Working With Foreclosure Consultants Can Get a Lawyer Burned
Illustration by Michael Morgenstern
As the recession puts a dent in legal work along with just about every other segment of the economy, many attorneys are being tempted by a business opportunity that shows no signs of slacking off: working with foreclosure consultants.
Foreclosure consultants, also known as loan modification agencies, advertise that they help struggling homeowners stave off foreclosure. They negotiate with lenders in an attempt to get new, more affordable loans for their customers.
With the real estate market in the tank and foreclosure numbers continuing to rise around the United States, these are boom times for businesses that do foreclosure consulting. And many of these companies desperately want to associate themselves with attorneys.
Some of them are looking for outside counsel. Some need in-house counsel. Others want to enter into some sort of joint business enterprise. And they all routinely offer attorneys the possibility of earning fees that reach into six figures.
There’s just one catch. attorneys who get involved with foreclosure consultants may be violating legal ethics rules on a number of grounds, including prohibitions against using “runners” (someone who solicits business on behalf of a lawyer), sharing fees with nonlawyers, and failing to exercise independent judgment on behalf of clients.
Read the full story “Playing with Fire: Working with foreclosure consultants can get a lawyer burned” in the July ABA Journal.
