 at 9:45 p.m. ( Suggest removal )
Amazing how everyone was just ecstatic when they were flipping them, but when the bottom fell out, they cry foul. Maybe those stone-throwers should take an accounting class to look at their personal budgeting. Don't blame the lawyers. They're no different than an oncologist. Their making a living off of your screw-ups. You just don't have cancer.
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