I've never heard of lawyers taking out mortgages on clients in order to get paid, but then I just recently got accustomed to not wearing a suit on Fridays:
“We thought, ‘Why don’t we use a bit of ingenuity to find an affordable way to represent them?’ ” said Peter Ticktin of the Ticktin Law Group in Deerfield Beach, Fla. “It’s a new model, a new paradigm.”Of course lawyers should get paid for their work, and these are cash-strapped clients who badly need legal assistance.
Foreclosure defense is a new legal specialty whose strategies and techniques are still being worked out. Mr. Ticktin, who has some 3,000 foreclosure clients, says his plan to collect fees by taking another mortgage on his clients’ properties has already been copied by other firms.
The Ticktin mortgages resemble the loans that the clients originally got from Countrywide, GMAC and other lenders. Each will be a contractual obligation with the law firm, labeled as a mortgage and structured like one, too, with the client paying a certain sum every month and using the house as collateral.
Unconventional payment structures are becoming popular in the foreclosure hotbed of Florida. Whether they yet have caught on elsewhere is unclear. Certainly, Mr. Ticktin is far from the only lawyer being forced to innovate.
“We can put in $100,000 of our time but over the length of a case be paid only $6,000 in monthly fees,” said Thomas E. Ice of Ice Legal in Royal Palm Beach.
Mr. Ice, Mr. Ticktin and many other Florida foreclosure lawyers typically receive a few hundred dollars a month from each client. To supplement that, they seek legal fees from the banks they successfully challenge as well as contingency fees.
Contingency fees are standard in cases in which the client has little money but there is the possibility of a large payout. A slip and fall on a store’s wet floor or a medical malpractice claim are classic contingency cases. If the plaintiff wins, insurance companies ultimately foot the bill.
In foreclosure cases, however, the client pays the contingency fee. While such an approach is sometimes used in commercial litigation, this is a first for consumer cases, said Lester Brickman, a professor at Cardozo Law School in New York.
“For a lawyer to supplement or replace the banks as a long-term mortgage creditor of homeowners leaves me a little queasy,” said Mr. Brickman, an expert on contingency fees. “It’s an invitation for the public to say, ‘There go the lawyers again.’ ”
But I wonder if there are conflicts created by such arrangement. Does anyone know if the Bar has approved of this?