Bankruptcy

Increasing the Profit Margin at Bankruptcy Mills by Using Virtual Paralegals

By Joseph McDaniel, Esq.

The first meetings there are less formal, and they are jammed, because a lot of folks in Casa Grande are filing bankruptcy cases of every flavor these days, and the lucky ones are filing Chapter 7 cases, and the rest are stuck in Chapter 13. Except for the really unlucky ones who might have to try to fit into personal Chapter 11 cases because of a combination of too much income to pass the means test and not fitting any of the exceptions, or too much debt to fit the limits in Chapter 13 bankruptcy cases at 11 USC 109, and a failure to cut deals with creditors.

But aside from saying howdy to my buddies who are primarily Casa Grande bankruptcy attorneys, and howdy to the Casa Grande bankruptcy trustees, who are a very nice crew, huge first meetings of creditors in bankruptcy cases are a great place to pick up bankruptcy gossip in Arizona.

Today's gossip was particularly interesting. There is a huge bankruptcy mill in Arizona, that handles many cases. It advertises on television a lot and has bankruptcy billboards and it brags about how many folks it processes through bankruptcy (kinda like tuna, you know).

Today's gossip concerns that bankruptcy mill, where I would not refer a corpse with creditor problems if my life depended on it, partly because of their high-pressure sales tactics, which I believe are simply wrong in the context of a consumer bankruptcy case. If you are a frightened consumer debtor who's being sued and you have to sign on the line and cut a check before you can see their newest bankruptcy lawyer for five minutes, that's just twisted.

The rumor is that they are going to fire a bunch of paralegals, and a bunch of lawyers, and then use "virtual paralegals" to do the work in the cases, because they'll work for next to nothing doing "phone bankruptcy cases", and the bottom line will show WAAAAAAAY more profit, because the "virtual bankruptcy paralegals" won't be employees with benefits, they'll be independent contractors getting a split of the fee, although that won't be the way they characterize it.

I have a problem with that business model. Several, in fact.

While I sometimes telecommute, and am perfectly happy to let one of my paralegals work primarily from home because then she can bask in the presence of her two small children (and Heidi the Bankruptcy Angel also keeps my clients happy, and that's a good thing), I supervise her and the emails she sends and receives as well as reviewing the schedules that are filed, unless Nina the Unpronounceable, my associate (the summa cum laude undergraduate and law school grad who passed her bar with flying colors the first time, thank you very much) does the reviewing.

I once considered hiring a virtual bankruptcy paralegal, but the idea of hiring somebody in another state, or even this state, when I couldn't watch her interacting with clients with my own personal eyeballs, and couldn't verify her educational background and the specialized CLE she had taken, and couldn't be certain exactly what he or she was doing in working with my clients at a distance without a face on one end of a phone line to someplace or other....that just didn't set well with me. Scared me a little.

I'm sure that some virtual bankruptcy paralegals could have a place in a practice, but I guess I'm just a little old fashioned; if a client hires my firm, it seems to me that they would want to know exactly who they'd be working with as the process unfolds.

And my troops aren't virtual, they're actual.

On the other hand, if the rumor is true, I may be able to pick up another experienced (and actual) bankruptcy paralegal or three to work in my non-virtual (actual) brick-and-mortar office next to the Arizona Biltmore Golf Course.

I'll have to retrain her or him to do things the way I want them done, of course. But that's part of the practice, in any case.

And for the good of the consumers of bankruptcy services in Arizona, I hope the rumor is false and that no big mills plan to switch to using virtual bankruptcy paralegals to cut their costs and make more profit.

NOTHING HERE CONSTITUTES LEGAL ADVICE RE A CHAPTER 7, CHAPTER 13, CHAPTER 11, OR CHAPTER 12. FIND AN ARIZONA BANKRUPTCY LAWYER WHO IS BOARD CERTIFIED IN BANKRUPTCY LAW, AV RATED, AVVO 10 RATED, ON SUPERLAWYERS, OR JUST VERY EXPERIENCED AND A FORMER CHAIR OF SOME BANKRUPTCY SECTION OR COMMITTEE. NOTHING HERE MAY BE USED AS LEGAL ADVICE IN CONNECTION WITH ANY BANKRUPTCY, WHETHER THAT BANKRUPTCY IS IN PHOENIX, GLENDALE, TEMPE, MESA, SCOTTSDALE, OR ANYWHERE ELSE.

Full post as published by Arizona Bankruptcy Attorney Blog on June 04, 2010 (boomark / email).