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Failed foreclosure firm that 'grew way too fast' leaves some 700 unpaid employees scrambling

By Martha Neil

May 20, 2015, 10:00 am CDT

A sudden announcement at the end of the day Thursday that a Florida real estate law firm would be closing its doors—and didn’t have enough money to issue final paychecks—has left some 700 employees scrambling.

“I know we shouldn’t be living from paycheck to paycheck, but that’s the reality today,” Dominique Grant, who said she worked in the Miami office of Butler & Hosch, told the Orlando Sentinel.

Her mortgage payment is due June 1, Grant said, “and I haven’t been paid for the last three weeks.”

Meanwhile, lawyers who worked for the 200-attorney Orlando-based firm may be stuck between a rock and a hard place, as far as the cases they have been handling are concerned, the Daily Business Review (sub. req.) reports.

Not officially let go, even though they may not be paid, a number of attorneys are concerned that they could face legal ethics consequences if court dates are missed, the business publication says. The 11 offices of Butler & Hosch, with the help of affiliated companies, were handling some 60,000 mortgage foreclosure cases for lenders and servicers and other real estate-related work in 27 states and the District of Columbia.

The firm didn’t send an attorney to several hearings scheduled Monday in St. Petersburg, said Matt Weidner, a foreclosure defense practitioner there.

Only three months ago, Butler & Hosch was in expansion mode, adding Atlanta-based Morris Schneider & Wittstadt in a “merger of equals,” the Daily Business Review reports.

But Butler & Hosch apparently bit off more than it could chew, and, stressed as well by a drop in foreclosure filings and pressure in the Florida court system to reduce a backlog of foreclosure cases, ran out of money.

“The firm simply grew way too fast,” said Roy Kobert, a GrayRobinson lawyer representing Butler & Hosch. “The only plausible way to mitigate the adverse impact on its employees, customers and the public was to file an assignment for the benefit of creditors and cooperate fully with the independent fiduciary. Simply throwing the keys to a Chapter 7 bankruptcy trustee would have led to chaos in the mortgage industry.”

A Michael Moecker & Associates Inc. website provides more information about the assignment.

Related coverage:

Tampa Bay Times: “As Butler & Hosch law firm shutters business, Tampa office closes to 100 employees”

See also:

ABAJournal.com: “PGA star claims law firm stole $3M to help cover shortfall after managing partner embezzlement”