From the FAQ Page:
COMMENT: I contacted one attorney on your list and had a consult with another firm which is not part of your list but has been referenced quite a few times in the blogs. I have a problem with both and find them a bit predatory (sorry guys and gals) and quite frankly, am reticent to contact any others.
One charges $350 a month and the goal is to get the mortgage nullified due to discovery of fraud. If they succeed in this, they get a 40% interest in the property (new appraised value) in the form of a mortgage. Ok, that’s win-win I guess. They then go for legal fees and get a share of any fees recovered over and above their actual legal fees if successful in a counter suit against the lender.
If they instead get a workout/modification, they then get a 40% interest in YOUR savings in the form of a new mortgage with them. So now the homeowner has a modified mortgage with lender and a second mortgage with attorney, basically putting homeowner upside down, again. (Editor’s note: not necessarily — and remember whether you accept the settlement is strictly your decision and not the attorney’s decision).
Second attorney was similar but upfront fee for audit/retainer. If no fraud found, then only small portion of retainer is reatined to cover the audit. If they go forward with trying to defend/get a work out, etc./they charge by the hour AND get 33% of any savings. I assume same as attorney #1, in the form of a mortgage.
You all really see this as ethical?
ANSWER: YES AND NO. YES IT IS PERFECTLY APPROPRIATE FOR AN ATTORNEY TO GET PAID A FAIR FEE FOR HIS PROFESSIONAL SERVICES. YOU HAVE A CHOICE OF PAYING HOURLY, WHICH NORMALLY RANGES BETWEEN $250-$400 PER HOUR.
That is what people pay when they see a lawyer. In some cases, like personal injury (auto accidents etc.), lawyers have worked out a method of allowing clients to have access to their services even if they don’t have money. The lawyer takes what is called a contingency fee. That fee, which is fairly standard throughout most of the states is 1/3 of the recovery of the value awarded or settled to the client if the matter does not go to court, 40% if the matter goes into litigation, and 45% if the matter goes to appeal.
Sometimes the attorney will even advance the filing fees, discovery costs and expert witness fees in a case on behalf of the client. For these foreclosure cases, or mortgage disputes, the hours spent can be very intensive and time is money.
Prospective clients often forget that it is their case and their life and that the lawyer has nothing to do with it unless he chooses to accept the retainer arrangement. On the other hand, it is improper under most rules to take an interest in the property that is the subject of the dispute, particularly a home residence. But the fees still apply.
So if the only way you can afford to pay the lawyer is to get a mortgage or give the lawyer a secured interest in your home AFTER the case is settled, then in most cases the fee would be considered fair and the arrangement within the bounds of legal ethics. If the lawyer is taking a sum of money that goes far beyond the costs of the case and is basically charging you hourly PLUS the full contingency fee, then you are right — that is predatory. The situations you described do not seem predatory although your description sounds that way.
You have a choice of paying an hourly fee plus the costs of the case and the lawyer will be perfectly happy to take your case. You don’t want to or can’t pay that fee so you want the attorney to take a risk as to whether he/she will get paid at all. You object to the amount of the contingency fee because you feel you have already been the victim of predatory behavior. You would like them to work for you for less than they charge other clients and they are not willing to do that. Why should they?