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Trail Potter

Argument – Access to Justice

Lawyers Against Access to Justice – a business problem.

This article is what happens when Lawyers don’t look at their practice as a Business. It’s wrong on several levels, and I will dismantle it in a moment, but the author is starting with the premise justifying his high cost, and mostly fails to acknowledge the problem. If you start with the problem, then distill it to a market need, basic business sense fills in the rest.

1) If you break wealth down into 5 groups (quintiles), only the top 20% can afford legal help with guys like this, doing what they do. The bottom 20% can get some free legal help as indigent. That leaves 60% in the middle – and that’s 60% of incomes, not population! This is a very large group.

2) Access to Justice is about lowering the total cost of legal services. Lawyers like Mr. Glover are fixated on justifying their hourly billing rate, but don’t look at their business efficiency. It’s the total cost of litigation that kills people, not the actual hourly rate of the attorney (but that rate is a factor).

3) Every lawyer who commits to making legal services available to the middle income groups, manages to do so without falling into poverty themselves. It’s a matter of the Lawyer making the decision to recognize a problem, and then to do something about it.

Now, for Mr. Glover:
A) “Even $400 is too expensive” So we know that a huge majority can’t produce the $6000 most lawyers want up front, and he cites half who don’t have $400 – but ignores the 30% who have maybe $1-2K. He jumps to the bottom to rationalize not doing anything to help those who have assets, but need a lower cost solution. The people who can’t put together $400 are likely to qualify for free legal aid, so they aren’t the problem that Access to Justice is designed to solve. Straw-Man argument.

B) “Value, Not Affordability” This is a sales pitch used by premium luxury automobiles, and that makes sense because that’s what most lawyers have become. It’s an easy insulation to say, “they just don’t recognize the value” – but this falls apart when you compare legal costs in different regions. In Houston Texas, you can take a dispute all the way to resolution for less than $5000, but in Phoenix, it’s north of $7000 – for the same legal conflict! That’s a market failure, not a value problem.

Most people recognize the value of something they can’t afford – I can’t afford a new Mercedes. I simply do not have the money. It’s not failure to recognize the value of the luxury car, it’s the fact that in Phoenix, there is only the luxury cars and the city bus, and nothing in between. I recognize the value of having more price-points in the market.

C) “DIY Fail” This is a non sequitur. The problem is NOT a lack of do-it-yourself forms. Arizona has great DIY forms, that is not legal assistance. Access to Justice is about contact between middle income clients and licensed attorneys, not forms.

D) “Pro Se by Choice?” Non-argument. He states that 80% are pro se (no lawyer, representing self), so maybe all of them are doing that by choice? No. No they are not. I deal with these people every day, and it’s apparent that Mr. Glover has never had a conversation with any of these people. In the end, he concedes that some percentage don’t want a lawyer; no one argues otherwise, we are dealing with those who WANT help, and have money, but advice is too expensive.

E) “Who Really Wants a Cheap Lawyer” I would think that Mr. Glover was, at one point, a salesman for a luxury car dealership – this is exactly what you are trained to do to keep a fence-buyer (one who can just barely afford your luxury model) at your dealership and away from the Chevy dealer across the street. Mr. Glover is more likely familiar with this pitch, because he upgrades luxury cars every year. He uses the word “Cheap” to indicate something shoddy, of poor quality, rather than what the issue is – Less Expensive. Let’s try it with the word-change: “Who really wants a less expensive Lawyer (fully licensed and qualified, just like Mr. Glover)?” A lot of hands go up.

People want help with their problem. They need a solution, and they need market-priced options. Who really wants a cheap car? People who need to get to work so they can feed their kids. Who really wants a cheap parachute? Well, my other option is assured death, so yes, I will take a cheap parachute over nothing. When I meet a client with less assets, I tell them where we are going to cut corners so they can get what they need. These clients are grateful.

F) “It’s Complicated” No. No it is not. It’s a matter of taking a few business classes to understand how to manage expenses. Lawyers get to pass 80 – 90% of all expenses on to clients, so they don’t even look at their expenses. Most lawyers don’t know a fixed cost from a variable cost, and they haven’t been trained to streamline a process to cut down overhead. I learned this starting companies back in the 90’s, and it’s basic stuff for any business other than a law firm.

I take a client from start through trial and full resolution for about half of what the other side charges. My rate is a little below the other lawyer, but it doesn’t account for the huge savings my client enjoys – that’s just my firm managing excess costs. My take-home pay is in line with where a solo in his second year should be. I’m not starving myself, I’m not suffering, I’m just being smart about how I spend my client’s money. This isn’t complicated at all. It’s taking my client’s financial problem as seriously as I take their legal problem, and I acknowledge that the problems are related.

Also, I win. I cost half as much, and I win. That’s Value.


Bankruptcy vs. Debt Consolidation

roads of debtWhen you reach that point where you know you can’t get out of the financial hole on your own, you start looking for options. If you think Bankruptcy is the worst thing that can happen, you might look for other ways to get the debt under control. It’s easy to find companies that perform an array of services, including Debt Consolidation, Debt Management, and Debt Settlement. It’s not always clear what these are, so let’s go over them –

Debt Consolidation is where you take out a lower interest loan to pay off all the higher interest loans – turning many debts into one debt. This lowers your interest, but not the principal, and you are still making payments, and subject to collection efforts. In most cases, you are also paying a fee to the company that is buying your debt, in addition to paying the debt and the new interest to that same company.

Debt Settlement is getting creditors to accept less than the full amount. This is attractive, but it will be reported to the credit agency that you paid less, and this will have a negative effect on your credit rating. In most cases, you are paying a fee to the settlement company for their negotiation on your behalf.

Debt Management is where you agree to financial counselling, and a debt management company will negotiate with your creditors. You pay the debt manager, they pay your debts, and maybe along the way they can negotiate some better terms, or arrange for debt settlement. In most cases, you will pay a fee for these services, in addition to your payments to your creditors.

When facing pressure from creditors, you may think about one of these debt services as a less drastic measure compared to Bankruptcy. And while this may be a good option in some circumstances, it’s important to get the facts. First of all, understand what debt consolidation will NOT do.

You are not under any legal protection with a Debt Service Company. When you file for Bankruptcy, your creditors must stop all collection efforts. The Bankruptcy process protects the Debtor, and insures that all harassment stops, under civil penalty for any creditor who contacts you.

In Bankruptcy, your communications with your attorney are privileged. This means that anything that is said between you and your lawyer are private, and no one can break that confidentiality. You do NOT have this confidentiality with a debt service, and anyone you talk to with the debt service can be called to testify against you in court.

Consolidation does not eliminate your debt, and neither does Settlement. In most cases, the debt service will ease your monthly burden – either by reducing the principal or the interest. That sounds good, but it will still appear on your credit report if the full amount was not paid, which will hurt your credit score. Reducing the interest is a good thing, particularly if you were holding some debt at maximum penalty rates – but this still doesn’t relieve you of the debt.

Bankruptcy sounds like the worst option – but it’s a widely misunderstood legal action. Bankruptcy puts the power of the law on your side, and protects you. Bankruptcy attorneys are your advocates, and they fight for you, while you concentrate on rebuilding. In most cases, a Chapter 7 Bankruptcy will eliminate a lot of your debt. If there are debts that cannot be discharged, the reorganization process will give you an opportunity to structure a better payment plan on the remaining debt. After a Bankruptcy, you can still use a Debt Service to work through the remaining debts.

I realize that Bankruptcy is a drastic measure – but if you are in real financial trouble, drastic measures will yield real results. You will have most or all of your revolving credit debt discharged (there are exceptions to dischargeability, please consult an attorney), and you will have a fresh start. Your credit score will improve, and you can start rebuilding your financial foundation. If you are worried about how the Bankruptcy will affect your credit score – remember that debts that have gone into collections will remain on your credit report for years, but getting those debts eliminated through a Bankruptcy makes you more credit worthy – as it is more likely you can pay off a new loan (and you can’t declare Chapter 7 Bankruptcy again for 8 years). Debt consolidation is a half-solution at best – you will still be in debt, and your credit score will not improve – you just change who you pay each month.

Talk to a Bankruptcy lawyer, and get the facts. Lawyers are required by law and the ethics of the profession to tell you the truth about the law, and your rights. Lawyers are trained and licensed by the state to insure that clients understand their situation – this is not true for debt consolidation. After consulting an attorney, if you still want to seek consolidation, you will be smarter about the options, and better equipped to make the right decision. Contact me at Potter Law Firm. “We’ll get you through it.”

Exercising your right to start over: Bankruptcy.

What do you think of, when you think of the Constitution? Freedom of speech? Right to Bear Arms? Unlawful Search and Seizure? None of these are in the Constitution – they were added later, in the Bill of Rights.

Constitution (Article 1, Section 8, Clause 4)

Constitution (Article 1, Section 8, Clause 4)

But you know what IS in the original draft? The right to Bankruptcy. Article I, section 8, Oversight of Bankruptcy is a required duty of Congress. The ability to start over, with a financial clean slate was so important, it was in the original draft – before freedom of speech, before the right to bear arms, before the guarantee of a jury trial, the framers made sure you could declare bankruptcy. Please keep that in mind.

You have a right to get the protection of the court against your creditors. In a lot of situations, you can have your debts eliminated, and you will have an opportunity to renegotiate the repayment, and at least get a break from the harassment. With so much debt collection abuse – why don’t more people take advantage of the Bankruptcy process? Yes, it’s complicated, but not more difficult than most other legal procedures. I think it’s the stigma – the shame of having to surrender, or the feeling that you have failed in your obligation by not repaying the debt.

If you are avoiding the phone because of creditors, you may be able to get some help before the holidays. The process was established in this Nation by the Founders; it is your absolute right. This
process may be the way you can start over, get a grip on your finances, or just give you some room to negotiate. Your creditors know you can get protection from the court, so they aren’t going to make deals with you until you do.

Here’s some insight on Creditors:

  1. High Interest Rates are the reward the lender gets for taking the risk that you will default. If you were guaranteed not to default, your interest rate would be tiny – like the kind of interest you get on a Treasury Note or US Savings Bond. High Interest means that they assume some are going to default, so they are getting their piece with every interest payment.
  2. Your Credit Score is a very complex calculation, and it takes into consideration what kind of debts you have, and what abankruptcy-sign-postssets you have. If you have a lot of debt that can be discharged in a bankruptcy, and you don’t have substantial assets (like a house, or investments), then you are a candidate for an easy Chapter 7 bankruptcy. The system then ASSUMES you are going to file for a Chapter 7, and it’s the reason your score is so low. The credit reporting agency is telling potential lenders that you will likely file, and once you do file, your score will go up.
  3. Bankruptcy will do a lot to protect you, but it’s still going to change your life. If you are still paying on a car loan, you may be able to get out of the loan – but you will likely lose the car. Yes, it gets rid of the debt, but if that debt has collateral, like a lien on the car title, you could lose that asset. There are ways to keep the car – so this isn’t an absolute rule, but you need to know how to keep the asset, and plan for it.
  4. Chapter 7 is a cleaner way to do it, as it will wipe out many different kinds of debt, but you can only do this once every 8 years. So if you declared a chapter 7 a few years ago, and disaster struck again, you can still file for Chapter 13. This is a much more complex process, and it’s going to cost more to do it – but if you have been backed into a corner again, it’s an option you can exercise.
  5. When you file for Bankruptcy, the creditors have to stop their collection efforts, and deal with your attorney.

If you are in the Greater Phoenix area, the Potter Law Firm may be able to help you. “We’ll get you through it.”

“We are a debt relief agency. We help people file for bankruptcy relied under the bankruptcy code.”