Law Firms Cash In On Foreclosures
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. 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. 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." 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 [email protected] or (813) 259-7865.